On Saturday October 8th, Delphi Corporation ended the intense
speculation of media and industry watchers by filing for Chapter 11
bankruptcy protection in the U.S. Bankruptcy Court for the Southern
District of New York.[1] Sources inside Delphi had indicated as late
as Friday that such a move was likely unless Delphi could negotiate a
last-minute reprieve in the form of a bailout package from its largest
creditors, General Motors and the United Autoworkers Union.
While Delphi is surely struggling, it is not currently strapped for
cash. So why file now? The answer lies in both the legal climate and in
business strategy.
Avoiding the New Bankruptcy Law
Delphi Corporation, along with 38 domestic subsidiaries and affiliates, filed voluntary petitions per 11 U.S.C. §
311 of the Bankruptcy Code, seeking relief under Chapter 11. [2] In
one of the 40-plus motions filed on Saturday, Delphi requested joint
administration [3] to allow … Read the rest