The U.S. Trustee on Wednesday objected to auto parts maker Delphi Corp.'s (DPHIQ.PK: Quote, Profile , Research) proposed $3.4 billion bankruptcy-emergence agreement with an investor group led by Cerberus Capital Management LP and Appaloosa Management LP.
The trustee's response follows earlier objections by a committee representing stockholders, a union that represents Delphi hourly workers and Highland Capital Management LP, which has proposed an alternate $4.7 billion offer.
Delphi, which filed for bankruptcy protection in October 2005, disclosed the proposed investment by the Cerberus and Appaloosa-led group Dec. 18 and an outline for treating various creditors. Highland made its proposal Dec. 21.
The agreement calls for millions of dollars of fees and expenses to professionals for the investors funding Delphi's emergence without oversight, the trustee, Diana Adams, said in court papers.
The framework agreement also appears to dictate many terms of the reorganization, circumventing the disclosure statement and confirmation approval processes, and restricts participation in plan negotiations, Adams said.
Bankruptcy Judge Robert Drain has set a hearing for Jan. 11 in the U.S. Bankruptcy Court for the Southern District of New York to consider whether to approve the equity investment and framework agreements.
Troy, Michigan-based Delphi was spun off by General Motors Corp. (GM.N: Quote, Profile , Research) in 1999. It plans to cut thousands of workers in the United States, 21 of 29 U.S. union plants and exit several business lines to reorganize its operations.
