Bankruptcy

Another Loan to Own ? Delphi

By mcbride

One method for obtaining ownership of a company in bankruptcy is to make a Debtor in Possession loan and then, as part or all of the purchase price, agree to forgive repayment of that loan in exchange for buying the company or its assets.  This makes sense because the DIP loan would have to be paid in full by any purchaser of the debtor?s assets.  This just happened with the primary GM supplier, Delphi.  ?A group of hedge funds that provided [3.5 billion in] bankruptcy funding to Delphi Corp (DPHIQ.PK) on Monday won a high-stakes auction to take control of the auto parts supplier, scuttling a rival deal brokered by the Obama administration.?

 Here is a link to the full article: http://www.reuters.com/article/hedgeFundsNews/idUSLNE56R01D20090728

 Michael

Full post as published by Texas Lawyer Blog on July 29, 2009 (boomark / email).