Delphi May Have to Liquidate

IRL sponsor Delphi Corp., could be forced to liquidate its U.S. operations if the automaker also seeks bankruptcy. Delphi, based in Troy, Michigan, is struggling to emerge from a bankruptcy case that began in 2005. It's already relying on Detroit-based GM to contribute about $10.6 billion to its restructuring by assuming pensions and amending contracts.

GM, the largest U.S. automaker, last week reported a $4.2 billion third-quarter operating loss and said it may run short of cash by the end of the year unless the auto market improves or it raises capital.

“If GM fails, it's likely the Delphi reorganization fails, and Delphi converts to a case under Chapter 7 — a liquidation,'' Nancy Rapoport, a law professor at the University of Nevada-Las Vegas, said yesterday in an e-mail. “For the creditors of Delphi, this of course isn't optimal, and the usual issues in Chapter 7, determining the liquidation value of the company, will apply.''