UPDATED: Fairness Heart of Latest Delphi Hearing

A judge will listen to arguments regarding whether an ethics breach occurred in the Delphi Corp. reorganization as several defendants found out they were sued by the company some three years after the company's reorganization plan was approved. The case could set an example for whether companies going through bankruptcy proceedings can file cases secretly and sit on them, without serving defendants, for a lengthy period of time.

Auto-parts supplier Delphi, which declared bankruptcy in 2005 and exited in 2009, is suing various companies/vendors for a total that some estimate is as large as $500 million for taking payments outside the regular course of business. Many of the defendants are alleged in various suits to have taken payments from Delphi, which formerly was the largest supplier to General Motors during part of its pre-2005 run.

Some close to the case question the fairness in the lawsuits proceeding any further as the identities of the defendants was sealed for a significant period of time when the reorganization plans were coming to fruition, and the parties were not notified that a case would eventually involve them. Among other arguements are that companies defending themselves may have entirely new employees that don't know details or changed computer systems, figuring agreements were made and plans were confirmed and there was no sign of any future legal ramifications. There is also a question as to whether the suits meet a newly set Surpreme Court standards calling for more sepcifics and identification of underlying facts such as antecedent debt.

(Editor's Note: A follow-up of the July 23 hearing on the Delphi case will be featured in the July 29 edition of NACM's eNews).

Brian Shappell, NACM staff writer

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