Delphi Bankruptcy

[Conor Ryan]

Ok, there appears to be more confusion on the definition of what exactly Chapter 11 Bankruptcy is, so here what is it is:

Chapter 11 is a state that is declared by corporations to protect them from creditors, what it says is that they spent more money then they actually have, and the company has the intent to stay in business and not liquidate all of it's assets and go out of business (Liquidation is Chapter 7 bankruptcy). What happens now is there is a reorganization of how the company intends to payoff its contracts and other debts. After this case is pleaded to the court they supervise they meet the needs and then potentially can relieve the creditors some or even all, so the company has time to get back on it's feet and doesn't start an uphill battle.

The Chapter 11 Bankruptcy code is being changed on October 17th, to become more creditor friendly, right now its easier on the corporations. Thats partially why Delphi declared it now rather than later.

Sooo....in the famous words of Douglas Adams, Don't Panic. My dad said (this is coming from an Financial Advisor) that a company with the product reputation of Delphi surely will be able to make its way back.

More reading

Interesting Fact: Between Aug. 31 and Saturday, Delphi dropped 1.27 Billion Dollars off of its Debt (and 0.6 Billion of its Assets) thats pretty good for 6 weeks.

Interesting Fact 2: Worldcom had the worlds largest Chapter 11 Filing, listing 103 Billion in Debt

Interesting Fact 3 (theres a lot): Delphi has the largest amount of assets ever declared by a company with a Chapter 11 Filing

[gburlison]

Just to help some people understand what can happen after filing Chapter 11.

Kmart filed Chapter 11 in early 2002, emerged from bankruptcy in May 2003, and announced it would buy/merge with Sears in Nov 2005. While this is listed as a merger, it is Kmart that is bailing out Sears.

The point is that filing for Chapter 11 should help Delphi financially in the long run. There is still a possiblity for some short-term pain. As Delphi makes changes and tries to be more competitive, the pain most likely will be felt by its workers. How it will effect the support that Delphi gives to FIRST teams is unknown. Personally, If I were connected with a FIRST team that is supported by Delphi, I would rather that the team do without Delphi money instead of someone getting laid off.

Just my .02

Originally Posted by gburlison

Just to help some people understand what can happen after filing Chapter 11.

Kmart filed Chapter 11 in early 2002, emerged from bankruptcy in May 2003, and announced it would buy/merge with Sears in Nov 2005. While this is listed as a merger, it is Kmart that is bailing out Sears.

Yeah, I'm still alive believe it or not....


Anyway, Chapter 11 isn't necessarily a bad thing. It's not a good thing, but there definitely are much worse alternatives. Most companies that file for Chapter 11 come out stronger [Example: Kmart], as shown in the above quote.

In fact, the company my dad works for in Kokomo filed for Chapter 11. Very few if any lost their jobs. Company operations and the way they did things were examined and changed. As a result, the company came out of bankruptcy 6 months earlier then expected and is currently stronger then ever. As people have said in above posts, just sit back and wait. There is no purpose in speculating.

[Thomas P]

They just got approval from a judge for a $950M loan to continue operations... still can't really determine what's going to happen based on that. They could be like "Ok, we aren't going to be shutdown so we'll continue with stuff like before" or "Ok, we were close to getting shutdown, so we're going to be a lot more conservative with our spending." I know that either way, the Delphi teams (with or without Delphi) will be at competition so I look forward to seeing all of you there.

[Erin Rapacki]

Originally Posted by MikeDubreuil

I just wanted to say to the employees of Delphi... good luck and that I hope there's a good outcome for you. Your generosity in with your time and dollars has been exemplary for the entire FIRST organization.

I agree, and I hope all goes well for the Delphi employees who also serve as FIRST mentors. If this unfortunate situation results in a pink-slip for any FIRST mentor, I hope they feel free to reach out to other mentors with their situation (or vice versa). Another job might be just a phone-call-to-a-FIRST-friend away.

[AmyPrib]

We had a company meeting this morning. Chapter 11 does not mean we can't pay our suppliers. In fact, we have money to pay our suppliers and at this point are not worried about that at all. Our suppliers and customers have also managed to lower their anxiousness on our ability to deliver, so they have some confidence in us. This is what we were told as FACTS from the many meetings and phone calls between the executives. If you have not been in those calls or have not talked to someone directly involved in those calls, it would be appreciated to keep the suspicion, rumors, and opinions on what it all means out of topic until more FACTS are known.

It will be up to the judges as to what happens in various aspects. Until those FACTS are known and announced by direct sources, nobody knows exactly what will happen. Our management (executives) seem to be very open and blunt with us as to what is happening, with the information that they KNOW at this point. It is not for any of us that even work here, let alone those who are just guessing, to say what the near future holds.

Do not speculate on the gloom and doom of Kokomo as a city or the companies within it. You cannot say "and if Chrysler follows", you have no clue. I am disappointed in a few of the posts of this nature and the "I think, I heard" statements. There are numerous other companies that file Chapter 11 and come out of it just fine. There are obviously compromises and negotiations along the way, but in the end, the company doesn't typically fold.

There's a Kokomo newspaper that had a huge headline today "BANKRUPT". That is entirely incorrect!! That shows a lack of understanding by our own news sources, and just points out how you cannot believe everything you "hear". It shows what happens when people write/report before they get the facts.

Sorry, had to get that out. I really don't think we can speculate on the future funding of Delphi teams either, until it becomes FACT that teams actually start losing their sponsorship due to this reorganization. My guess is that most Delphi teams have been prepared for this and have thought about it. So, even if there is some loss, they are smart enough to find a way to carry on... Let's focus on the positive people.