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Platinum Deal for Delphi Delayed Again

The auction for assets of bankrupt auto parts maker Delphi was delayed again by the New York bankruptcy court -- from yesterday (July 21) to Friday. Beverly Hills-based Platinum Equity, the buyout firm that now owns the Union-Tribune, is bidding to take over Delphi with a huge subsidy from General Motors, which is controlled by the U.S. government. Creditors, who stand to make 20 cents on the dollar, have called it a sweetheart deal. Court documents indicate that creditors have voted against the plan: of seventeen classes of creditors, ten voted against it, two for it and five didn't vote, according to the Associated Press. Creditors may put together a bid for Delphi on Friday.

Says Reuters, quoting sources, "Talks between Delphi and its lenders have been progressing toward a compromise deal that would supersede a bid by private equity firm Platinum Equity favored by GM and the U.S. Treasury."

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The auction for assets of bankrupt auto parts maker Delphi was delayed again by the New York bankruptcy court -- from yesterday (July 21) to Friday. Beverly Hills-based Platinum Equity, the buyout firm that now owns the Union-Tribune, is bidding to take over Delphi with a huge subsidy from General Motors, which is controlled by the U.S. government. Creditors, who stand to make 20 cents on the dollar, have called it a sweetheart deal. Court documents indicate that creditors have voted against the plan: of seventeen classes of creditors, ten voted against it, two for it and five didn't vote, according to the Associated Press. Creditors may put together a bid for Delphi on Friday.

Says Reuters, quoting sources, "Talks between Delphi and its lenders have been progressing toward a compromise deal that would supersede a bid by private equity firm Platinum Equity favored by GM and the U.S. Treasury."

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Comments
4

This is how the rich keep getting richer and us middle class schmucks have to foot the bill.

July 22, 2009

Response to post #1: You mean that since you are subsidizing GM (through 60% ownership), you don't want to subsidize Platinum Equity, too? Or Delphi? C'mon, be a good sport. Billionaires will be billionaires. They do it with OPM -- Other People's Money. Ours. Best, Don Bauder

July 22, 2009

This is how the rich keep getting richer and us middle class schmucks have to foot the bill.

By sanman

Exactly.

This type of deal reminds me of the RTC back in the late 80's and early 90's. They had taken over billions of dollars in commercial real estate from 2000 failed banks and thrifts.

The head of the RTC, Bill Seidman, started selling off the commercial REO assets at 10-30 cents on the dollar by selling the properties in huge pools of $50-$100 million, or more, which accounted for the low prices.

By idiot Siedman selling the REO properties off in huge pools like this three things happened;

1) just a handful of Wall Street investment banks and REITS had the deep pocket cash to bid or purchase on these pools,

2) because the pools were so large and just a handful of deep pockets could bid the price went down to pennies on the dollar because there was no competitive bidding, and

3) the taxpayers took billions of losses in the shorts, while the priviledged few on Wall street made billions off the backs of the poor and middle class when they "flipped" these properties individually after they gained control-many times doing a "double escrow" where the property was sold at a profit of double or triple the amount paid to the RTC the second the Wall Street bank took title to it.

These Wall Street investment bankers were no super financial guru's-they were just getting a deal no one else had the same opportunity to get.

This is basically what the gov is doing with Delphi.

That is government for you-full of idiots at all levels. It has been going on like this since time began.

July 22, 2009

Response to post #3: It's not that government bureaucrats are idiots. It's that their bosses -- in the White House and Congress -- are crooks under the thumb of Wall Street. All these deals get set up so that Wall Street can rake in billions from taxpayers and the people never figure it out. In 2001, Joseph Stiglitz won the Nobel Prize for his work in markets with asymmetric information. Translated into simple prose, that means that some people know more than others do. And the ones who know little are the ones whose pockets get picked. The Securities and Exchange Commission permits prospectuses and other filings to be written in indecipherable prose. Wall Street knows what's afoot. Small investors don't -- and get fleeced while insiders get very rich. The press doesn't do its job by telling people how they are being screwed by asymmetric information, such as you describe in the S&L bailout. People say lawyers can't write. Balderdash. They know how to write in a way that nobody except their inner circle can comprehend. Best, Don Bauder

July 22, 2009

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