August 22, 2008 / 5:02 AM / 10 years ago

Highland Capital seeks to block Delphi loan

Aug 22 (Reuters) - Highland Capital Management LP is trying to prevent Delphi Corp DPHIQ.PK from borrowing an additional $300 million from former parent General Motors Corp (GM.N), court documents showed.

In court papers filed with the U.S. Bankruptcy Court in Manhattan on Wednesday, Highland Capital said Delphi’s North American operations “continue to lose staggering sums of money, and drag down the rest of the business.”

Highland Capital, a Delphi bondholder, said recoveries for unsecured creditors in the bankruptcy case were certain to be eroded by the financing.

“The Debtors’ continued willingness to operate a money-losing business that burns cash for the benefit of GM is beyond comprehension,” Highland said in the court papers.

Delphi and Highland Capital could not be immediately reached for comment.

Steven Cohen’s CR Intrinsic Investors LLC joined Highland in the objection, according to the court documents.

Earlier this month, Delphi said General Motors had agreed to increase its loan to Delphi by $300 million for a total of $950 million to shore up the supplier’s liquidity.

Delphi, which filed for bankruptcy protection in October 2005, has cut thousands of jobs and divested several business units in its reorganization. (Reporting by Ajay Kamalakaran in Bangalore; Editing by Anshuman Daga)

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