Delphi or Megarebound ?

Under the Bankruptcy Code, equity holders are the lowest ranked creditors and can't receive any recovery unless all other creditors in the case are paid in full, so appointment of an official committee solely to represent equity interests is considered an unusual measure. Official committees in Chapter 11 cases have their legal fees paid by the debtor company so they regularly face opposition.

U.S. Bankruptcy Judge Robert Drain said if he does decide to appoint an equity committee, he may not include Appaloosa, noting he was concerned by Tepper's recent efforts to pressure Delphi. However, Drain did rule against a request by Delphi seeking to force Tepper to testify at the hearing.

The hearing on Appaloosa's motion is to resume Wednesday afternoon with further witness testimony.

Thomas Lauria, an attorney for Appaloosa, said the fund would expect any equity panel that is appointed to closely monitor the case and be involved, in particular, in negotiations or litigation involving the relationship between Delphi and its former parent General Motors Corp. (GM) and whether GM would have any responsibility for Delphi's labor-related costs.

Shares of GM were up earlier Tuesday following reports that the company is closing in on an important labor deal with Delphi and the United Auto Workers union that would provide for early retirement for thousands of employees. The deal could save Delphi and GM billions of dollars on labor costs.

-By Christopher Scinta, Dow Jones Newswires; 201-938-5218; chris.scinta@ dowjones.com

 (END) Dow Jones Newswires
 03-21-061812ET
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