According to The Wall Street Journal, a federal judge signaled Wednesday he may allow Delphi Corp. to pursue broader fraud claims against Appaloosa Management, after the hedge fund and other investors terminated a deal to invest $2.55 billion in the auto-parts maker.
Judge Robert Drain of the U.S. Bankruptcy Court in Manhattan said at a court hearing that his decision this summer to dismiss part of Delphi's fraud claim -- the part alleging a secret sabotage plot -- may have been wrong.
"I'm afraid I was wrong on this point," Judge Drain said Wednesday, referring to the dismissal, which he will now reconsider after reviewing additional filings.
Judge Drain asked Delphi and Appaloosa to file court papers by Oct. 21 about the issue.
Delphi, based in Troy, Mich., filed for bankruptcy three years ago. It was poised to exit Chapter 11 earlier this year thanks to a planned $2.55 billion equity investment by the Appaloosa-led group. The investment was the backbone of Delphi's exit plan, but the investors terminated the deal in April. Delphi, a former unit of General Motors Corp., is suing Appaloosa and the other investors to follow through with the $2.55 billion investment.
By Ed Coury, Senior Editor and Midwest Bureau Chief for the Wall Street Journal Radio Network, Dow Jones & Co., and a reporter for WWJ Newsradio 950. Portions of this report were published in The Wall Street Journal.
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