Deloitte & Touche LLP has agreed to pay more than $38 million to settle claims related to an accounting scandal at Delphi Corp., according to Grant & Eisenhofer, co-lead counsel for the lead plaintiffs.
The case stems from alleged accounting improprieties at the bankrupt auto-parts maker that forced the company in June 2005 to restate its financials for all fiscal periods dating back to 1999, according to the law firm. As CFO.com reported in October 2006, Delphi’s financial woes resulted in Securities and Exchange Commission charges against eight former finance executives, including the company’s CFO, controller, and treasurer.
The lead plaintiffs in the case are the Teachers’ Retirement System of Oklahoma, Public Employees’ Retirement System of Mississippi, Raiffeisen Kapitalanlage Gesellschaft mbH, and Stichting Pensioenfonds ABP. The other law firms representing the plaintiffs are Bernstein Litowitz Berger & Grossmann; Schiffrin Barroway Topaz & Kessler; and Nix, Patterson & Roach, according to Reuters.
The complaint was filed against Delphi, Deloitte — which was Delphi’s outside auditor — several of Delphi’s officers and directors, the banks that underwrote Delphi’s offerings of securities, and several other parties. Grant & Eisenhofer said that Delphi earlier settled claims worth more than $200 million.
Additional payments from Delphi’s insurance carriers and former banks bring the total settlement to more than $300 million, according to the law firm. The settlement must be approved by Judge Gerald Rosen in the Eastern District of Michigan.
Delphi filed for Chapter 11 in October 2005, and had planned to emerge from bankruptcy in the first quarter of 2008. However, in early December Delphi asked for three additional months to get its reorganization process under control. In papers filed with the U.S. Bankruptcy Court in New York, the company said that the credit crunch had made it much harder to obtain exit financing.
Delphi also wants to delay until the end of May the deadline to obtain creditors’ support for its reorganization plan.