Hedge Funds to Play Key Roles in Dana Case

NEW YORK (HedgeWorld.com)--Deirdre A. Martini, U.S. trustee, has named P. Schoenfeld Asset Management LLC, a prominent hedge fund manager, to the committee of unsecured creditors in the Chapter 11 proceedings concerning Dana Corp., the Ohio-based auto parts manufacturer that filed for bankruptcy protection March 3.

A trustee will usually name to such a committee the seven entities, of those willing to serve, that hold the seven largest claims against the debtor, although she may also try to ensure that the different classes of claim (tort judgments, bonds, trade debts, etc.) are represented.

The committee is central to subsequent proceedings, hammering out a plan of reorganization that will in time be submitted to the court for approval.

Aside from P. Schoenfeld, the new committee includes: Wilmington Trust Co., New York; Judy Scott, executrix for the estate of Matthew Scott, Belfair, Wash.; Sypris Technologies Inc., Louisville, Ky.; Metaldyne Co. LLC, Plymouth. Mich.; Eaton Corp., Cleveland; and the United Automobile Workers, Detroit.

P. Schoenfeld is an activist fund manager that played an important role, for example, in pressing successfully for a Weyerhaeuser-Willamette merger in 2002.

At least one other hedge fund firm will likely be in the thick of the coming proceedings over Dana--although it will be on the equity, rather than on the debt, side of contentions. That is Appaloosa Partners Inc., of Chatham, N.J., an event-driven firm that has been pressing in another matter before the New York bankruptcy court to get a committee established to represent Delphi's holders of equity. It may be committing itself to similar struggle in this matter, because it has expanded its share of the equity in Dana since the filing.

Appaloosa, run by Goldman Sachs alumnus David Tepper, said in a filing with the Securities and Exchange Commission March 6 that it controls about 22.5 million shares of Dana's equity, or nearly 15%.

At the end of the third quarter, 2005, Dana reported total assets of approximately US$7.9 billion and liabilities of approximately US$4.7 billion.

CFaille@HedgeWorld.com

Contact Bob Keane with questions or comments at bkeane@investmentadvisor.com.

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