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Washington, D.C. 20549

(Name of Issuer)

(Title of Class of Securities)

(CUSIP Number)

(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)

(Date of Event Which Requires Filing of this Statement)

 

 

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Item 1. Security and Issuer.

     This statement on Schedule 13D relates to the Common Stock, par value $0.01 per share (the “Common Stock”), of Delphi Corporation, a Delaware corporation (“Delphi” or the “Issuer”). The securities reported herein were previously reported on a Schedule 13G filed by the Reporting Persons (defined below) on December 4, 2006, as amended by Amendment Number 1 to such Schedule 13G filed on December 12, 2006 (collectively, the “Schedule 13G”). The principal executive offices of Delphi are located at 5725 Delphi Drive, Troy, Michigan 48098.

     The information set forth in the Exhibits to this Schedule 13D is hereby expressly incorporated herein by reference, and the responses to each item of this Schedule 13D are qualified in their entirety by the provisions of such Exhibits. Unless otherwise indicated, all capitalized terms shall have the meanings ascribed to them in the Schedule 13G, and unless otherwise amended hereby, all information previously filed remains in effect.

Item 2. Identity and Background.

     (a) This statement is filed by and on behalf of each of the following persons (collectively, the “Reporting Persons”): (i) Highland Capital Management L.P., a Delaware limited partnership (“Highland Capital”); (ii) Strand Advisors, Inc., a Delaware corporation (“Strand”); (iii) James D. Dondero; (iv) Highland Credit Strategies Fund, a Delaware trust (“HCF”); (v) Highland Multi-Strategy Onshore Master SubFund, L.L.C., a Delaware limited liability company (“SubFund”); and (vi) Highland Multi-Strategy Master Fund, L.P., a Bermuda limited partnership (“Master Fund”). Information is also given with respect to Highland Multi-Strategy Fund GP, L.P., a Delaware limited partnership (“Multi-Strategy GP”), and Highland Multi-Strategy Fund GP, L.L.C., a Delaware limited liability company (“Multi-Strategy GP LLC”). The directors and executive officers of Strand and SubFund are named on Appendix 1 hereto.

     Each of the Reporting Persons declares that neither the filing of this statement nor anything herein shall be construed as an admission that such person is, for the purposes of Section 13(d) or 13(g) of the Act or any other purpose, the beneficial owner of any securities covered by this statement.

     The proposal referenced in Item 4 to this Schedule 13D was made by Highland Capital and certain of its affiliates or other related entities as may be designated. Highland Capital has not determined if any of the Reporting Persons will provide the financing to support the Proposal, but it has been determined that HCF will not provide any of the financing. Therefore, the Reporting Persons expressly disclaim membership in a group with respect to the issuer or securities of the issuer for the purposes of Section 13(d) or 13(g) of the Act. Each of the Reporting Persons declares that neither the filing of this statement nor anything herein shall be construed as evidence that such person is, for the purposes of Section 13(d) or 13(g) of the Act or any other purpose, (i) acting (or has agreed or is agreeing to act together with any other person) as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding, or disposing of securities of the Issuer or otherwise with respect to the Issuer or any securities of the Issuer or (ii) a member of any group with respect to the Issuer or any securities of the Issuer.

     (b) The address of the principal business office of each of the Reporting Persons is Two Galleria Tower, 13455 Noel Road, Suite 800, Dallas, Texas 75240.

     (c) The principal business of Highland Capital, a registered investment adviser, is acting as investment adviser and/or manager to other persons, including HCF and Master Fund. Highland Capital may be deemed to beneficially own shares owned and/or held by and/or for the account of and/or for the benefit of other persons, including HCF, Master Fund and SubFund. The principal business of Strand is serving as the general partner of Highland Capital. Strand may be deemed to beneficially own shares owned and/or held by and/or for the account of and/or for the benefit of Highland Capital. The principal business of Mr. Dondero is serving as the President of

HCF and the President and a director of Strand. Mr. Dondero may be deemed to beneficially own shares owned and/or held by and/or for the account of and/or for the benefit of Strand. The principal business of HCF is to act as a registered investment company. The principal business of SubFund is purchasing, holding and selling securities for investment purposes. The principal business of Master Fund is serving as the managing member of SubFund. Master Fund may be deemed to beneficially own shares owned and/or held by and/or for the account of and/or for the benefit of SubFund.

     (d) and (e) During the last five years, none of the Reporting Persons, nor, to the knowledge of the Reporting Persons, any of Multi-Strategy GP, Multi-Strategy GP LLC, the persons controlling the Reporting Persons, or the directors or executive officers of Strand and SubFund, has been convicted in a criminal proceeding or was a party to a civil proceeding, in either case of the type specified in Items 2(d) or (e) of Schedule 13D.

		(f)		Highland Capital Management, L.P. – Delaware
				Strand Advisors, Inc. – Delaware
				James Dondero – United States of America
				Highland Credit Strategies Fund – Delaware
				Highland Multi-Strategy Onshore Master SubFund, L.L.C. – Delaware
				Highland Multi-Strategy Master Fund, L.P. – Bermuda

Item 3. Source and Amount of Funds or Other Consideration.

     The Reporting Persons have acquired an aggregate of 49,551,415 shares of Common Stock (the “Shares”), which are reported herein, in open market transactions for an aggregate purchase price of approximately $108,876,176.61 using a combination of funds from accounts managed by Highland Capital and Mr. Dondero’s personal funds to purchase the shares owned in his individual capacity.

Item 4. Purpose of Transaction.

     The Reporting Persons acquired the Shares for investment purposes. However, on December 18, 2006, the Reporting Persons learned that Appaloosa Management L.P., Cerberus Capital Management, L.P., and Harbinger Capital Partners Master Fund I, Ltd., as well as Merrill Lynch & Co. and UBS Securities LLC made a proposal for an equity purchase and commitment agreement to invest up to $3.4 billion in preferred and common equity in the reorganized Delphi to support Delphi’s transformation plan announced on March 31, 2006 and its plan of reorganization framework agreement filed on December 18, 2006 (the “Appaloosa/Cerberus Proposal”). As a result, Highland Capital has re-evaluated its investment intent with respect to the securities reported herein and no longer holds the Common Stock for investment purposes only. Highland Capital will file its opposition to the Appaloosa/Cerberus Proposal with the United States Bankruptcy Court for the Southern District of New York on or before January 2, 2007. In addition, on behalf of itself, certain of its affiliates and related entities, Highland Capital made a proposal to the Board of Directors of Delphi on December 21, 2006. Such proposal is attached hereto as Exhibit 1 (the “Proposal”).

Equity Purchase and Rights Offering

     The Proposal provides that Highland Capital will purchase up to $4.7 billion of new common stock, par value $0.01 per share (the “Common Stock”), of the reorganized Delphi to support the transformation plan Delphi announced on March 31, 2006 and a plan of reorganization supported by Highland Capital to be filed by the Company and confirmed in Delphi’s Chapter 11 Case No. 05-44481 (the “Plan”).

     The Proposal also provides that Delphi must agree to conduct a Rights Offering (the “Rights Offering”) by offering and selling shares of its Common Stock to its existing stockholders on the terms and subject to the conditions set forth in an Equity Purchase and Commitment Agreement (the “New Equity Agreement”) to be entered into by Delphi and Highland Capital. Highland Capital also agreed to purchase any shares of Common

Stock that are unsubscribed in the Rights Offering up to $4.7 billion (the “Backstop”) and receive a fee in the amount of 2.5% of the Rights Offering (the “Backstop Fee”). Pursuant to the Proposal and subject to existing laws, all existing holders of at least 0.5% of the currently issued and outstanding shares of Common Stock of Delphi will be given the option to participate in the Backstop and earn their pro-rata share of the Backstop Fee. The Rights Offering will provide (i) that the existing stockholders will receive the right to acquire new common stock of the Company (the “Rights”) either as part of confirmation of a Plan or subject to the effectiveness of a registration statement to be filed with the Securities and Exchange Commission, (ii) that the Rights Offering be subject to prior approval of the Bankruptcy Court and satisfaction of certain other terms and conditions similar in scope to those set forth in the New Equity Agreement and (iii) that the Rights will entitle the eligible stockholders to purchase their pro rata share of the Common Stock at a discount to the anticipated business enterprise value of the reorganized Company and would be transferable by the original eligible Stockholders.

     No preferred stock in the reorganized Delphi will be offered or purchased pursuant to the Proposal by Highland.

Plan of Reorganization Framework

     The Proposal also provides that Highland Capital will enter into a Plan Framework Support Agreement (the “New Plan Agreement”), which will provide that (i) all senior secured debt will be refinanced and paid in full and all allowed administrative and priority claims will be paid in full; (ii) trade and other unsecured claims and unsecured funded debt claims will be reinstated pursuant to terms satisfactory to Highland Capital or be satisfied in full with cash; (iii) in exchange for GM’s financial contribution to Delphi’s transformation plan, and in satisfaction of GM’s claims against Delphi, GM will receive 7.0 million shares of Common Stock in the reorganized Delphi, $2.63 billion in cash, and an unconditional release of any alleged estate claims against GM; and (iv) all subordinated debt claims (“Preferred Holders”) will be satisfied in full with cash.

     As a result of the Plan and the Rights Offering, holders of existing equity securities in Delphi will effectively receive 3.0 million out of a total of 135.3 million shares of Common Stock in the reorganized Delphi, at a deemed value of $45 per share, and rights to purchase approximately 125.3 million shares of Common Stock in the reorganized Delphi for $4.7 billion at a deemed exercise price of $37.23 per share (subject to the Rights Offering becoming effective and certain other conditions). In the event Highland Capital determines to reduce the Rights Offering to $4.2 billion, existing equity holders will receive rights to purchase approximately 115.3 million shares of common stock in the reorganized Delphi for $4.2 billion at a deemed exercise price of $36.56 per share.

Refinance of DIP Facility

     Pursuant to the New Plan Agreement, Highland Capital will also support Delphi with its announced efforts to refinance successfully in full its existing $2.0 billion DIP facility and $2.5 billion prepetition revolver and term loan facilities with JPMorgan Chase Bank, N.A. and other lenders as announced by the Company on December 18, 2006.

Improved Corporate Governance Structure

     Because there will be no preferred stock possessing veto rights in the reorganized Delphi and there will be no sale of control pursuant to the Proposal, the common equity holders will have corporate governance protection following the confirmation of the Plan. The executive management team as announced on December 18, 2006 will be left in place post-confirmation. Highland Capital will also accept the proposal that Delphi will be governed by a twelve (12) member Board of Directors, ten (10) of whom would be independent directors and two (2) of whom would be the new Executive Chairman and a new Chief Executive Officer and President.

     However, with respect to the appointment of post-confirmation directors, a board selection panel of six members will be created to choose the members of the reorganized Delphi board (the “Panel”). The Panel will consist of Highland Capital and a maximum of two other significant stockholders of the reorganized Delphi, one representative from GM, one management representative, and one representative from the equity committee.

Pension Funding

     Highland Capital will also support Delphi’s earlier commitment to preserve its salaried and hourly defined benefit U.S. pension plans and will include an arrangement to fund approximately $3.5 billion of its pension obligations.

     This Schedule 13D is not a solicitation for or against votes on the Issuer’s plan of reorganization. No disclosure statement has been approved by the Bankruptcy Court for the Issuer’s plan of reorganization.

     In addition to the Proposal discussed herein, the Reporting Persons may engage in communications with one or more stockholders, one or more statutory committees of the Issuer and any members thereof, and officers or directors of the Issuer, including discussions regarding the Proposal, the Plan, and the pending Appaloosa/Cerberus Proposal , along with the Issuer’s operations and strategic direction and ideas that, if effected, could result in, among other things: (a) the acquisition by the Reporting Persons of additional securities of the Issuer, or the disposition of securities of the Issuer; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; (d) changes in the present board of directors or management of the Issuer; (e) a material change in the present capitalization or dividend policy of the Issuer; (f) any other material change in the Issuer’s business or corporate structure; (g) changes in the Issuer’s certificate of incorporation or bylaws or other actions which may impede the acquisition of control of the Issuer by any person; (h) causing any class of the Issuer’s securities to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended; or (j) any action similar to those enumerated above. Except to the extent that the foregoing may be deemed to be a plan or proposal, none of the Reporting Persons currently has any plans or proposals that relate to or would result in any of the actions specified in clause (a) through (j) of Item 4 of Schedule 13D. The Reporting Persons reserve the right, based on all relevant factors and subject to applicable law, at any time and from time to time, to review or reconsider their position, change their purpose, take other actions (including actions that could involve one or more of the types of transactions or have one or more of the results described in paragraphs (a) through (j) of Item 4 of Schedule 13D) or formulate and implement plans or proposals with respect to any of the foregoing.

Item 5. Interest in Securities of the Issuer.

     (a) As of December 21, 2006, (i) Highland Capital may be deemed to beneficially own 44,256,915 shares of Common Stock, which represents approximately 7.9%^1,2 of the outstanding Common Stock; (ii) Strand may be deemed to beneficially own 44,256,915 shares of Common Stock, which represents approximately 7.9%^1,2 of the outstanding Common Stock; (iii) James D. Dondero may be deemed to beneficially own 49,551,415¹ shares of Common Stock, which represents approximately 8.8%¹ of the outstanding Common Stock; (iv) HCF may be

deemed to beneficially own 3,653,116 shares of Common Stock, which represents approximately 0.7%¹ of the outstanding Common Stock; (v) SubFund may be deemed to beneficially own 1,619,667 shares of Common Stock, which represents approximately 0.3%¹ of the outstanding Common Stock; and (vi) Master Fund may be deemed to beneficially own 1,619,667 shares of Common Stock, which represents approximately 0.3%¹ of the outstanding Common Stock.

(b)

		Sole				Shared				Sole				Shared
		Voting				Voting				Dispositive				Dispositive
		Power				Power				Power				Power
Highland Capital Management, L.P.			38,984,132				5,272,783				38,984,132				5,272,783
Strand Advisors, Inc.			38,984,132				5,272,783				38,984,132				5,272,783
James D. Dondero			5,094,500				44,456,915				5,094,500				44,456,915
Highland Credit Strategies Fund			0				3,653,116				0				3,653,116
Highland Multi-Strategy Onshore Master SubFund, L.L.C.			0				1,619,667				0				1,619,667
Highland Multi-Strategy Master Fund, L.P.			0				1,619,667				0				1,619,667

     (c) Except as set forth below, there have been no transactions in the Common Stock by any of the Reporting Persons during the past sixty days.

          During the past sixty days, the Reporting Persons affected the following purchases of shares of Common Stock in open market transactions:

								Number of
Reporting Person		Date		Price				Shares
Highland Capital		10/19/2006			2.08				200,000
Highland Capital		10/19/2006			2.07				200,000
Highland Capital		10/19/2006			2.06				700,000
Highland Capital		10/20/2006			2.402				200,000
Highland Capital		10/20/2006			2.374				200,000
Highland Capital		10/20/2006			2.384				200,000
Highland Capital		10/23/2006			2.595				100,000
Highland Capital		10/23/2006			2.565				22,500
SubFund		10/25/2006			2.775				500,000
SubFund		10/25/2006			2.779				100,000
SubFund		10/26/2006			2.902				215,000
SubFund		10/26/2006			2.9				188,000
Highland Capital		10/26/2006			2.902				815,000
Highland Capital		10/26/2006			2.9				692,000
HCF		10/26/2006			2.902				270,000
HCF		10/26/2006			2.9				220,000
Highland Capital		10/27/2006			2.76				150,000
Highland Capital		10/27/2006			2.829				254,000
HCF		10/27/2006			2.76				50,000
HCF		10/27/2006			2.829				83,000

								Number of
Reporting Person		Date		Price				Shares
Highland Capital		10/30/2006			2.816				750,000
Highland Capital		10/30/2006			2.844				300,000
HCF		10/30/2006			2.816				250,000
HCF		10/30/2006			2.844				100,000
Highland Capital		11/2/2006			2.65				300,000
Highland Capital		11/2/2006			2.647				200,000
Highland Capital		11/8/2006			2.202				725,000
Highland Capital		11/8/2006			2.214				250,000
Highland Capital		11/8/2006			2.208				300,000
Highland Capital		11/8/2006			2.2				50,000
Highland Capital		11/9/2006			2.36				100,000
Highland Capital		11/9/2006			2.346				125,000
Highland Capital		11/13/2006			2.369				2,300,000
Highland Capital		11/13/2006			2.358				250,000
Highland Capital		11/13/2006			2.36				150,000
Highland Capital		11/14/2006			2.301				85,000
Highland Capital		11/14/2006			2.29				50,000
Highland Capital		11/14/2006			2.278				125,000
Highland Capital		11/14/2006			2.314				180,000
Highland Capital		11/14/2006			2.31				50,000
Highland Capital		11/14/2006			2.3				25,000
Highland Capital		11/15/2006			2.283				700,000
Highland Capital		11/15/2006			2.273				430,000
Highland Capital		11/16/2006			2.46				238,065
Highland Capital		11/16/2006			2.459				544,000
Highland Capital		11/16/2006			2.29				250,000
Highland Capital		11/17/2006			2.39				400,000
Highland Capital		11/17/2006			2.422				1,000,000
Highland Capital		11/17/2006			2.4				152,500
Highland Capital		11/20/2006			2.257				600,000
Highland Capital		11/20/2006			2.271				700,000
Highland Capital		11/21/2006			2.179				500,000
Highland Capital		11/21/2006			2.189				481,750
Highland Capital		11/22/2006			2.204				600,000
Highland Capital		11/22/2006			2.215				70,000
Highland Capital		11/27/2006			2.102				1,200,000
Highland Capital		11/27/2006			2.08				100,000
Highland Capital		11/28/2006			2.215				850,000
Highland Capital		11/29/2006			2.25				1,821,500
Highland Capital		11/29/2006			2.278				80,300
Highland Capital		12/4/2006			2.624				975,000
Highland Capital		12/4/2006			2.64				750,000
HCF		12/4/2006			2.624				325,000
HCF		12/4/2006			2.64				250,000
Highland Capital		12/5/2006			2.805				1,200,000
Highland Capital		12/5/2006			2.82				187,500
Highland Capital		12/5/2006			2.855				150,000

								Number of
Reporting Person		Date		Price				Shares
Highland Capital		12/5/2006			2.772				37,125
HCF		12/5/2006			2.805				400,000
HCF		12/5/2006			2.82				62,500
HCF		12/5/2006			2.855				50,000
HCF		12/5/2006			2.772				12,375
Highland Capital		12/6/2006			2.986				393,750
Highland Capital		12/6/2006			2.995				225,000
Highland Capital		12/6/2006			3				150,600
HCF		12/6/2006			2.986				131,250
HCF		12/6/2006			2.995				75,000
HCF		12/6/2006			3				50,200
Highland Capital		12/7/2006			2.999				157,500
Highland Capital		12/7/2006			3				693,750
Highland Capital		12/7/2006			2.995				187,500
HCF		12/7/2006			2.999				52,500
HCF		12/7/2006			3				231,250
HCF		12/7/2006			2.995				62,500
Highland Capital		12/8/2006			3.266				452,625
Highland Capital		12/8/2006			3.185				180,000
HCF		12/8/2006			3.266				150,875
HCF		12/8/2006			3.185				60,000
SubFund		12/12/2006			3.09				16,667
Highland Capital		12/12/2006			3.09				16,667
HCF		12/12/2006			3.09				16,666
Highland Capital		12/13/2006			3.252				4,000,000
SubFund		12/13/2006			3.252				600,000
Highland Capital		12/14/2006			3.255				125,000
Highland Capital		12/18/2006			2.713				1,000,000
Highland Capital		12/18/2006			2.739				833,333
Highland Capital		12/18/2006			2.593				1,000,000
Highland Capital		12/18/2006			2.621				916,667
HCF		12/18/2006			2.713				200,000
HCF		12/18/2006			2.739				166,667
HCF		12/18/2006			2.593				200,000
HCF		12/18/2006			2.621				183,333

     (d) Not applicable.

     (e) Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

     On December 21, 2006, Highland Capital delivered the Proposal to the Issuer, a copy of which is attached hereto as Exhibit 2.

     Other than as provided herein, there are no contracts, arrangements, understandings or relationships between the Reporting Persons or any other person with respect to the securities of the Issuer.

Item 7. Material to be Filed as Exhibits.

Exhibit 1		Letter from Highland Capital Management, L.P., dated December 21, 2006, to the Board of Directors of Delphi Corporation.
Exhibit 2		Joint Filing Agreement, by and among the Reporting Persons, dated as of December 21, 2006.

SIGNATURES

     After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this Schedule 13D is true, complete and correct.

Date: December 22, 2006

		Highland Credit Strategies Fund
		By:		/s/ James Dondero
				Name: James Dondero
				Title: President
		Highland Capital Management, L.P.
		By:		Strand Advisors, Inc., its general partner
				By:		/s/ James Dondero
						Name: James Dondero
						Title: President
		Strand Advisors, Inc.
		By:		/s/ James Dondero
				Name: James Dondero
				Title: President
		James Dondero
				/s/ James Dondero

		Highland Multi-Strategy Onshore Master SubFund, L.L.C.
		By:		Highland Multi-Strategy Master Fund, L.P., its
				managing member
		By:		Highland Multi-Strategy Fund GP, L.P., its general
				partner
		By:		Highland Multi-Strategy Fund GP, L.L.C., its general
				partner
		By:		Highland Capital Management, L.P., its sole member
		By:		Strand Advisors, Inc., its general partner
				By:		/s/ James Dondero
						Name: James Dondero
						Title: President
		Highland Multi-Strategy Master Fund, L.P.
		By:		Highland Multi-Strategy Fund GP, L.P., its general
				partner
		By:		Highland Multi-Strategy Fund GP, L.L.C., its general
				partner
		By:		Highland Capital Management, L.P., its sole member
		By:		Strand Advisors, Inc., its general partner
				By:		/s/ James Dondero
						Name: James Dondero
						Title: President

EXHIBITS

Exhibit 1		Letter from Highland Capital Management, L.P., dated December 21, 2006, to the Board of Directors of Delphi Corporation.
Exhibit 2		Joint Filing Agreement, by and among the Reporting Persons, dated December 21, 2006.

APPENDIX 1

     The name of each director and executive officer of Strand and SubFund is set forth below. The business address of each person listed below is Two Galleria Tower, 13455 Noel Road, Suite 1300, Dallas, Texas 75240. Each person identified below is a citizen of the United States of America. The present principal occupation or employment of each of the listed persons is set forth below. During the past five years, none of the individuals listed below has been convicted in a criminal proceeding or been a party to a civil proceeding, in either case of the type specified in Items 2(d) or (e) of Schedule 13D.

		Present Principal Occupation or Employment
Name		and Business Address (if applicable)
Strand Advisors, Inc.
James Dondero, Director		President
Mark Okada		Executive Vice President
Patrick H. Daugherty		Secretary
Todd A. Travers		Assistant Secretary
J. Kevin Ciavarra		Assistant Secretary
Michael Minces		Assistant Secretary
James Plohg		Assistant Secretary
Brian Lohrding		Treasurer
Highland Multi-Strategy Onshore Master SubFund, L.L.C.
James Dondero, Director		President
Mark Okada		Executive Vice President
Patrick H. Daugherty		Secretary
Todd A. Travers		Assistant Secretary
J. Kevin Ciavarra		Assistant Secretary
Michael Minces		Assistant Secretary
James Plohg		Assistant Secretary
Brian Lohrding		Treasurer