Delphi Allowed to Negotiate With Unions on Pensions (Update1)
By Christopher Scinta
Sept. 23 (Bloomberg) -- Delphi Corp. can begin negotiating with unionized workers on freezing contributions to existing pension plans, a move that may save the former General Motors Corp. part-making unit millions of dollars.
Delphi intends to freeze the plans for both hourly and salaried workers and replace them with new ones. Each month the hourly pension plan isn't frozen costs Delphi about $1 million, according to court papers.
U.S. Bankruptcy Judge Robert Drain in New York approved Delphi's request at a hearing today, citing the savings to the company. He overruled an objection by Delphi's unsecured creditors, who said turmoil in the auto industry made it a bad time to create a new benefit plan for senior managers.
``It would be patently unreasonable'' to create replacement plans for everyone except 460 top executives, Delphi attorney John Butler Jr. said.
The creditors committee is also opposing revised agreements that boost the financial contributions GM will make to Troy, Michigan-based Delphi as part of its reorganization to $10.6 billion from $6 billion.
Delphi will ``give away control over the Chapter 11 plan process to GM,'' in exchange for financing, attorneys from Latham & Watkins representing the creditors wrote in a court filing.
Following a dispute between Butler and creditors attorney Robert Rosenberg over what information Delphi provided the committee on the pension freeze, Drain adjourned the hearing amending the GM agreements until Sept. 25.
Drain must approve the changes by the end of the month if Detroit-based GM is to take on $3.4 billion of Delphi's pension liabilities to block the federal Pension Benefit Guaranty Corp. from putting a lien on Delphi's foreign assets.
The case is In re Delphi Corp., 05-44481, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Christopher Scinta in New York at cscinta@bloomberg.net
Last Updated: September 23, 2008 14:45 EDT
By Christopher Scinta
Sept. 23 (Bloomberg) -- Delphi Corp. can begin negotiating with unionized workers on freezing contributions to existing pension plans, a move that may save the former General Motors Corp. part-making unit millions of dollars.
Delphi intends to freeze the plans for both hourly and salaried workers and replace them with new ones. Each month the hourly pension plan isn't frozen costs Delphi about $1 million, according to court papers.
U.S. Bankruptcy Judge Robert Drain in New York approved Delphi's request at a hearing today, citing the savings to the company. He overruled an objection by Delphi's unsecured creditors, who said turmoil in the auto industry made it a bad time to create a new benefit plan for senior managers.
``It would be patently unreasonable'' to create replacement plans for everyone except 460 top executives, Delphi attorney John Butler Jr. said.
The creditors committee is also opposing revised agreements that boost the financial contributions GM will make to Troy, Michigan-based Delphi as part of its reorganization to $10.6 billion from $6 billion.
Delphi will ``give away control over the Chapter 11 plan process to GM,'' in exchange for financing, attorneys from Latham & Watkins representing the creditors wrote in a court filing.
Following a dispute between Butler and creditors attorney Robert Rosenberg over what information Delphi provided the committee on the pension freeze, Drain adjourned the hearing amending the GM agreements until Sept. 25.
Drain must approve the changes by the end of the month if Detroit-based GM is to take on $3.4 billion of Delphi's pension liabilities to block the federal Pension Benefit Guaranty Corp. from putting a lien on Delphi's foreign assets.
The case is In re Delphi Corp., 05-44481, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Christopher Scinta in New York at cscinta@bloomberg.net
Last Updated: September 23, 2008 14:45 EDT
