Delphi Allowed to Cancel Benefits for 15,000 Workers
March 1st, 2009Via: Bloomberg:
Delphi Corp., the bankrupt auto- parts maker, won permission to cancel health-care benefits for 15,000 current and former salaried workers, saving $1.1 billion as it tries to emerge from court protection amid falling vehicle sales.
U.S. Bankruptcy Judge Robert Drain in New York issued the ruling today after witnesses for Troy, Michigan-based Delphi testified the cuts were vital to its survival because its lenders demanded them. About 1,600 objections were filed by workers.
Ending the benefits will save $70 million a year and eliminate $1.1 billion of debt, Delphi said. The company has said its value has fallen so much that it may be unable to cover debt accrued while in bankruptcy. Robert Vican, a Delphi employee who retired in 2001 after almost 37 years at the company, said the ruling would be especially painful for elderly former workers.
“It’s a real shame,” said Vican, of Hemlock, Michigan. “It’s an easy way out, to take something away from people who can’t do anything about it. The majority of these people bent over backward to satisfy that company.”
The parts-maker won approval in January 2007 of a Chapter 11 turnaround plan that valued the company at about $12.8 billion. That value was later reduced to $7.2 billion. Delphi wasn’t able to implement the plan in April because investors led by Appaloosa Management LP backed out of an agreement to provide as much as $2.55 billion, saying the company failed to meet conditions.
‘Terminate the Benefits’
Delphi’s bankruptcy lenders “have made it very clear that the company has a fiduciary duty to terminate the benefits,” Delphi’s lawyer, John Butler Jr., told the judge. “They simply will not support having discretionary liabilities of this magnitude on the reorganized balance sheet.”
My aunt’s husband works for Delphi. After decades of consumning coca-cola and various hifructose fed meats, I imagine this cancellation will not be met well. They’re nice people, just a bit angry, depressed, overweight and lacking in any sort of vision. I don’t want to sound like I’m coming from a high horse here, I’m not judging them so much as noting that the habit of taking money from a company to buy unhealthy food and then expecting that same company to pay for your open heart operations carries undue risk.
Again we learn the only things an employer really offers are cash in hand right now and lies about tomorrow.