David Shepardson / Detroit News Washington Bureau
WASHINGTON -- A group of more than 1,000 Delphi salaried retirees has hired a San Francisco law firm to try to block the Troy-based auto supplier from cancelling their health care and life insurance benefits.
The ad-hoc group, the Delphi Salaried Retiree Association, has hired the law firm of Farella, Braun & Martel LLP, and will file a formal objection to Delphi's plan later today, the deadline for objections to be filed. U.S. Bankruptcy Judge Robert Drain will hear the request by Delphi on Feb. 24.
"The retirees have accomplished an incredible amount of progress in only one week," said Den Black, a member of the Delphi Salaried Retirees Association. "It is clear that Delphi is attempting to high-jack the retirees by robbing them of benefits that were earned over decades and promised at the time of their retirement. It is also clear that Delphi is attempting to fake the court by rushing for a motion that will have a traumatic impact on a multiple of 15,000 families."
On Friday, another law firm representing Delphi retirees, Stahl, Cowen Crowley LLC, filed an objection to Delphi's plan. Those retirees point to employee benefit records that suggest the benefits were permanent. A 2001 letter to retirees from Delphi said the life insurance "will remain in effect for the rest of your life and is provided by Delphi at no cost to you."
The retirees argue that Delphi wants to deny retirees "a voice to at least defend themselves against this onslaught."
On Feb. 4, the company sought permission to cancel retiree health benefits for current and future salaried retirees, a move that it says would save the company $200 million from 2009 through 2011, or about $70 million a year.
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The moves would allow Delphi to reduce its balance sheet liabilities by nearly $1.2 billion. About 15,000 salaried retirees with medical and insurance benefits would lose coverage. The company wants to end coverage "as soon as (it is able) after March 31."
The company also moved to cancel all retiree health reimbursement accounts for Medicare-eligible salaried retirees and terminate the Medicare Part B special benefit for current and future salaried retirees and their surviving spouses.
"This is a decision that was as tough for us to make as it was for employees to receive. It's a tough, hard decision," said Delphi spokesman Lindsey Williams earlier this month, noting the declining auto market and worsening economy prompted the move. "It wasn't one we wanted to do."
Delphi has about 10,000 salaried employees.
For workers hired after 1999, Delphi doesn't pay retiree health benefits, but puts 1 percent of an employee's base pay into a retirement savings plan. That contribution would be canceled if the court granted permission.
Retirees would be allowed to keep coverage if they paid for it, Delphi said.
Delphi, which has been under bankruptcy protection since 2005, has been struggling to emerge in recent months in the face of tight credit. Delphi had planned to continue the programs until it ran into difficulty raising enough funds to emerge from bankruptcy. The company noted that auto sales have declined dramatically.
Delphi's "reasonable business judgment no longer permits them to maintain discretionary benefit programs ... that would cost hundreds of millions of dollars," the company said in a court filing. "Delphi has been working and continues to work closely with its advisors and stakeholders to re-evaluate its business plan and implement cash-conservation measures wherever it can."
Delphi said in its filing that it plans to revise its bankruptcy plan and file it by the end of the month as it struggles to shore up its cash. It asked the court to approve a deal to accelerate a $100 million payment from GM into the first quarter from the second quarter. It also disclosed that the value of the company may now be less than what it owes banks and investors funding its bankruptcy case.
This is the latest benefit cut sought by Delphi. In September, Delphi won permission to freeze its pension plans.
Delphi's hourly manufacturing cost has been cut to about $27 an hour this year from $73 an hour in 2005. Delphi rocked the auto industry when it filed for Chapter 11 bankruptcy protection on Oct. 8, 2005. Since then, it has lost more than $12 billion, closed 21 of its 29 U.S. factories, and cut its hourly work force nearly 50 percent and its salaried work force almost 40 percent.
The Delphi retirees have started a website at www.delphisalariedretirees.org.
1 comment:
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