Delphi may file for bankruptcy

[Marc]

Check out the estimated pension plan liabilities...

Delphi may file for bankruptcy

REUTERS - THURSDAY, OCTOBER 06, 2005

NEW YORK: Struggling US auto parts supplier Delphi is prepared to file for bankruptcy this week, as it lines up lawyers and consultants, the New York Times reported. The move came on Monday, when Delphi appointed David Sherbin as general counsel.

Whether Delphi CEO Robert Miller goes through with a bankruptcy filing for Delphi remains to be seen, the paper said. Mr Miller has said he will file by October 17 at the latest, when US bankruptcy laws change, unless former parent company General Motors and the United Automobile Workers union agree to a multibillion-dollar bailout.

Delphi employs nearly 50,000 people and makes parts for most new cars and trucks sold in the US. A Delphi bankruptcy would be painful for GM as the automaker, under the terms of Delphi’s 1999 spin-off, agreed to provide medical and pension benefits to Delphi retirees if the company went bankrupt before ‘07.

There is also the issue of pension costs. Delphi has previously reported its pension obligations on behalf of workers exceed its plan assets by $4bn, but a calculation by the US Pension Benefit Guaranty — obtained by the New York Times — suggests Delphi’s shortfall would be closer to $10.9bn if the plan were terminated today.

[Wes Bucey]

As I wrote somewhere else, that pension plan liability used to be GM's. Wasn't it fortuitous that GM was able to dump the liability on to Delphi and the former GM employees will get coal in their stockings for Christmas, but the guys who engineered the spinoff of Delphi are sitting fat and happy on THEIR money that they got at the front end?

If Delphi goes, can Visteon be far behind?

What was the catch phrase in the movie Wall Street?
Oh yes - "Greed is good!"

[bpritts]

I can't recall all the details, but as part of the agreement creating Delphi,
GM retains some obligations for employee benefits. If Delphi files, GM
must assume some (not sure how much!) of the pension and other benefit
liability.

For that reason, GM is willing to sit down with Delphi and talk turkey on
some kind of support. The bankruptcy filing is a gun held to GM's head.

Some of us in the industry who sell to Delphi are like the Ewoks in the Star
Wars battle - just trying to run fast enough to avoid getting stepped on!



Regards...........

Brad

[Rob Nix]

Hah Ha, That's a great visual! I'm one of those Ewoks. We're up to our ears in this one.

[Wes Bucey]

Originally Posted by Rob Nix

Hah Ha, That's a great visual! I'm one of those Ewoks. We're up to our ears in this one.

Bummer! That's tough - it must feel like waiting for a glacier to overtake you - everything in slow motion, but you are still trapped!