| DETROIT, MI - Delphi has filed for Chapter 11 but in so doing has put at risk the survival of its former parent, General Motors.
According to figures released in the US, GM’s liabilities for pensions and benefits due Delphi’s workers could amount to $11 billion, although this was a “worst case scenario” figure unofficially provided by the company. It does mark, though, the first time that the carmaker has provided any kind of figure on its liabilities with regard to Delphi, nor it is in any financial position to provide assistance to its stricken offspring.
According to Delphi chairman, Robert “Steve” Miller, his company “simply cannot afford to continue to be encumbered by high legacy issues and burdensome restrictions under current labour agreements that impair our ability to compete.” However, he has been at pains to assure GM and other customers that deliveries will continue as normal during bankruptcy.
Delphi said in its bankruptcy filing that it will ask the courts in December for permission to eliminate medical and life insurance benefits for union-represented retirees. However it is required to negotiate a settlement with its unions under bankruptcy law, a process that Miller estimates will take three to six months. If no agreement is reached by that point, Delphi could move to reject labour contracts and then it becomes a "free for all," Miller said.
Delphi also wants to create a new severance plan for which about 13,000 workers would qualify, and has requested permission to give about 600 executives worldwide as much as a 10 percent stake in the company as a bonus if the company emerges from bankruptcy.
For GM, though, Delphi’s bankruptcy places the carmaker in a very precarious situation. Chairman and CEO Rick Wagoner, who has already been pressing the union for steep health care concessions, is trying to get his company back on course after suffering a $2.5 billion loss in North America in the first six months of this year.
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