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GM sued by UAW for $450M over Delphi fund

GM sued by UAW for $450M over Delphi fund

Automotive News | April 7, 2010 – 12:34 pm EST

DETROIT (Bloomberg) — General Motors Co. was sued by the UAW over claims the automaker owes $450 million to the retiree health care fund of parts supplier Delphi Corp.

GM breached a contract promising to fund a voluntary employee beneficiary association, or VEBA, for Delphi retirees, according to the lawsuit filed Tuesday in Detroit federal court. General Motors, Delphi’s former owner, made the promise in 2007. The court overseeing Delphi’s bankruptcy approved the agreement in October 2009, the union said.

In October, "the UAW made a written demand that the company honor its contractual obligation to make the foregoing payment" to the VEBA, the union said in its complaint. In November, "that UAW demand was rejected and since that time the company has failed and refused to make the contractually required payment."

Delphi’s union-run fund was one of several set up by auto industry companies to cut costs by shifting responsibility for retiree health care. The UAW said General Motors owes the money despite its own bankruptcy protection filing last year. Tom Wilkinson, a GM spokesman, declined to comment.

GM filed for bankruptcy protection on June 1, and emerged on July 10. The company is still struggling to get back to profitability as it tries to boost sales in the United States and restructures its Opel unit in Europe.

Delphi, once the largest U.S. auto-parts supplier, filed for bankruptcy in October 2005 after failing to win wage cuts and financial aid from GM. The company emerged from bankruptcy under the new name of Delphi Holdings LLP in October.

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