$450M Delphi retirees case to advance

August 30, 2011 http://detnews.com/article/20110830/AUTO01/108300331

$450M Delphi retirees case to advance

Judge won’t dismiss UAW suit seeking payment from GM

DAVID SHEPARDSON
/ Detroit News Washington Bureau

Washington— The battle for nearly a half-billion dollars in health care money for Delphi hourly retirees moves back to U.S. District Court in Detroit, after a New York judge declined to dismiss the case.

The United Auto Workers is fighting for $450 million the union contends General Motors owes a retiree health care fund set up to help cover the medical expenses of retired hourly workers from Delphi Corp. Delphi is GM’s former parts unit.

The UAW contends GM is obligated to make the contributions because of a June 2007 agreement among the three parties.

The payment was to be made when Delphi exited bankruptcy.

By the time Delphi exited bankruptcy in October 2009, GM had entered and exited bankruptcy as a new company, as part of a $49.5 billion U.S. bailout.

When GM failed to make the payment, the UAW filed suit in U.S. District Court.

The automaker then asked U.S. Bankruptcy Judge Robert Gerber, in New York, to hear the case.

Gerber declined to intervene, and said the U.S. District Court in Detroit can hear the lawsuit.

“Since so much has already been accomplished in helping new GM and the UAW get back to business as usual, I think it’s better for the New York bankruptcy court to minimize its role in New GM affairs, and to act only with respect to matters where the New York Bankruptcy Court has a significant interest,” Gerber said in a 28-page opinion last week.

GM spokesman Jim Cain said Monday that the automaker is confident it will prevail.

“As the U.S. Bankruptcy Court makes clear, their decision not to hear the matter has nothing to do with the merits of the dispute,” Cain said.

GM has said it is not required to honor all contractual obligations under the 2007 agreement.

A UAW-GM retirement agreement approved by the bankruptcy court in 2009 gave a UAW retiree health care trust fund more than $10 billion in GM equity, but made no mention of the $450 million payment.

GM said that deal “superseded and extinguished” the $450 million payment.

The UAW, however, argues that the 2009 agreement has no impact on the 2007 deal.

The 2007 deal between GM and the UAW allowed Delphi to pay lower wages and benefits to UAW workers, froze its hourly pension plans, terminated retiree medical benefits and made it easier to close plants with UAW workers.

The dispute has been on hold by U.S. District Judge Avern Cohn for nearly a year as the bankruptcy court in New York decided whether to hear the case.

GM set aside more than $1 billion to make up the difference for Delphi hourly retirees, whose pension plants were terminated by Delphi and turned over to the Pension Benefit Guaranty Corp.

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