Bankruptcy News

U.S. Bankruptcy Court Declines GM Plea to Halt Delphi Hearing

NEW YORK: A U.S. bankruptcy court judge has turned down General Motor Corp.'s request to delay hearings on whether its auto parts supplier Delphi Corp. can nullify its own union contracts as it struggles to emerge from bankruptcy protection. The automaker had requested judge Robert D. Drain to adjourn the hearings for up to 60 days so that it can use the time to negotiate an out-of-court settlement and avert a threatened strike by Delphi's 33,000 unionized plant workers. The hearings had begun earlier this month and resumed Wednesday morning. Delphi, which entered bankruptcy protection in October 2005, had requested the judge on May 9 to void its union contracts and allow it to impose salary and benefits cuts on its workers. The United Auto Workers union has authorized a strike against Delphi in case the judge ruled in the company's favor, which in turn would paralyze production lines at General Motors.

Delphi did not support General Motors' request. General Motors, which recently took a $5.5 billion charge related to its potential liabilities at Delphi, which was its former subsidiary, reached an agreement with it and the UAW that offered buyouts to many Delphi employees and jobs to 5,000 others. The automaker buys parts worth $14 billion from Delphi every year. A company spokesperson said the company will continue its talks with Delphi and the unions. Meanwhile, the company began replacing union employees lost to buyouts and retirements with temporary workers. The temporary hands will be used at factories that it plans to close down and will cover immediate shortages caused by staff departures.

A company spokesperson confirmed that some temporary hands are being taken in, but would not guess a number. He said the main thrust is to maintain production levels during the transition. The temporary workers will be paid $18 to $19 an hour, or 30 per cent less than an average unionized assembly worker is paid. The company's existing workers have time until 23 June to accept retirement or buyout, some as high as $140,000. The company wants as many of its 113,000 workers to leave as possible so that it can effectively work out a restructuring plan and put it in place. The development sent the company's shares up 8.3 per cent to $26.51 in New York Stock Exchange composite trading.

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