Delphi asks for court approval of agreements with four unions, GM

By Reshmi Basu

New York, Aug. 7 - Delphi Corp. asked for court approval of contracts with four of its unions, according to documents filed Tuesday with the U.S. Bankruptcy Court for the Southern District of New York.

Delphi said Monday that it signed a memorandum of understanding with the International Union of Electrical Workers-Communications Workers of America (IUE-CWA), the International Association of Machinists (IAM), the International Brotherhood of Electrical Workers (IBEW) and the International Union of Operating Engineers (IUOE) as well as with General Motors Corp.

Delphi noted that the accords achieve "significant cost savings through wage reductions, work rule and operational changes and buyouts and buy-downs that will enable it to better meet its competitive challenges," according to one of its filings.

In a separate motion, Delphi asked for approval of an agreement with the International Union of Electrical Workers-Communications Workers of America (IUE-CWA), in which the union has agreed to an attrition program under which "thousands of employees at traditional Big Three wages and benefits took buyouts or retired, and the IUE-CWA waived Delphi obligations to hire thousands of new employees as a result of the departures caused by the attrition program," the debtor said in the motion.

Under the contract, collective bargaining agreements are extended until Oct. 12, 2011.

Delphi said it plans to retain ownership and operations at three of its IUE-CWA represented plants. It will sell two of the plants and close another two.

In addition, some workers will have the option to work at Delphi or at the company's former parent General Motors.

For those who do not elect the attrition option or become employed at GM or return to work at Delphi, there is a "buy-down" payment amounting to $105,000. Also for those who do not opt for the attrition program, there is a relocation allowance of up to $67,000 under certain circumstances when specific plants stop production.

Also there is a severance package of up to $40,000 for eligible employees who are permanently laid off before Oct. 12, 2011.

In addition, the IUE-CWA will receive a $126 million allowed general unsecured claim against Delphi.

General Motors has also agreed to take over some financial obligations related to certain retiree benefits.

IUOE, IAM, IBEW agreement

Meanwhile in another filing Tuesday, under the proposed agreement with the IUOE, IAM and IBEW unions, collective bargaining agreements will be extended until Sept. 14, 2011.

Also, there will be an implementation of a work force transition program for those eligible employees who participated in the company's hourly rate pension plan. Under the plan, there will be a provision that allows for a lump sum "buy-down" payment amounting to $10,000 and severance payments of up to $40,000 for eligible employees laid off before Sept. 14, 2011.

Under the agreement with General Motors, Delphi's obligation to provide certain welfare benefits to the three unions will be eliminated. Instead, General Motors will take over those obligations.

Furthermore, Delphi's existing pension plan is frozen in certain respects effective upon emergence from Chapter 11. Under the memorandum of understanding among all parties, both Delphi and GM receives releases from IUOE, IBEW and IAM.

Moreover, for those hourly wage employees and retirees who are not represented by unions, GM will provide post-retirement medical benefits. GM will also provide post-retirement basic life insurance benefits to certain employees who fall under that category.

The debtors asked for court approval of the settlement, calling the accord the "result of careful deliberations and extensive negotiations...that equitably address many of the debtors' substantial financial, transformational and labor relation roadblocks in a manner that will best serve the economic interests of the debtors' estates and their shareholders."

A hearing on the union settlements is scheduled for Aug. 16.

On Aug. 2, Delphi obtained court approval of its investment plan, which is headed by lead investor Appaloosa Management LP. The investors would inject Delphi with $2.55 billion in exchange for preferred and common stock in the reorganized company.

Delphi, a Troy, Mich.-based automotive electronics manufacturer, filed for bankruptcy on Oct. 8, 2005. Its Chapter 11 case number is 05-44481.

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