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Delphi IRS pension funding waiver extended to March 31
By Caroline Salls
Pittsburgh, Feb. 27 - Delphi Corp. received an extension to March 31 of pension plan funding waivers granted by the Internal Revenue Service that will help the company avoid a more than $1.4 billion excise tax claim for the pension plan year ended Sept. 30, 2006, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.
The pension funding waivers were previously set to expire if Delphi did not emerge from bankruptcy by Feb. 29.
The company also obtained court approval to increase the $150 million in outstanding letters of credit it has issued to the Pension Benefit Guaranty Corp. in connection with the IRS funding waivers by $10 million.
According to the motion, since Delphi filed for Chapter 11 bankruptcy, it has been making "normal-cost" contributions to its pension plans, which are contributions for amounts covering service provided by plan participants after the bankruptcy filing.
These normal-cost contributions are less than the minimum funding, and, if additional amounts are not contributed within 8½ months after the end of the plan year for which the contributions are due, an accumulated funding deficiency arises.
Although the company said it disputes the IRS' ability to levy the excise tax penalties, Delphi said it applied to the IRS and the PBGC for pension funding waivers.
When the court approved an initial funding waiver in May 2007, it also gave Delphi permission to issue $150 million in letters of credit to the PBGC.
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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