Delphi's troubles may cost GM - 08/31/05

A Delphi Bankruptcy Could Cost GM $9 Billion
According to the Detroit News:

The United Auto Workers recently sent a letter to GM that detailed what the union believes are the automaker's obligations to Delphi workers if the parts supplier files for bankruptcy. One analyst said the obligations could total $9 billion.

In the letter, obtained by The Detroit News, the UAW says GM has the responsibility to protect Delphi workers' pensions, retiree health care benefits and post-retirement life insurance under a 1999 agreement that created the Troy-based auto supplier from a collection of GM parts plants.

Such benefits are all guaranteed by GM in the event of "financial distress" at Delphi on or before Oct. 18, 2007, according to the letter.

The agreement was established to ensure that Delphi's hourly workers had ironclad backing from the world's largest automaker if Delphi had financial troubles. And it is taking on special significance now that Delphi is threatening a bankruptcy filing by this fall if it does not receive significant givebacks from the UAW.