Delphi Can Trim retired employees benefits, according to Jus

 

Thursday, Mar 05,2009, 4:14:36 PM   Click:

Delphi may trim employees retirement benefits, the judge said Jewel Gopwani Detroit Free Press McClatchy-Tribune Regional News
February 25 - A judge said Tuesday that Troy supplier Delphi Corp. has the right to terminate health and life insurance benefits for 15,000 retired employees, whose company plans to do at the end of March.

But the United States Bankruptcy Judge Robert Drain also said during a hearing Tuesday, a pension committee must be formed to determine whether one of its retired employees of Delphi promised benefits for life and will be eligible to continue company-sponsored coverage.

Drain took the decision after witnesses testified to Delphi cuts are vital to the survival of the company.

"Over the past two or three months, the company has undergone tremendous change for the worse," said Drain.

More than 1,500 objections have been filed by workers.

In letters to Drain, retirees have raised several concerns.

Some feared that pensioners would not be able to find affordable insurance elsewhere if they have conditions such as cancer and diabetes.

"I'm 55 and I had prostate cancer and diabetes and hypertension. I fear that I am probably in this category uninsurable, "said Milton Beach Kokomo, Ind.

Said Beach, whose job was eliminated at Delphi: "I have 10 years before I arrived at 65 and would be eligible for Medicare. It is a long time to pay such prices for health insurance on income fixed. "

Then, a pension committee will be formed to determine whether there is evidence that retirees promised benefits for life, "said Jon Cohen of Stahl Cowen Crowley Addis, in Chicago, a law firm that represents approximately 1,200 retirees.

"It is anticipated that the pension committee will appeal to all retirees for their assistance to help them find historical records of retirees enjoy," said Cohen. "That's what the judge wants to see."

The committee has until March 11 to submit its findings to the judge.

Delphi, which was the bankruptcy reorganization in Chapter 11 since October 2005, told the court that the elimination filings health and life insurance benefits for current employees and future retirees the company would save more than $ 200 million until 2011.

It would take more than $ 1.1 billion in commitments to reduce stock of Delphi, a move that could help the provider to attract the financing it needs to leave the protection against bankruptcy.

Delphi's bankruptcy lenders have said very clearly that the company has a fiduciary duty to terminate benefits, "the lawyer for Delphi, John Butler Jr., said the judge. "They simply have no appreciation of the liabilities of this magnitude on the reorganization of the balance sheet."

Bloomberg News contributed to this report.