Judge OKs loss of Delphi benefits

A federal bankruptcy judge has ruled that Delphi Corp. is justified in its plan to eliminate health and life insurance benefits for 15,000 retired salaried workers at a potential savings of $200 million over the next two years.

The judge gave tentative approval Tuesday to Delphi’s request to terminate the benefits for the salaried retirees, effective April 1. There are as many as 5,000 retired salaried Delphi employees in central Indiana.

There is a possibility through the ruling that some retired employees may be eligible to retain their benefits, but a spokesman for the Delphi Retired Salary Association believes it is unlikely.

Dennis Black, co-founder of the association, said the ruling came as a shock.

Black said the retirees’ association will file an appeal of the decision in hopes that the court will approve an extension of the cutoff date.

“The court gave no relief at all in terms of the April 1 date,” he said.

Black wondered where the retirees between 55 and 65 years of age can find health insurance in 30 days.

“We were blind-sided by the loss of our benefits,” he said. “We’re stunned by the decision. We have to get the extension because we can’t decide what to do in 30 days.”

Black said the retirees’ association is looking to obtain insurance coverage as a group to help lower the costs.

The group was counting on a provision in the bankruptcy law that required the formation of a committee if a company intended to eliminate benefits. The committee would negotiate with the company in hopes of reaching a settlement.

“It’s going to take some time and investigation to see what Delphi did was amendable,” Black said. “Basically, they violated what the committee process was intended for.”

Black said the judge did appoint a special committee to determine if some of the retirees meet the criteria to be considered vested in the life and health insurance benefits.

A hearing has been set for March 11 to consider the findings of the committee on any eligible retirees.

He said Delphi officials didn’t expect the retirees to become so well organized in the space of 20 days. The motion to eliminate the benefits was filed by Delphi on Feb. 4, and retirees were notified the following day.

Black said the San Francisco law firm representing the retirees’ association noted to the court that if the insurance benefits are eliminated and Delphi decides to eliminate pensions in the future, it can’t be done legally.

He said the pension has to be eliminated and taken through the Pension Benefit Guarantee Corp. before the benefits are cut off. Black said a 65 percent health-care tax credit is available to cover health insurance costs if retirees lose their pension and health-care coverage.

Black said another concern is employees who retired and took an annual incentive until they reached the age of 62 could lose that benefit in the future.

In issuing the ruling, the judge said the motion to eliminate the insurance benefits for salaried employees who retired was justified because of Delphi’s dire financial situation.

The judge said Delphi is within its right to eliminate the benefits as a means of removing $1.1 billion in long-term debt as a way to attract future investors and emerge from bankruptcy.