Delphi's emergence from bankruptcy is uncertain
Nearly three years after Delphi Corp. filed for bankruptcy, its prospects for emerging soon remain deeply uncertain as the Troy-based auto parts supplier faces growing pressure from investors and the government.
Delphi remains mired in Chapter 11 bankruptcy because it cannot raise the money it needs to operate outside court protection from creditors. The company is seeking court approval to borrow an additional $300 million from General Motors Corp., but investors are objecting to Delphi's continued reliance on its former parent when GM is facing deep financial trouble of its own. A court hearing on the loan that was scheduled for today has been postponed until next month.
For now, it turns to GM, which has loaned Delphi $650 million and is prepared to add $300 million. U.S. Bankruptcy Judge Robert Drain has set a Sept. 23 hearing on the loan, which has been criticized by one of Delphi's largest investors.
That loan is "a Band-Aid (albeit an enormously expensive and porous Band-Aid)," Highland Capital Management LP said in a court filing last week. Highland said Delphi is losing "staggering sums of money" at an "alarming rate," noting that it burned through $960 million in cash in the first six months of the year.
There also are significant questions about Delphi's ability to meet its pension fund obligations. The Pension Benefit Guaranty Corp., which insures the nation's pension plans, is urging Delphi and GM to shift some of that burden to GM.
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Delphi rocked the auto industry when it filed for Chapter 11 bankruptcy protection on Oct. 8, 2005. Since then, it has lost $11.8 billion, closed 21 of its 29 U.S. factories and cut its hourly work force by nearly 50 percent, and its salaried work force by almost 40 percent.
The supplier has spent $3 billion to offer buyouts and early retirements to thousands of hourly workers. This month, it reported a $551 million second-quarter loss and said it would cut 600 more salaried workers, mostly in Indiana.
Delphi is tight-lipped about its progress in bankruptcy. Spokesman Lindsey Williams said the company continues to talk with GM, its unions, government agencies and others about resolving the pension funding problem.
"We do not provide commentary regarding ongoing negotiations," he said. Williams also said Miller planned to remain with Delphi through the bankruptcy.
Despite the delays and continuing problems, Delphi executives say the company will emerge from bankruptcy, but as a much smaller, more profitable company.
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Again...leaving the same people in charge who got the company in the sad state it's in now in the first place.
How is it EVER legally and morally justifiable that a company can promise retirement benefits then renege at a later more convenient time?
This is the kind of thing that makes retirees pick up a gun and go balistic and I can't blame them one bit.
I can resolve this though.
A) Make all executive operating officers of companies of this scale legally and criminally accountable for failure to honor contracts and keeping the company financially resolute. (This is justified by the enormous pay scales which already exist, they just get paid to fail currently.)
B) Fire them via court order and have the court post the positions for people actually qualified whom may not be in the "old boy network".
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Steve Miller is just as tough on UAW president Ron Gettelfinger. Since the opportunities for retribution are frequent and one-sided, auto executives almost never criticize union leaders in public. But Miller is fearless, at least in print. He butted heads with Gettelfinger over Delphi, and found the union boss stubborn, inflexible, and occasionally nasty. After Miller put together what he thought was a reasonable compensation package to keep Delphi executives from departing the bankrupt company, Gettelfinger denounced it as "obscene" and "outrageous," and then attacked Miller personally for disrespecting workers and destroying the middle class.
Miller won the public relations battle by declaring he would cut his own salary to $1 a year. But the war continued. "Gettelfinger's disdain was not confined to me," Miller writes . "He simply couldn't get along with anyone," referring to Delphi's executives as "pigs at the trough." During the last half year of negotiations, Gettelfinger refused to meet personally with anyone from Delphi. Miller concludes: "Gettelfinger was a big disappointment. An industry in crisis needs leaders who can rise above the tactics of intimidation that may have worked decades earlier."
A sadly-shrunken Delphi is due to emerge from bankruptcy in March with a fraction of the union workers it once enjoyed. Miller, now executive chairman, is looking forward to the retirement at his Oregon home that he has been postponing for years He may not get a chance to enjoy it. With the economy now in a tailspin, his skills as "the Turnaround Kid" may drag him off the sidelines once again.
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The Turnaround Kid just made tool of the day.
I like the $1 a year thing...good PR...means nothing.....but it is good PR...These guys get Class A stock options and contracts like you would not believe...did you think he was going to have to cut coupons while making a dollar a year....please...most of these guys don't even pay for their own gas for their company cars...or planes...or boats....or helicopters....
How do you pay for the gas for your helicopter?
Welcome to Detroit, get paid millions to fail then retire to Boca Raton.
