Thursday, March 12 2009
New York judge rules in Delphi's favor: Hearing on stay set for next week
Mar. 12
The Delphi Salaried Retirees Association lost another round in U.S. Bankruptcy Court Wednesday when the judge affirmed his original decision to allow the company to terminate health and life insurance benefits.
Judge Robert Drain, with the U.S. Bankruptcy Court for the Southern District of New York, made final his preliminary decision issued Feb. 24 to allow Delphi Corp. to terminate health and life insurance benefits for up to 15,000 salaried retirees effective April 1
We were disappointed, but we expected it, said Milton Beach, spokesman for the DSRA. This is Delphi's judge.
The DSRA filed a motion Tuesday seeking a 90-day stay of Drain's order until a pending appeal could be heard by the U.S. District Court in New York.
Drain will hear the motion for a stay next Tuesday.
Drain based his decision that Delphi had the right to terminate the benefits on a Detroit case Sprague v. General
Motors, he said.
Dennis Black, coordinator with DSRA, said it was a bad day for the salaried retirees."In a nutshell, we haven't gotten anything," Black said. "We were hoping to get an extension. We were negotiating with Delphi trying to get an agreement to transition to a group health plan we're trying to create."
Black encouraged retirees who can afford it to continue with Delphi's insurance plan until the DSRA can establish its own group.
Black said the retiree committee appointed to determine if any of the salaried benefits were vested did a good job in gathering data in a short period of time.
There was no doubt during an 11-year period from 1974 to 1985 there were promises of lifetime benefits, he said. Black said normally a person is considered vested in insurance and retirement plans after 10 years.
"The judge keeps going back to the Sprague case," Black said. "Legal law requires that you follow the law in the 2nd District New York and not the 6th District Detroit. The district rulings are different. Judge Drain has no interest in that legal argument."
Black said the DSRA will appeal Drain's two motions allowing Delphi to terminate benefits.
"I would speculate that we're prepared to take this to the U.S Supreme Court," he said. "Different courts have differing rulings and the Supreme Court is the only one that can make a final decision.
"We lost some more battles, but we continue to fight the war."
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The DSRA is trying to bring in the rest of the automotive groups in the country to include GM, Ford and Chrysler.
"The name of the game is to shed their obligations," Black said of the decision to terminate benefits.
Delphi, which became a spin-off company from General Motors in 1999,iled Chapter 11 bankruptcy in 2005.
By terminating the benefits, Delphi expects to realize a savings of $200 million through 2010 and be able to write-off $1.1 billion from its long-term obligations.
