US - Delphi has used its bankruptcy to offload its pensions costs on to the taxpayer, said International Union of Electrical Workers (IUE) chairman Donald Arbogast.
Speaking at a press conference on Monday, Arbogast insisted Delphi’s bankruptcy could have been prevented, and accused the company of exploiting the system to dump pension plans on to the government funded PBGC.
It was a well-planned and executed plan to shift costs to the American taxpayer, he said. Delphi is liable for US$12.9bn in pension benefits, but its pension fund has a $4.7bn shortfall. The automotive supplier filed for bankruptcy on Saturday, October 8.
It was announced last week two state pension funds and other shareholders weresuing Delphi, alleging that executives had lied about the company's finances in order to protect their jobs and artificially inflate Delphi's stock price.
Bernstein, Litowitz, Berger and Grossman - the law firm representing the plaintiffs - said the suit involved allegations regarding violations of federal securities laws by Delphi Corporation and certain trusts it had established to sell securities.
“Specifically, plaintiffs allege that defendants made materially false and misleading statements,” the firm said.
General Motors said in a statement released after the bankruptcy court hearing that it could have to assume $10bn to $11bn in retirement benefits for union-covered employees who transferred to Delphi as part of the 1999 spinoff.
General Motors also said it had provided limited guarantees with respect to certain benefits payable by Delphi to former GM US hourly employees who transferred to Delphi relating to pensions, post-retirement health care and life insurance.
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