DETROIT -- If the CEO of Delphi Corp. can't get wage concessions from the UAW, a bankruptcy court judge could help.
Although Steve Miller has been unsuccessful in that effort, CEOs of auto parts suppliers Citation Corp. and Intermet Corp. won wage and benefit reductions after seeking refuge in bankruptcy court.
Filing for Chapter 11 protection could provide the leverage Miller and other supplier company CEOs need to renegotiate labor contracts. But such a move could have severe consequences.
Corporate bankruptcies cause huge financial losses for investors, lenders and vendors. Thousands of workers' jobs and benefits are put at risk. And for automakers, a supplier bankruptcy can threaten production.
Delphi would be the largest industrial company to file for Chapter 11 reorganization in at least a decade, according to BankruptcyData.com, a service that tracks bankruptcies.
Filing for Chapter 11 protection is an attempt to stay in business while a bankruptcy court supervises the reorganization of company contracts and its debts. And a judge is likely to be sympathetic to canceling parts contracts and labor contracts if a company can prove they are a burden.
Automakers and parts makers are struggling and strapped for cash. There is little they can do about higher materials prices, so they're looking to win concessions from unions.