DETROIT -- The UAW wants to exclude Delphi Corp. bondholders, equity funds and most creditors from participating in hearings next month on the suppliers petition to terminate its labor agreements.
In a filing in U.S. Bankruptcy Court in New York on Wednesday, April 26, the UAW said the hearings should be limited to Delphi, its six unions and Delphis former parent, General Motors. GM has a stake in the negotiations because it is paying for employee buyouts and guarantees Delphis UAW pensioners, the UAW said in its filing.
The UAW specifically wants to exclude Wilmington Trust Co., Appaloosa Management LP and the Official Committee of Unsecured Creditors from participating.
Wilmington holds about $2 billion in Delphi bonds, Appaloosa is a large equity holder, and the committee represents unsecured creditors owed billions of dollars by Delphi for delivered parts and services. The hearings on the so-called Section 1113 and Section 1114 petitions are scheduled to begin May 9.
The UAW cited appellate court rulings in other cases that limited participation in those types of hearings to parties involved in collective bargaining.
The sections of the bankruptcy code allow a company in bankruptcy to terminate under court supervision its labor agreements if it can prove that the action is necessary for the successful reorganization of the company. Delphi put its U.S. operations in Chapter 11 bankruptcy protection on Oct. 8.
The UAW has threatened to strike Delphi if the court approves terminating the contracts. A Delphi strike would shut GM within days since the supplier provides about $14 billion on parts to the automaker annually.
Wilmington has filed an objection to Delphis petition to terminate its labor agreements. The company wants more information about how cutting wages and benefits will help Wilmington collect a fair share of the $2 billion it is owed by Delphi. Wilmington, for example, is concerned that GM will make unsecured claims of between $3 billion and $4 billion for the cost of buying out as many as 13,000 of Delphis UAW-represented workers.
Edward Fox, an attorney representing Wilmington, declined to comment on the UAW filing. He is an attorney with Kirkpatrick & Lockhart Nicholson Graham LLP in New York.
You may e-mail Dave Barkholz at [email protected]