Judge to rule on who gets say at hearing

The UAW wants to bar shareholders and noteholders from the hearing.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
NEW YORK -- Before testimony in today's Delphi Corp. bankruptcy hearing, a judge must settle a dispute over who can participate.
The United Auto Workers union wants only the auto parts supplier and its unions to be involved in the hearing on whether Delphi can cancel its union contracts and get out of its health care obligations to retirees.
Three other groups have cried foul in legal documents.
The issue will be decided by Judge Robert Drain of U.S. Bankruptcy Court in New York. He is holding hearings today, Wednesday and Friday on Delphi's motions. Delphi said it needs to get out of the contracts to survive, while the unions say cost reductions should occur at the bargaining table.
The UAW, which represents most of Delphi's 34,000 hourly workers, said in a recent court filing that the proceedings would be unmanageable if all parties with a financial interest were allowed to participate.
Delphi has six unions that represent its hourly workers, and enough parties to the hearing, the UAW said.
The International Union of Electrical Workers represents the approximately 3,800 Delphi workers in the Mahoning Valley.
Here's the argument
The law says "all interested parties" are allowed to participate in such hearings.
The UAW cited a ruling in the 7th Circuit Court of Appeals that supported its position that "interested parties" should be defined narrowly: only the parties to the labor deals themselves.
The UAW said a group of shareholders, bondholders and the creditors' committee should not be allowed to participate.
Those groups argued in court documents, however, that "interested parties" should be defined more broadly.
"The argument that shareholders are not interested parties is absurd," said Appaloosa Management, which owns nearly 20 percent of Delphi stock. It was specifically mentioned by the UAW as a group that should not be allowed to participate.
Appaloosa said Delphi has indicated that shareholders are likely to receive nothing for their investment when Delphi comes out of bankruptcy protection.
Another party mentioned by the UAW is Wilmington Trust Co., which is owed $2 billion in notes by Delphi.
Wilmington's view
Wilmington said it was surprised by the UAW's motion because its participation could help the union in defeating Delphi's attempt to reject the union contracts.
Wilmington said Delphi Corp. won't benefit from voiding the union contracts because it doesn't actually employ any union workers. Those workers are under a subsidiary, Delphi Automotive Systems, which would receive all the benefits from voiding contracts, the filing said.
Wilmington said it should participate because it is in the best position to look out for the interests of Delphi Corp., the holding company for all 43 domestic subsidiaries included in the bankruptcy filing.
Delphi's officers and directors are answering to 43 entities, while the creditor's committee is responsible to the creditors of all those entities, Wilmington said.
"Wilmington Trust Co. is uniquely situated to appear on behalf of the interests of Delphi Corp.," its filing said.
The creditor's committee said the circuit court ruling that UAW cites in its motion doesn't apply to this case because it has different circumstances. Congress intended to be inclusive when it wrote into the bankruptcy law that "all interested parties may appear and be heard," the committee said.
In other matters, Judge Drain approved a buyout agreement Monday reached by the UAW, GM and Delphi. It doesn't apply to Mahoning Valley workers because the IUE hasn't reached such a deal with the companies.
The agreement provides that UAW workers at Delphi can retire with a $35,000 lump-sum payment. It also provides for 5,000 Delphi workers to flow back to GM, which used to be the parent company of Delphi.
The UAW, however, had provisions for Delphi workers to return to GM in certain circumstances, while the IUE does not.
shilling@vindy.com