Judge OKs freezing of Delphi’s pension plans

Delphi expects its unions to approve the pension changes.

NEW YORK (AP) — A bankruptcy judge approved Delphi Corp.’s proposal to freeze its pension plans Tuesday as part of the auto supplier’s blueprint to cut its costs and eventually emerge from bankruptcy protection.

Delphi, which has been closing plants in the Mahoning Valley and elsewhere, also had been scheduled to seek approval for a deal with former parent General Motors Corp. that would boost GM’s financial support of Delphi to $10.6 billion, from $6 billion under terms of an earlier plan. But U.S. Bankruptcy Judge Robert Drain adjourned the hearing until Thursday to allow attorneys for Delphi and its creditors time to settle objections to the motion.

Drain approved the company’s motion to freeze the plans for salaried and hourly workers and replace them with new ones. However, changing the hourly workers’ pensions still requires union approval.

Jack Butler, an attorney for Delphi, said he expects to receive the needed union approvals. An earlier deal with Delphi’s unions allowed the company to freeze the pensions but not until it emerged from bankruptcy.

Delphi said in its motion that accelerating the freezing of its pension plans will allow it to cut costs faster and emerge from bankruptcy protection quicker, while also protecting the benefits of its current and former workers.

Attorneys for the companies’ unsecured creditors argued against approving the motion, saying that continued troubles in the credit and automotive industries make it an inappropriate time to be changing benefits for company executives.

But Drain approved Delphi’s motion, saying that it was clear that a delay would result in substantial costs for the company.

Delphi’s creditors also have objected to the latest deal between Delphi and GM, saying it would give GM too much control over Delphi’s Chapter 11 process. Troy, Mich.-based Delphi was GM’s parts-making unit until a 1999 spinoff.

An earlier plan included the participation of a group of equity investors who said they would inject up to $2.55 billion into the company. That deal fell through in April when the investors, led by Appaloosa Management LP, backed out.