General Motors released from $450 million payment with appeal ruling

By Kali Hays

New York, May 14 – General Motors, LLC (GM) will not be required to contribute $450 million for the payment of retirement benefits of former employees of Delphi Corp., according to a Thursday appeal ruling from the U.S. Court of Appeals for the Sixth Circuit.

After filing for bankruptcy protection in 2005, a claim was asserted against Delphi by former and current employees represented by International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) related to retirement benefits.

As Delphi’s “most important creditor” GM agreed to contribute $450 million toward payment of claimed retirement benefits in exchange for UAW’s cooperation in Delphi’s reorganization. After GM filed for bankruptcy in 2009 and worked with UAW regarding its own retiree debts, neither party “explicitly took a position on the claim for the $450 million contribution,” according to the ruling.

A dispute arose between GM and UAW regarding the payment, with UAW demanding the contribution and General Motors refusing to pay, and as a result of litigation the District Court ruled in favor of GM and UAW was denied payment.

UAW appealed the decision, but due to a “relevant” restructuring support agreement between the parties related to GM’s restructuring that “extinguishes UAW’s claims” the Sixth Circuit upheld the District Court ruling.

Delphi is a vehicle components manufacturer based in Gillingham, England. Its subsidiary is based in Troy, Mich.

General Motors, a Detroit-based automaker that filed for bankruptcy on June 1, 2009. The new General Motors Corp. emerged from Chapter 11 on July 10, 2009. The Chapter 11 case number is 09-50026.

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