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Delphi Deal with GM and United Auto Workers Approved

New deal has been approval last Friday between recently bankrupt auto parts maker Delphi, its former parent General Motors and the United Auto Workers Union. According to the new deal, Delphi will be able to offer GM-funded retirement incentives to around 13,000 members United Auto Workers Union members, and even allow 5,000 employees to return to factory positions at General Motors.

Delphi, which last week asked the court for permission to reject its labor contracts, has described the attrition plan as a first step to slashing wage and benefit costs and reversing losses in its U.S. operations. It argued the voluntary program presented "a menu of options and opportunities" to workers, making it possible for at least some blue-collar employees to manage "a soft landing."

In his ruling, Judge Robert Drain agreed with that argument. "The agreement provides an important option for the debtor`s UAW workforce to exercise a right either to be bought out or to migrate from the company to GM," Drain said. "This right is significant in that there is tremendous uncertainty with regard to the future of the debtor`s operation and the future of the collective bargaining agreement." He also said he would approve a cooperation agreement between GM and unsecured creditors. The creditors` committee had asked for GM documents detailing its ties to Delphi so it could estimate the scope of GM`s claim.