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Former Car Czar Will Testify About Abandoned Delphi Pensions

About 70,000 Delphi employees lost retirement plans under bankruptcy.

by on Jun.21, 2011

Former auto czar Ron Bloom will be facing some tough questioning on the GM bailout and Delphi bankruptcy.

Former White House “Car Czar” Ron Bloom will be one of those called to testify in what could be an angry Congressional session looking into the long-term impact of the General Motors bailout.

Among other things, lawmakers are expected to focus on the decision to abandon the pension program run by Delphi, GM’s former parts subsidiary.  Delphi, which underwent the longest corporate bankruptcy in U.S. history, walked away from a program that covered about 70,000 retirees.  Some have lost as much as 65% of their benefits.

Among others called to testify will be Vince Snowbarger, the deputy director of the Pension Benefit Guaranty Corp., the agency created to assume control of failed pension programs.  Delphi’s pension program was underfunded by $7 billion, and the PBGC will cover $6.1 billion of that – making it the second-largest failed pension program ever assumed by the agency.

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While Delphi did not receive a direct federal bailout, its survival – and eventual emergence from Chapter 11 – depended on its ongoing relationship with GM.  That was enough to bring it under the umbrella of the House Oversight and Government Reform Committee, which will be holding a Wednesday hearing titled, “Lasting Implications of the General Motors Bailout.”


GM Selling Off Delphi Stake

Federal pension fund also selling off stake, leaving hedge funds in control.

by on Mar.31, 2011

Delphi CEO Rodney O'Neal.

Putting further distance between it and its one-time parts subsidiary, General Motors will sell off its stake in the massive automotive supplier Delphi.

The $3.8 billion deal will be paired with the sell-off of the stake in Delphi held by the federal Pension Benefit Guarantee Corp.  Both GM and the PBGC received their shares in the supplier following its emergence from bankruptcy protection in mid-2009.

Those moves will leave control of Delphi Automotive in the hands of the hedge funds that also took a stake in the supplier as it wrapped up what was the longest run through Chapter 11 in U.S. industrial history.

The decision to sell off its Delphi holdings comes just weeks after GM also generated $1.0 billion through the sale of its preferred holdings in Ally Financial, the lender once known as GMAC.  The Ally transaction will generate a one-time gain of $300 million, while GM will book a $1.6 billion profit from the sale of its Delphi shares.

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“We are systematically delivering on our commitment to strengthen and simplify our balance sheet,” said Dan Ammann, GM senior vice president and chief financial officer as of April 1.

Officially known as Class A Membership, GM took its stake in the supplier as part of the complex financial package that helped Delphi finally get back to business after it voluntarily plunged itself into bankruptcy in 2005.


Delphi Pension Dust-Up Under Federal Investigation

Did undue political influence cost many retirees their pensions?

by on Sep.15, 2010

Former Delphi CEO Steve Miller initially promised to keep both blue- and white-collar pension programs once he got the partsmaker out of Chapter 11.

A new federal investigation is underway, looking at whether undue political influence ultimately cost thousands of Delphi retirees a large chunk of their pensions.

An independent counsel has been brought in to review a controversial decision by the Pension Benefit Guarantee Corp., or PBGC, to assume control of the Delphi Corp. salaried pension program as the supplier finally emerged from its long run through bankruptcy.

Neil M. Barofsky, a special inspector general for the Troubled Asset Relief Program, said, in a letter to a New York congressman, that his office would examine whether officials from the Treasury Department’s automotive task force — or the White House — pressured General Motors to protect the pensions of Delphi’s blue collar workers, while the PBGC slashed the pensions of salaried employees.

Barofsky said his office would try to determine whether political considerations played any role in the decisions, “favoring hourly over salaried retirees.”

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There’s no question there were a lot of vested parties desperately hoping to drag Delphi out of its Chapter 11 quagmire, last year, the longest any major industrial company had ever been caught in the bankruptcy process.