Car firm Delphi wants to pay off Spanish workers
11 July 2007, WASHINGTON - Delphi Corp. wants bankruptcy-court approval to fund a EUR 119 million severance deal with workers at a southern Spain manufacturing plant that is slated to be closed.
11 July 2007
WASHINGTON - Delphi Corp. wants bankruptcy-court approval to fund a EUR 119 million severance deal with workers at a southern Spain manufacturing plant that is slated to be closed.
Delphi has asked the U.S. Bankruptcy Court in Manhattan to sign off on the funding by the end of next week, which would allow the Spanish court to approve the package before its August recess.
Delphi said in court papers filed Monday that if the severance plan is not in place by the end of July, the Spanish subsidiary that operates the plant could be on the hook for $509 million (372.5 million) in labor costs.
The manufacturing plant, located in the Cadiz province of Spain, employs 1,600 workers and produces steering equipment, suspension gear and bearings. It is run by Delphi Automotive Systems Espana S.L., a subsidiary of Delphi Automotive Systems (Holding) Inc.
Delphi, based in Troy, Michigan, filed for Chapter 11 protection in October 2005, driven into bankruptcy by cutbacks in the U.S. auto industry. The Spanish subsidiary announced the closure of the Cadiz plant in February and filed for an insolvency proceeding in March.
Delphi Automotive Systems (Holding) Inc. would pay EUR 119 million to fund the settlement agreement, which covers 45 days of salary per year of service for each employee. The previous 2005 labor agreement provides workers 60 days of pay per year and continuing wages through 2010, the company said.
Delphi warned that if the Spanish subsidiary doesn't have the money in place by July 31, the Spanish court could dismiss the settlement and order the 2005 agreement to take effect. The company estimated the cost of the 2005 deal would cost it USD 509m.
Delphi is also asking for bankruptcy-court permission to spend up to EUR 10m to cover the claims of the Spanish subsidiary's suppliers and non-labor creditors. The holding company would only provide funding if proceeds from the sale of the subsidiary's assets are not enough to cover the claims.
Delphi said paying the claims "will preserve the credit reputation of the company globally, and particularly in Europe."
[Copyright AP with Expatica]
Subject: Spanish news