Posted on 10/08/2005 9:36:39 AM PDT by HAL9000
DETROIT (AP) -- Delphi Corp., the largest U.S. auto supplier, filed for bankruptcy Saturday, sending shock waves through the nation's auto industry, which already is weakened by high labor costs and falling market share. The company's bankruptcy is one of the largest in the country's history.Delphi filed to reorganize its U.S. operations in federal bankruptcy court in New York, where hearings are scheduled to begin next week. Delphi's non-U.S. operations were not included in the filing.
Delphi Chairman and CEO Robert S. Miller said the company hopes to emerge from Chapter 11 in early to mid-2007.
"We will make every effort to make this as quick as possible," Miller told The Associated Press on Saturday.
Miller, a restructuring expert who was hired in July, had threatened to take the company into bankruptcy if he failed to reach a restructuring agreement with Delphi's former parent, General Motors Corp., and its largest union, the United Auto Workers. Miller set a deadline of Oct. 17, when U.S. bankruptcy laws are scheduled to change.
Miller said Delphi will continue negotiating with GM and the UAW to lower its labor costs. Miller said the three parties agreed to continue their discussions after a bankruptcy filing.
"We mutually concluded there was still too much of the complex work yet to be done," Miller said. "It was not going to be efficient to work right up to the midnight deadline to the change in the law."
Miller said nothing will change immediately. Delphi will continue to pay its 50,000 U.S. employees and suppliers and will ship its products on schedule. Delphi has 31 plants in 13 states, including Michigan, Ohio, Alabama and California. The company has 185,000 employees worldwide.
"We are not going to adversely affect our customers," he said. "Our people will get their pay checks and will still have their health benefits. Retirees will continue to get their checks. Any changes to that will be dealt with in an orderly way."
Delphi will finance its operations with $4.5 billion in loans, including up to $2 billion in debtor-in-possession financing from a group of lenders led by JPMorgan Chase Bank and Citigroup Global Markets Inc.
Delphi, based in the Detroit suburb of Troy, has struggled to make a profit since GM spun it off in 1999. It lost $4.8 billion in 2004 and nearly $750 million in the first half of this year.
Delphi had $16.5 billion in total assets as of June 30, the most recent figure available, and has total debt of $6 billion, Standard & Poor's said Thursday. The company had $4.3 billion in unfunded pension liabilities at the end of 2004, according to a company filing with the U.S. Securities and Exchange Commission.
The largest corporate bankruptcy in the U.S. was WorldCom Inc., which had $103.9 billion in pre-bankruptcy assets.
This sets the stage for GM to file reorganization, and then in order to stay competitive, Ford.
The legacy costs will be shunted to the Pension Guarantee which is already underwater.
I expect to see everyone's pension plans disappear until there are none for the private sector.
Good news though....all those public pensions throughout the country will still be paid. Legacy costs for city state federal will continue.....forever and ever and ever and ever.....
Well, at least it's not as bad as WorldCom.../s
The writing is definitely on the wall.
Exactly! And the Clintons,Kerrys and Kennedys wouldn't have it any other way.
I saw this one coming for years.
We have to get away from employer-furnished health care and back to fee-for-service soon or there will be no companies left. Milton Friedman has suggested the quickest way to do this is to make all benefits taxable. That would force people to choose between (now) free medical benefits and cash.
Only a few years ago but it now seems so long ago.
There was a Delphi online service, but it was a totally different company than the Delphi auto parts manufacturer.
I was a Delphi customer. It was the only way to get an Internet connection back in 1992, prior to the emergence of the World Wide Web, Mosaic, Netscape, etc.
You can get their 10K from http://phx.corporate-ir.net/phoenix.zhtml?c=105758&p=irol-sec&secCat01.1_rs=11&secCat01.1_rc=10
Their balance sheet is a shambles.
The main problem seems to be that about half their sales are to GM and have been declining since separation from GM. However, due to union contracts and other constraints, they haven't been able to shut capacity and fire workers fast enough to stay viable. Nor have they been able to compete for and win other business to replace the GM losses.
"Take the 16.5 billion in assets, pay off the 6 billion in debts, fund the 4.3 billion in pension obligations, that leaves approximately 6 billion. What's the problem?"
Aww......you know you can't spoil Carl Ichan's party, don't you.
Loyalty to anyone other than yourself, your family, and those who owe their positions to your family is a fool's game.
Follow the Bushes' example.
Don't worry, I'm sure the military will come to your rescue, that is the answer to all things lately.
And before anyone says it, No, I'm NOT a DUtroll.
TLR
The bankruptcy timing had to do with the coming change in the bankruptcy law.
This could mean the loss of 4000 jobs in Western NY, they are the largest employer in Niagara County.
The unions are breaking the backs in both private and public sectors.
UAW refuses to compromise risking all their members' jobs.
Well, the gravy train is slowly coming to an end...the sooner the better.
From the Curent Forbes...
"GM has thousands of workers collecting paychecks for not doing much. What would it take to get them off the payroll? Probably more than GM could afford to spend."
http://www.forbes.com/business/forbes/2005/1017/110.html
unbelievable such a situation could exist. Corporate welfare for real.
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