DETROIT (Oct. 11, 2005) — Delphi Corp., North America's largest automotive parts supplier, has filed for Chapter 11 bankruptcy protection, looking to the courts to let it cut costs by rewriting the wage deal with its unionized workforce, close plants and possibly put billions of dollars in pension liabilities back onto former parent General Motors (GM) Corp.
The bankruptcy covers only Delphi and its 38 units in the U.S.; non-U.S. subsidiaries are not included.
The company filed for Chapter 11 at the U.S. Bankruptcy Court in New York late the morning of Oct. 8 after a special board of directors meeting to approve the move. The filing came more than a week before changes in the bankruptcy laws take effect on Oct. 17. Those changes give companies less flexibility and control over restructuring efforts.
Delphi CEO Steve Miller had set Oct. 17 as a deadline in seeking wage concessions from the United Auto Workers (UAW) and financial aid from GM. But he said Oct. 8 that reaching a deal with the UAW to cut costs was “more complex than we anticipated. There was no way to get it all done before Oct. 17.”
GM, Delphi's biggest customer, said it did not expect the bankruptcy to have any immediate impact on its operations. The auto maker noted in a statement that the bankruptcy might let it pay less for Delphi parts in the future.
However, GM shares lost almost 10 percent Oct. 10 after Delphi's filing, while Standard & Poor's dropped its rating on the car maker's $284 billion in debt further into junk status. One S&P analyst, according to Dow Jones & Co. Inc., noted the repercussions from Delphi's problems could impede GM's efforts to turn around its ailing North American automotive operations.
Delphi's bankruptcy petition listed total assets of $17.1 billion as of Aug. 31 and debts of $22.2 billion. Delphi had sales of $28.6 billion in 2004, including $12.7 billion from GM in North America.