According to a Detroit Free Press news report, the $3 million sought by the department would be on top of an agreement announced in early September, in which the struggling auto parts maker said it would pay employees and retirees $47 million to make up for losses in their retirement accounts (See Delphi Closer to Clearing Bankruptcy Hurdles ).
The employees and retirees had sued the company, charging that Delphi should have known that investing retirement funds in company stock as part of the Delphi Savings-Stock Purchase Program was unwise. The $46-million settlement covered individuals who traded in Delphi stock between March 7, 2000 – when General Motors Corp. spun off its auto parts division – and March 3, 2005.
According to the news report, the company reinvested GM dividends into more GM stock instead of investing them in the fund it was supposed to. During this time, the value of GM’s stock saw a near 16% dip. The department claims that if the company would have instead invested the in the Promark Income Fund, the workers would have gained a total of $3 million.
A U.S. bankruptcy judge, who will have to sift through thousands of other claims made by parties who say the company owes them money, also must decide whether to accept the department’s $3 million secured claim.Delphi says that it has already dealt with the mistake when in 2005 it gave workers a choice of keeping GM stock or selling the shares to buy shares in the Promark fund, plus the difference if that money had been invested correctly. The company said it paid $856,596 to 1,476 workers who asked for a change, according to the news report.
The department claims, however, that Delphi made it seem as though the workers would lose money by selling their extra GM shares because of the language it used when it told them about their options.