One Delphi Plan Goes to GM, One to PBGC

June 4, 2009 ( - Bankrupt auto-parts maker Delphi Corp. announced that General Motors will take over its hourly pension plan and the federal private-sector pension insurer will assume responsibility for its salaried pension program for 20,000 workers and retirees.

Delphi revealed the plan for its pension programs, as part of an overall blueprint for its emerging from U.S. Bankruptcy Court protection, in a securities filing with the U.S. Securities and Exchange Commission (SEC).

The company said in the document that a dispute with former investors and the economic downturn   “have prevented Delphi from being able to fund its defined benefit pension plans for existing retiree and active hourly and salaried employees following emergence from Chapter 11 reorganization.”The company also indicated it had looked into several alternative solutions for its salaried pension plan and other “subsidiary” plans, but “none were determined to be feasible.”

Delphi said the Pension Benefit Guaranty Corporation (PBGC) may initiate an involuntary termination of the salaried pension plan and the other “subsidiary” plans. The company said the pension insurer is expected to enter into a settlement with Delphi that will result in the PBGC receiving certain assets from the bankruptcy estate.

The reorganization plan also included a deal to sell Delphi’s remaining assets to a variety of buyers including Los Angeles-based private equity firm Platinum Equity Partners. Platinum will acquire four of Delphi’s U.S. plants, accompanying tech centers, its Troy headquarters and the rest of its global operations. Platinum lined up $3.6 billion in investments to pay for Delphi’s ongoing operations.

The SEC filing is available  here .