Delphi has asked a New York bankruptcy court for another five months in which to file a restructuring plan amid indications that the automotive parts supplier is close to reaching a crucial deal on labour concessions with its unions and General Motors.
The proposed extension, from July 31 to December 31, confirms that Delphi will not emerge from Chapter 11 protection by mid-2007, the target set when it filed for court supervision in October 2005.
However, a source close to the talks said yesterday that an “over-arching” deal was likely within the next week. The source cautioned that the talks were convoluted, involving existing and new employees, as well as GM.
Delphi was wholly owned by GM until 1999, and the carmaker remains liable for some employee and retiree benefits. GM has estimated the cost of these at $7bn.
The unions, led by the United Auto Workers, have resisted Delphi’s demands to nullify its labour contracts.
But according to recent reports, the deal taking shape would provide cash payments to workers in exchange for wage concessions. GM, which accounts for about half of Delphi’s revenues, is expected to subsidise future wages in exchange for more competitive component prices. Delphi officials were not available for comment yesterday
Delphi said in its extension application that although further talks with the unions and GM were necessary, it was confident a deal would provide “a platform to emerge from Chapter 11 during the current calendar year”.