A US judge has provisionally granted bankrupt Delphi permission to end health care and life insurance benefits for retired salaried workers from April.


Delphi sought relief from the benefits, which cost it more than US$70m per year, according to court documents cited by Reuters. The benefits total liabilities of more than $1.1bn on its balance sheet.


Citing Delphi’s need to conserve liquidity, US bankruptcy judge Robert Drain of the Southern District of New York said the company had waited for a sufficient time before seeking to suspend the benefits, the report said.


Lawyers for about 15,000 salaried retirees had argued that parts of the US bankruptcy code limited the ability of a debtor in possession to modify retiree benefits, but Delphi countered that those benefits are provided “at will.”


Judge Drain ruled that the code only applied when retirees could prove they have a guaranteed right to those benefits.

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Delphi also sought to stop providing similar benefits to future salaried retirees and post-retirement life insurance benefits to its current and future retirees.


Drain ordered the creation of a committee to see whether any group of employees may be vested in the plans and have guaranteed rights to the benefits.


He granted the committee a budget of $200,000 and set a hearing date of 11 March for it to present its results.


“The consequence of the court being wrong is pretty serious,” Drain said, according to Reuters.


“No company is ever satisfied with having to cut benefits,” said Jack Butler, Delphi’s bankruptcy lawyer. “But we appreciate the judge concurring with our business judgment.”