Hearing Scheduled for Delphi's Losing Contracts

Bankruptcy Court Judge Robert Drain has scheduled a hearing for August 15, 2006 for Delphi Corp. (USA, operating under Chapter 11 bankruptcy protection since October 2005). The purpose of the hearing -- under 11 U.S.C. Section 365 -- is to consider Delphi's request to cancel nearly 5,500 auto parts supply contracts to former parent General Motors Corp. Delphi claims all the contracts it seeks to abandon are money-losing, a key contributor to its financial woes, and cannot continue if it is to be a viable organization again. Only Delphi's Sandusky, Ohio plant produces bearings -- wheel bearing hub units, roller clutch bearings, and several other precision reciprocating parts. As part of the planned reorganization, Sandusky is to be sold or closed. We eviewed Delphi's petition and found it includes ten contracts for bearings. But those contracts comprise the vast majority of Sandusky's production. The affected contracts are for the following bearings (by GM part number): 930660, 930706 7467157, 7467181, 7470511, 7470587, 7470597, 7470617, 7470619, 7470625, 7471001, 7471009 12413037, 12413045 15839050, 15839051 21012556, 21013003 22701516, 22701520, 22703526, 22715554, 22715555 88957259 Creditors are backing Delphi's effort, but GM opposes it, calling the move, "blackmail."