Delphi has reached a deal with the Internal Revenue Service that will allow it to transfer some pension liabilities to its former parent, General Motors, according to the Associated Press.

The deal also enables the bankrupt auto-parts maker to avoid up to $1.4 billion in excise taxes, reported the AP, which cited papers filed Friday in U.S. Bankruptcy Court in Manhattan.

In addition, according to the wire service, Delphi has won a reprieve from its June 15 deadline for meeting minimum funding requirements for its pension plans, one for hourly workers and one for salaried workers. The waivers permit the company to defer contributions that would have been due on June 15 until after Delphi emerges from Chapter 11.

Delphi filed for bankruptcy protection in October 2005.

Without the waivers, the AP noted, the IRS would declare a $1.25 billion shortfall for the plans for the year ended September 30, 2006. In that event, Delphi reportedly stated, it would be on the hook for an added excise-tax assessment of at least $125 million.

The AP explained that Delphi disputes the right of the IRS to levy taxes against the company while it operates under bankruptcy protection. The waivers would reportedly render that point moot.

In return, however, Delphi must file a reorganization plan no later than July 31 and emerge from bankruptcy no later than November 15. It also must make a $10 million “accelerated contribution” to its hourly plan following its emergence from Chapter 11, the AP reported .

Delphi must also provide the Pension Benefit Guaranty Corp. with two letters of credit in favor of the plans: $100 million toward its hourly plan and $50 million toward its salaried plan, according to the wire service. The letters of credit will expire once Delphi satisfies its contribution requirements upon exiting bankruptcy.

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