DETROIT (CN) – The United Auto Workers says General Motors welshed on its promise to pay $450 million to a health-care fund for retirees of GM’s former subsidiary, the parts-maker Delphi Corporation. General Motors announced on Wednesday that it lost $3.4 billion in the fourth quarter of 2009.
The International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW) says GM agreed to pay the money to a Voluntary Employees’ Beneficiary Association during Delphi’s 2007 bankruptcy proceedings, and again during its own bankruptcy proceedings in 2009.
The UAW says it demanded payment in October 2009 after GM and Delphi completed a plan to reorganize Delphi. But the union says, “By letter dated November 11, 2009, that UAW demand was rejected, and since that time [General Motors] has failed and refused to make the contractually required payment.”
In 1999, when General Motors spun off the auto parts-maker as an independent company it also spun off part of its pension fund to cover the workers shifted to Delphi, according to contemporary reports from the New York Times. In doing so, General Motors agreed “to take back part of that fund if Delphi were ever in severe financial distress,” the Times reported.
The union wants the $450 million. Its lead counsel is Julia Penny Clark with Bredhoff & Kaiser of Washington, D.C.