Union Sues GM for Delphi Payments

Says GM didn't honor pledge to pay $450 million to union health trust fund for Delpha

The United Auto Workers sued General Motors on April 6, claiming the automaker bailed out by the government failed to honor a pledge to pay $450 million to a union trust fund for former GM parts unit Delphi.

The lawsuit filed in federal court in Detroit seeks "to remedy the company's failure to honor its obligation under (its) labor contract to make a specified payment into a Voluntary Employees' Beneficiary Association (VEBA)," the court filing said.

The VEBA was created to cover retiree health costs at Delphi when that division went into bankruptcy.

The suit claimed that when GM went into bankruptcy last year with the support of the U.S. and Canadian governments, the company pledged to live up to earlier commitments to the union. But GM last November refused to make the payment after Delphi emerged from bankruptcy and "thus stands in breach of its contractual obligation."

The suit came a day before GM reports post-bankruptcy financial results.

GM has said it hopes to launch an initial public offering as early as the second half of this year.

The U.S. government holds a 61% stake in the nation's largest automaker and has said it does not want to hang onto that stake indefinitely. However, it will likely take a number of years for the government to fully wind down its position.

Copyright Agence France-Presse, 2010

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