Court orders Visteon retiree benefits reinstated

[Jack]

Court orders Visteon retiree benefits reinstated
July 13, 2010 - 2:16 pm ET


WILMINGTON, Del. (Reuters) -- A U.S. appeals court today ordered bankrupt auto parts maker Visteon Corp. to reinstate benefits to thousands of retirees who had them terminated during the company's ongoing Chapter 11 reorganization.

The Third U.S. Circuit Court of Appeals in Philadelphia reversed a lower court ruling that affirmed a bankruptcy court decision allowing the company to unilaterally cut off health and life insurance benefits for nearly 8,000 retirees and dependents.

Visteon, the former unit of Ford Motor Co. that spun off in 2000, had argued that it needed to end the benefits to save $31 million in 2009 and $310 million long term.

Visteon spokesman Jim Fisher said, "We are assessing the ruling and will determine an appropriate course of action."

The arguments in the case turned on whether Congress intended to restrict the ability of a bankrupt company to unilaterally end benefits, even if it had that right prior to filing for Chapter 11.

The appeals court sided with a union representing 2,100 retirees that appealed the bankruptcy court's decision. The judges said that by the plain language of the law Visteon had not gone through the proper procedures.

"It's long overdue," said Thomas Kennedy of Kennedy, Jennik & Murray, who argued the case for the unions. "This changes the law that was previously established in Second Circuit."

Christopher Sontchi, the Delaware bankruptcy court judge who approved Visteon's request to end retiree benefits, relied on a ruling in the U.S. Second Circuit, where parts maker Delphi Corp won bankruptcy court approval to cut benefits for 15,000 employees in 2009.

Visteon currently employs 31,900 worldwide and 5,769 in the United States.

The Third Circuit Court has appellate jurisdiction over U.S. district courts in Delaware, New Jersey and Pennsylvania. Visteon filed for bankruptcy protection in Wilmington, Del., in May 2009.



Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100713/OEM01/307139967/1424#ixzz0tcAUXWpl

[Jack]

These greedy bastards won't give up will they.
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Visteon may target benefits again

Supplier studies ruling on hourly retirees


BY JEWEL GOPWANI
FREE PRESS BUSINESS WRITER

Visteon may try again to cut health care and life insurance benefits for 2,100 hourly retirees, which a federal appeals court this week ordered the company to reinstate.

The Van Buren Township auto supplier said it is evaluating the ruling and could consider terminating the benefits when it emerges from bankruptcy protection.

A federal appeals court in Philadelphia ruled this week that the supplier moved too fast when it cut off health care and life insurance benefits for retirees earlier this year. Visteon should have tried to negotiate with the union representing retirees before ending those benefits, the court ruled, reversing previous decisions in bankruptcy and district courts.

The ruling applies to hourly retirees represented by the IUE-CWA who worked at Visteon's now-shuttered Indiana plants in Connersville and Bedford.

Visteon expected to save $310 million by cutting health and life insurance benefits.

Creditors are voting on Visteon's reorganization plan now. If creditors approve, a hearing to confirm the plan would be held in September.

When Visteon emerges from bankruptcy, the company won't be subject to the bankruptcy rules that it violated.

But whether that would be legal is up for dispute.

In court documents, Visteon argued that in its agreements with the union, it reserved the right to change or terminate benefits to workers.

The union argued that the benefits are vested.

"Over the years, the union members agreed to give up part of their cost-of-living increases to pay for retiree health benefits," said Susan Jennik, an attorney who represents the union. "These benefits are in fact vested and can't be changed as the employer wishes."

Visteon also could try to negotiate with the union in bankruptcy court to reduce the benefits.

But Richard Kruger, a bankruptcy lawyer at Jaffe Rait Heuer & Weiss, expects Visteon to wait until the company emerges from bankruptcy and not propose changes while its case is ongoing.

Negotiating benefit cuts would have been easier last year, when automotive sales and production fell steeply.

Visteon's improved financial health -- it reported a profit for in the fourth and first quarters -- could work against its argument to cut benefits, Kruger said.

Visteon, which could be nearing the end of its bankruptcy stay, wouldn't want to risk delaying the case, said John Pottow, law professor at the University of Michigan.

Retirees who will see their benefits restored acknowledge that the benefits may only be temporary.

Linda Ross said she expects her benefits to be reinstated, but doesn't know for how long she can rely on them.

"It's just been like riding a roller coaster," Ross said.

http://www.freep.com/article/20100717/BUSINESS01/7170366/1002/NLETTER01/Visteon-may-target-benefits-again?source=nletter-business