Delphi Shafts Suppliers, Union; Executive Bonuses Escape Unscathed
When former GM division and bankrupt parts supplier Delphi tried to get their re-organization plan approved by a federal judge earlier this month, shareholders and creditors panned it. In the last filing, Delphi's top brass wanted to cut the shareholders' recovery from $470m to $69m. The latest revision ups the pay-off to $190m. To make that happen, Delphi looted took money from the right to purchase stock assigned to the United Auto Workers (UAW) and other unions– reducing the UAW's cut by 6.4m shares. Even so, creditors aren't happy with the new plan. But they're caught by the short hairs; they lose everything if Delphi goes under. The clincher: if the new new new plan isn't in place by December 31, Delphi's IRS waiver expires. Delphi would have to cough-up $1.4b for taxes and penalties on pension obligations. Other disclosures from the filing: their legal expenses have topped $320m and could reach as high as $400m. And they're capping the agreement to supplement some long-term employees' retirement plans. Oh, and they're still going to give their top executives at least $216m in bonuses, post-bankruptcy.
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The problem is that CEO bonuses and whatnot are a private sector decision, and while reprehensible in many cases, are not and SHOULD NOT be illegal. There's a little thing called liberty we claim to defend in the free world. Everyone has liberty to be a moron.
I don't see why the union should be treated any different than the other suppliers. As soon as they start working under a union contract they really work for the union that is now providing labor for the company. I know that's not how the law sees it, but I see it that way. Actual employees should be first to be defended, followed by suppliers. Now the real pickle are the officers of the company. In our present system it seems that the stock holders are not really running the company, and I have to agree that the first ones burned should really be the officers. Would someone here please explain how the stockholders suddenly lose their rights to fire all the management? It would seem to me that the stockholders would ALWAYS choose to liquidate the company if there were any chance at all of getting money back for their investment. Even if there was not, it would seem they would somehow set themselves up to get preferential treatment to buy back into the new company. I am really at a loss as to how the officers can ignore their fiduciary obligations to everyone other than themselves.
Corporate America is run for the benefit of executives and Wall Street - any other entities or individuals who derive any positives are completely unintentual. The government figured out how to get themselves in the group of executives and investors, but they have guns and are allowed to use them to get their way.