Delphi Corp., the struggling U.S. auto parts supplier, is prepared to file for bankruptcy as early as this week as it lines up lawyers and consultants, the New York Times reported on Wednesday.
The latest move came Monday when Delphi appointed David Sherbin as general counsel. Sherbin had worked with Delphi Chief Executive Robert Miller in the same capacity at Federal Mogul, which had filed for bankruptcy.
Whether Miller goes through with a bankruptcy filing for Delphi remains to be seen, the paper said. Miller has said he will file by Oct. 17 at the latest, when U.S. bankruptcy laws change, unless former parent company General Motors Corp. and the United Automobile Workers union agree to a multibillion-dollar bailout.
Delphi employs nearly 50,000 people and makes parts for most new cars and trucks sold in the United States.
A Delphi bankruptcy would be painful for GM because the automaker, under the terms of Delphi’s 1999 spin-off, agreed to provide medical and pension benefits to Delphi retirees if the company went bankrupt before 2007.
There is also the issue of pension costs. Delphi has previously reported its pension obligations on behalf of workers exceed its plan assets by $4 billion, but a calculation by the U.S. Pension Benefit Guaranty Corp. — obtained by the New York Times — suggests Delphi’s shortfall would be closer to $10.9 billion if the plan were terminated today.
