Bankruptcy

Who Is Hurt Most by G.M.?s Wide-Scale Bankruptcy?

By writer

Jobs Overseas + Bankruptcy/Health Care Catch 22=Unsure Future for Retired Workers

Retired (G.M. parent company) Delphi workers have long enjoyed a life-time of health coverage. Even as insurance coverage rates went sky-high, G.M. continued to foot the medical bill for about 100,000 of these white-collar salaried employees?a sum of $1.5 billion a year in health care for Delphi workers. 2007?s health insurance cost for all G.M. workers in 2007 was a staggering 4.6 billion. In December 2008, their promise of a lifetime of health insurance came crashing down. With that development and G.M. filing for bankruptcy June 1, 2009, (and back out of Chapter 11 on June 11) many retirees were terrified that their pensions would be confiscated as well.

They do have some reason for concern– G.M. has been rampantly downsizing their workforce and paying severance packages to hourly workers after coming to an agreement with United Auto Workers in 2007. Since then, they have been dipping into G.M.?s pension fund to pay for this. That includes a sizable severance package of 8.2 million over the next five years for disfavored ex-CEO Rick Wagoner. According to their agreement, they also don?t have to replenish the pension fund until 2013, further emphasizing that GM is running on borrowed resources.

Congressional lobbyists applied intense pressure on G.M. to make good on their promise to Delphi pensioned white collar workers as well as hourly workers. After much deliberation and thousands of anxiously nibbled fingernails, 30-year long G.M. hourly workers will continue to receive $19,000 a month for their loyalty. The same can?t be said for honoring life-long health insurance promises, however. With this broken promise, it?s safe to say that many employees will think twice when their corporate employers offer ?set for life? health benefits.

Going bankrupt due to health care costs is a looming threat to many Americans. In 2007, the percentage of bankruptcies that were health-care related was at 15%. 2009 saw health-related bankruptcies rise 50 percent, with many cut insurance plan to blame. Lack of health insurance and a stockpile of debt isn?t anyone?s American dream, but they must know that situations like that presented by ?America?s car company? G.M. are on the rise. Discover how bankruptcy can keep you protected from angry creditors when you?ve been hit hard. Call one of our Legal Helpers bankruptcy attorneys today!

Full post as published by Consumer Bankruptcy Blog from Legal Helpers on July 31, 2009 (boomark / email).