US judge says GM doesn not have to pay old-GM retirees’ medical benefits

Article by Christian Andrei, on December 12, 2013

United States District Judge Avern Cohn in Detroit has ruled that General Motors Co. is not required to pay $450 million to cover medical benefits for its retirees. The judge said that the current GM did not assume any obligation for the payment, since it was contracted by the old GM before it filed for bankruptcy in June 2009.

The payment had been part of a June 2007 contract between the old GM, Delphi Corp. and the UAW. But the payment was excluded in another contract over medical benefits inked in July 2009 by the new GM that emerged from Chapter 11. The UAW had claimed that the new GM owed the money by virtue of Delphi's own emergence from bankruptcy in October 2009.

Cohn, however, said the language of the 2009 contract was clear that GM did not owe the amount, adding that US Bankruptcy Judge Robert Gerber in New York, found the contract fair, reasonable and in retirees' best interests.

Cohn wrote in a 36-page decision that whether new GM has a moral obligation regarding the payment is another matter and not relevant.

"The UAW's efforts to turn the absence of language into language is reminiscent of the efforts to capture a 'will o' the wisp.'" Chapter 11 reorganizations can allow debtors to deny obligations predating their bankruptcy filings.

Topics: gm, united states

If you liked the article, share on:


Login or Create new account to add a comment!


It wasn’t too long ago when Maserati took the wraps off what appears to be the most gorgeous concept coupe ever made. The Alfieri coupe premiered at the 2014 Geneva...
by - October 23, 2016
Many have been excited with the impending arrival of the next-generation Jeep Wrangler and the new 2019 Jeep Grand Wagoneer, which is slated to be the brand’s new range-topping model....
by - October 21, 2016
Chevrolet has taken the wraps off its new Chevrolet Colorado ZH2 at the fall meeting of the Association of the United States Army (AUSA). Tagged as the most extreme fuel-cell-powered...
by - October 21, 2016
Honda has unveiled the fifth generation of its hot-selling SUV – the 2017 Honda CR-V. The latest iteration of the CR-V should help it maintain its benchmark status in the...
by - October 21, 2016
Many are already expecting BMW to launch an ultra luxurious SUV that will serve at its new flagship by late 2018. Larger than the X5 and X6, the new X7...
by - October 21, 2016