A Delaware bankruptcy judge on Tuesday refused to halt implementation of his order allowing auto parts supplier Visteon Corp.
to terminate its retirees' health and life insurance benefits.
An attorney for a union representing some 2,100 people who worked at two Visteon plants in Indiana argued Tuesday that many are facing hardship, and that the order should be stayed pending an appeal to a federal district court judge.
"Literally, lives are in danger," said Susan Jennick, a lawyer representing retirees who worked at Visteon's shuttered plants in Connersville and Bedford.
Visteon, a top supplier to and a former subsidiary of Ford Motor Co., argued at a hearing last year that the retiree benefits were one of its largest liabilities and posed a significant obstacle to a successful reorganization. The company claimed that the retiree health and life insurance subsidies constituted a liability of about $310 million.
According to court records, benefits for retirees of the two Indiana plants alone cost the company more than $1 million a month.
But Vicki Jo Lady, a maintenance worker employed by Visteon for 33 years, said she and her husband both suffer from chronic illnesses and had to cut back on medication as they faced the loss of their employer-sponsored coverage. Lady, 58, began sobbing as she described the choice of paying for COBRA coverage and making house payments and buying groceries.
"They don't look at me as a person, they look at me as a piece of paper," she told Judge Christopher Sontchi before offering a tearful plea to Visteon officials.
"You're messing with people's lives here," she said. "... You're intelligent people; quit taking from people out of greed."
While acknowledging the decision to terminate benefits will cause hardship for some, Visteon attorney Steve McCormick said the appeal is bound to fail, and that further delays will only cause confusion for retirees exploring other health plans in advance of the April 1 benefits termination.
After a three-hour hearing, which included testimony from Connersville mayor Leonard Urban, Sontchi stood by his earlier ruling, in which he determined that the retirees did not have vested rights in the benefits and that Visteon had the ability to terminate them unilaterally.
"Needless to say, this is an extremely serious issue, the court is well cognizant of that," said a somber Sontchi. He agreed with Visteon that the retirees had not met the standards for him to halt implementation of his ruling, including the likelihood that their appeal would be successful.
"It would be further delay of the inevitable," said Sontchi, who also acknowledged the hardship some retirees will face.
In other developments, Visteon submitted a revised reorganization plan that provides more recovery for unsecured creditors than its original plan did.
Visteon attorney Marc Kieselstein said the company is receptive to bondholders who want to propose an alternative plan that would pay off the term loan lenders and leave the bondholders in control of the company, but that the bondholders have yet to submit a definitive proposal.
"We're waiting for a specific plan," he said.
Attorneys for the bondholders and other unsecured creditors accused the company of filing an amended plan in an effort to gain an advantage over the bondholders group, which says it needs time to complete its due diligence.
A hearing on the company's revised plan is set for April 13.