General Motors is not obligated to honor a pre-bankruptcy contract between the automaker, its affiliate, Delphi, and the United Auto Workers to cover $450 million in retiree medical benefits, a federal judge says, according to Reuters. The contract in question was enacted two years before GM's June 2009 bankruptcy filing.
When UAW entered a medical benefit contract with post-bankruptcy GM in July 2009, the payment reportedly was not included. Contrary to UAW's claim that GM is obligated to make the payment because Delphi emerged from bankruptcy in October 2009, US District Judge Avern Cohn says that the language in the July 2009 contract made it clear that GM doesn't owe that $450 million in medical benefits.
"Whether New GM has a moral obligation regarding the payment is another matter and not relevant," part of Cohn's 36-page decision reportedly reads. "The UAW's efforts to turn the absence of language into language is reminiscent of the efforts to capture a 'will o' the wisp."
Bob King, UAW's president, says the union is considering whether to appeal the decision or not.