Judge denies Visteon severance, retention plans

WILMINGTON, Delaware - A bankruptcy judge on Thursday denied a request by auto parts supplier Visteon Corp. to approve severance and retention plans for its nonunion employees.

In denying the proposed severance plan, Judge Christopher Sontchi said its inclusion of 12 company officers violated bankruptcy law. He also expressed concern that there might be officers among the 3,300 other workers who would be covered by the plan.

Sontchi expressed similar concerns about the proposed retention plan, wondering if it included employees who should be considered officers.

The judge did say Visteon could submit revised plans if it can clearly identify which employees are officers.

Visteon attorneys argued that the plans are needed to ease anxiety among workers concerned about losing their jobs, and to keep key employees from leaving the company.

"It's really to keep people focused on what we have to do to move the business forward," chief financial officer William Quigley testified Thursday.

But Sontchi noted that bankruptcy laws prohibit severance payments to a company officer unless the severance program is generally applicable to all full-time employees, and payments to the officer do not exceed a certain multiple of the amounts given to non-management employees.

The United Auto Workers objected to the severance plan, noting that it excluded union employees and was proposed at a time when Visteon wants to cut medical and life insurance benefits for UAW retirees.

Peter DeChiara, an attorney for the UAW, noted that 1,750 unionized employees would be excluded from the severance plan.

"There are unionized employees at the company who are not covered by any severance plan," he added.

The proposed severance plan would have covered more than 3,300 nonunion employees and carried a maximum payout of about $115 million to those who lost their jobs involuntarily. Half of that amount would be reimbursed by Ford Motor Co. because Visteon's work force includes salaried employees assigned to Automotive Components Holdings LLC, a wholly owned subsidiary of Ford. Visteon is the top supplier to and a former subsidiary of Ford.

The retention plan would have authorized payments of up to $3 million to 50 employees identified as critical to Visteon's ongoing operations and reorganization.

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