By SCOTT SMITH, Kokomo Tribune staff writer
scott.smith@kokomotribune.com
Howard County officials filed a limited objection late last week to Delphi Corp.'s reorganization plan, in an attempt to receive a full property tax settlement.
The Troy, Mich.-based parts maker still owes $6.5 million in property taxes to local taxing units, as the result of not paying taxes in 2006, the year after the company declared bankruptcy.
A U.S. bankruptcy court in New York is scheduled to hear the Howard County filing - along with objections from hundreds of other creditors - at a hearing Thursday.
That hearing may, or may not, be the last chance for creditors to press claims against General Motors' largest parts supplier.
The plan calls for Delphi operations in Kokomo, Grand Rapids, Mich., Saginaw, Mich. and Lockport, N.Y., to be sold to General Motors Corp., and for most of the company's remaining assets to be sold to Los Angeles-based private equity firm Platinum Equity.
But the speed of the government-brokered deal has produced a logjam of objections, including filings last week from a group representing former salaried Delphi employees.
The county's objection, filed July 14, asks for immediate repayment of about $1.88 million - the secured portion of the total tax liability - as soon as Delphi emerges from bankruptcy.
According to the reorganization plan, however, the county might have to wait up to seven years to receive the $1.88 million.
The county's objection said the repayment of that money over time, even with interest, violates bankruptcy law and would pose a hardship to the county's taxing units.
In addition, attorneys representing the county want to make sure the remaining $4.6 million owed would remain as a lien against whomever assumes the tax liability for the Kokomo Delphi operations.
The county also wants the $4.6 million, which is listed as a "priority" claim, to be paid in full on or before March 1, 2011, with interest.
The objection also seeks clarification on the future ownership of the Kokomo Delphi properties.
While it appears some of Kokomo's Delphi properties are being sold to GM, it's not certain that all Kokomo properties will go to GM, the objection states.
The concern is that, without that clarification, there could be some confusion over responsibility for both the unpaid 2006 taxes, as well as taxes due this year and next.
Avoiding that confusion could be critical, if the county is to avoid a situation similar to the recent bankruptcy reorganization of the former Chrysler LLC.
That reorganization was approved before local officials realized the liability for paying more than $24 million in unpaid personal property taxes would remain with the now-defunct "old Chrysler."
The "new Chrysler," now managed by Italian automaker Fiat SpA, did not acquire that liability during the sale of the "old Chrysler" assets by the bankruptcy court.
As a result, local taxing units likely will have to borrow some or all of the $24 million in order to avoid cuts in essential public services.