General Motors shares suffer from Delphi bankruptcy
General Motors seems to be badly affected by the recent filing for bankruptcy by the auto parts suppliers Delphi. The shares of the company in the market have fallen down by 4.6% after auto parts firm Delphi declared itself bankrupt. The company was once a subsidiary of the General Motors and is now seeking protection from its creditors.
The problem for General Motors is that they had agreed to support Delphi pension-holders if the parts firm went bust before 2007. In another news, auto parts firm Dana said it would have to restate its earnings after the Delphi reported their problems. They claim that Delphiâ€™s accounts have weaknesses in its accounting of customer pricing and transactions with suppliers in its commercial vehicles business.
Delphi had sometime ago stated that its earnings for the rest of 2005 would fall short of forecasts because of rising steel and energy costs. Later, they postponed their third-quarter earnings announcement. General Motors itself is in quite some troubles with their operations. The company has lost $2.5bn on its North American operations in the first six months of 2005.
Delphi on their part is now finding ways to scrap its deals with its workforce as part of a wholesale restructuring.