There is an implied misuse of bankruptcy law by Delphi Corp. Reutter (2005) explains that in recent times, chapter 11 of the bankruptcy code has become an evasive solution for companies who wish to have contract agreements with unions terminated and also dishonor employee benefits and pension plans. Under justified circumstances, chapter 11 is vital in aiding companies which have encountered unexpected fall backs in rebuilding themselves and starting anew. However, this innocent motive has been marred by companies seeking to slash employee wages and jobs among other responsibilities. Mismanagement of Delphi Corp also played a substantial role in the cause for bankruptcy and the decision to file for chapter 11.
Even with mandated negotiations with labor unions, under the umbrella of the bankruptcy law concessions are likely to be made involuntarily. Also, considering thatDelphiinitially had no cause for bankruptcy as they still possessed capital it was inappropriate to seek the intervention of the bankruptcy court. Clearly, their agenda was to take a completely different perspective on organized labor in the company. Furthermore, there use of the courts is to avoid collective bargaining and also side step employees’ benefits. As an unsecured creditor in such bankruptcy dealings, the employee definitely is not privy to any existing assets of the company leaving them without even their pension benefits.
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