Dana Corporation obtains Global Settlement and creates VEBA trusts for retiree health care benefits
Client(s) Dana Corporation
Jones Day successfully represented Dana Corporation in obtaining a series of settlements to eliminate an enormous accumulated liability for health and life insurance benefits for retirees from its unionized and nonunion workforces, and to modify its collective bargaining agreements with active employees, allowing Dana to compete in the troubled auto industry upon emergence from bankruptcy. This "Global Settlement" resulted in the elimination of almost $1.5 billion in accumulated post-retirement benefit obligations, and the creation and funding of Voluntary Employee Benefit Association (VEBA) trusts to provide non-pension retiree benefits, a freezing of the current defined benefit pension plans, institution of consumer-driven healthcare programs for active unionized employees with sharing of medical inflation costs, a competitive two-tier wage structure, elimination of liability for long-term disability benefits, elimination of cost of living increases, buy-outs of high-wage employees, cost-saving changes to work rules, and agreement on plant closings, work movement and other manufacturing footprint changes. Several creditors filed objections to Dana's motion for court approval of the settlement and all but two of these objections were withdrawn as a result of successful negotiations with Dana's main creditor constituents. On July 26, 2007 Judge Burton Lifland approved the Global Settlement, after hearing testimony from Dana CEO Michael J. Burns. In his decision, Judge Lifland described the Global Settlement as "groundbreaking" and "paving the way" for Dana's reorganization.
In re Dana Corporation, et al., Case No. 06-10354 (BRL) (Bankr. S.D.N.Y.)