DELPHI 2011 Annual Report Download - page 127

Table of Contents
Unsecured Creditors Litigation
In December 2011, a complaint was filed in the Bankruptcy Court alleging that the redemption by Delphi Automotive LLP of the membership interests
of GM and the PBGC, the initial public offering and a distribution by Delphi Automotive LLP in the amount of $95 million principally in respect of taxes
constituted, in the aggregate, distributions to the members of Delphi Automotive LLP in excess of $7.2 billion. The complaint further alleges that such
aggregate distributions obligate Delphi Automotive LLP to pay to the holders of allowed general unsecured claims against the Predecessor $32.50 for every
$67.50 in excess of $7.2 billion in distributions, up to a maximum of $300 million. At this time, we believe that the allegations contained in the complaint are
without merit, and we intend to vigorously contest the allegations set forth in the complaint. No accrual for this matter has been recorded as of December 31,
2011.
Environmental Matters
Delphi is subject to the requirements of U.S. federal, state and local, and non-U.S., environmental and safety and health laws and regulations. As of
December 31, 2011 and 2010, the undiscounted reserve for environmental investigation and remediation was approximately $22 million (of which $5 million
was recorded in accrued liabilities and $17 million was recorded in other long-term liabilities) and $23 million (of which $5 million was recorded in accrued
liabilities and $18 million was recorded in other long-term liabilities), respectively. Delphi cannot ensure that environmental requirements will not change or
become more stringent over time or that its eventual environmental remediation costs and liabilities will not exceed the amount of its current reserves. In the
event that such liabilities were to significantly exceed the amounts recorded, Delphi's results of operations could be materially affected. At December 31,
2011, the difference between the recorded liabilities and the reasonably possible range of loss was not significant.
Ordinary Business Litigation
Delphi is from time to time subject to various legal actions and claims incidental to its business, including those arising out of alleged defects, breach of
contracts, product warranties, intellectual property matters, and employment-related matters. It is the opinion of Delphi that the outcome of such matters will
not have a material adverse impact on the consolidated financial position, results of operations, or cash flows of Delphi. With respect to warranty matters,
although Delphi cannot ensure that the future costs of warranty claims by customers will not be material, Delphi believes its established reserves are adequate
to cover potential warranty settlements.
Brazil Matters
Delphi conducts significant business operations in Brazil that are subject to the Brazilian federal labor, social security, environmental, tax and customs
laws, as well as a variety of state and local laws. While Delphi believes it complies with such laws, they are complex, subject to varying interpretations, and
the Company is often engaged in litigation with government agencies regarding the application of these laws to particular circumstances. In addition, Delphi
also is a party to commercial and labor litigation with private parties. As of December 31, 2011, related claims totaling approximately $225 million (using
December 31, 2011 foreign currency rates) have been asserted against Delphi. As of December 31, 2011, the Company maintains accruals for these asserted
claims of approximately $40 million (using December 31, 2011 foreign currency rates). The amounts accrued represent claims that are deemed probable of
loss and are reasonably estimable based on the Company's analyses and assessment of the asserted claims and prior experience with similar matters. While the
Company believes its accruals are adequate, the final amounts required to resolve these matters could differ materially from the Company's recorded estimates
and Delphi's results of operations could be materially affected.
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