County will get Delphi property taxes

Posted: Saturday, August 15, 2009 12:00 am | Updated: 5:18 pm, Tue Sep 15, 2009.

Peter Adelsen Staff Writer padelsen@kokomoperspective.com | 0 comments

Howard County learned Friday via teleconference that Delphi Corp. through General Motors will begin paying its property taxes since the company has emerged from chapter 11 bankruptcy.

General Motors has assumed the liability for repaying Delphi's delinquent property taxes incurred in 2005 as part of the purchase plan in the bankruptcy case. The bulk of those taxes - personal property - are due to be paid with interest by March 1, 2011. The delinquent real estate property taxes must be paid to the county with interest no later than seven years from the effective date of the purchase plan. The amount of those delinquent taxes is $4,615,399.18 in pre-petitioned (or pre-bankruptcy) personal property tax and $1,881,810.60 in pre-petitioned real estate tax.

GM also should resume regular payment of the Kokomo operations' personal property and real estate taxes in the fall on time in three installments, said Dave Powlen-one of the county's attorneys with Barnes & Thornburg. The fall installment will be $3,769,193. Spring and fall 2010's installments are estimated at $7.6 million total, for an aggregate of $11,369,193.

The court approved a three-way unequal split of Delphi's chapter 11 debtors, Powlen said. The largest part is selling assets back to GM. The second part of the arrangement is a sale of its steering business and other parts of the business to secured creditors, the financial institutions that provided financing to Delphi while under chapter 11. The third part is the assets that are going to be left behind in the "old" Delphi entities that are not being taken by GM or the secured party group.

"We could have been facing liquidation or further shut-down of Delphi facilities," Powlen said. "If we had been faced with a shut-down or a move of some or all of the operations out of Kokomo it could have been much worse for the county."

In the Delphi bankruptcy case, there were hundreds of objections filed in the case. Howard County and the Texas taxing authorities were among the first to be heard in the case, Powlen said.

"We argued that we are tax collectors," he said. "We're not in the business of lending money."

Howard County tried to get the 8 percent Indiana post-judgment rate, and the Texas taxing authorities asked for 12 percent. On the effective date in August or September, the county will receive interest from the current seven-year treasury rate plus 200 basis points, which is a bit higher than 5 percent.

"The county is getting every dollar of its taxes obviously delayed," he said. "Obviously the county has to make due in the mean time."

The bankruptcy code provides a priority on unpaid tax claims, he said.

"If we had not had that priority, we would have received much worse treatment," he said.

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