The Associated Press
NEW YORK (AP) -A bankruptcy judge on Thursday approved Delphi Corp.'s plan to hand control of the big auto parts supplier to its lenders and soon end a nearly four-year stay under Chapter 11 protection.
U.S. Judge Robert Drain said the plan is in the best interests of both Delphi and its stakeholders, especially given the challenges the parts maker has faced recently as a result of the turmoil in the credit markets and the crumbling of the U.S. auto industry.
Drain's approval paves the way for Delphi to emerge from bankruptcy protection. The Troy, Mich.-based company has set a target date of Aug. 31 for emerging and expects to be out by Sept. 30 at the latest.
After Delphi emerges from court oversight, its current CEO, Rodney O'Neal, will continue to lead the company and a new board will be appointed, Delphi spokesman Lindsey Williams said.
Delphi, General Motors' former parts division, was spun off from the automaker in 1999 and filed for Chapter 11 in October 2005. The supplier still produces about 10 percent of the parts used in GM's global production and its components go into nearly all of GM's North American production lines.
Nearly 2,000 objections ‚Äî including about 1,400 from Delphi workers and retirees ‚ were filed against the plan approved Thursday, but all of them were either resolved out of court or dismissed by Drain on Wednesday.
Last month, Delphi had agreed to let an affiliate of Beverly Hills, Calif.-based Platinum Equity take control of most of the auto supplier's businesses with the help of billions from GM.
But Delphi's lenders, which have financed the company's operations during its years under court oversight, balked at the deal, calling it a "secretly negotiated transaction" that violated Delphi's obligations to maximize the value of the lenders' investment.
The lenders submitted their own bid, under which they will forgive a combined $3.44 billion in debt owed to them. The lenders' bid ultimately won out over the deal with Platinum after an 18-hour auction process that ended on Monday.
Both of the deals had been backed by GM, which has pumped billions of dollars into Delphi since it filed for Chapter 11 to ensure a stream of parts for its vehicles.
As it had agreed under the deal with Platinum, GM will take back some of Delphi's businesses, including its Saginaw, Mich.-based steering business, and facilities and contribute billions in aid to help finance the deal.
The exact details of the credit bid, which isn't a public document, have not been released.
Delphi attorney Jack Butler on Thursday would not confirm or deny is talks were still active between Delphi and Platinum. The company has said that it plans to make a $30.5 million payment to Platinum to compensate them for their expenses.