Judge approves Delphi sale to lender group, GM

By Emily Chasan

NEW YORK (Reuters) - A U.S. judge ruled on Thursday that auto parts maker Delphi Corp (DPHIQ.PK: 株価, 企業情報, レポート) can sell itself to a group of lenders, paving the way for the company to end its near four-year trip through bankruptcy court.

Earlier this week, Delphi's board accepted a bid from its debtor-in-possession lenders, including several hedge funds, to take over much of its operations.

In exchange, the lenders, led by Elliott Management Corp and Silver Point Capital LP, agreed to forgive nearly $3.5 billion of debtor-in-possession (DIP) loans. The lenders are also investing about $750 million in capital into the new company, according to the company's bankruptcy lawyer, Jack Butler of law firm Skadden Arps Slate Meagher & Flom.

General Motors GM.UL, Delphi's former parent, would take over some of the company's U.S. plants, and has agreed to provide some further funding to Delphi.

Judge Robert Drain approved the sale during the second day of a hearing in U.S. bankruptcy court in Manhattan, saying he believed the auction process for the company was "fair" and would bring a successful conclusion to a company that has been through a set of "colossal" and "remarkable" problems in its own case and with the industry.

The deal with its lenders is the latest in a series of attempts to get Delphi out of bankruptcy since it first sought court protection in October 2005.

In April 2008, investors led by Appaloosa Management backed out of a plan that would have provided $2.55 billion of financing, forcing Delphi to come up with a new plan during the worst U.S. auto sales market since the 1980s and as automakers like GM and Chrysler were forced into bankruptcy themselves.