3 Min Read
NEW YORK (Reuters) - A U.S. bankruptcy judge gave General Motors Corp permission on Monday to buy several assets of bankrupt auto parts supplier Delphi Corp as part of a deal with a private equity firm that could take Delphi out of bankruptcy.
Judge Robert Gerber of U.S. Bankruptcy Court in Manhattan gave "Old GM," now known as Motors Liquidation Corp, permission to buy Delphi's steering business and a number of its plants, deemed essential to GM's ability to build cars.
Delphi is by far GM's largest supplier, accounting for approximately 11.3 percent of its purchases in 2008.
If GM's partner in the bid for Delphi, private equity firm Platinum Equity, won the auction for Delphi that is set for later this week, "New GM" or General Motors Co -- which emerged from bankruptcy on Friday after the carmaker sold the bulk of its best assets to a U.S. government-led group -- would reimburse Old GM and receive the Delphi assets.
Old GM, which now consists of the remainder of the automaker's assets, remains in bankruptcy court.
Delphi, which was spun off from General Motors Corp in 1999 and filed for bankruptcy in 2005, said last month that it had reached a deal to sell most of its global operations to Platinum, in a plan that with the participation of GM would allow Delphi to emerge from Chapter 11 bankruptcy.
In a court document, GM had said it expected the transaction to cost $3.9 billion, including a payment of $1.1 billion to Delphi's creditors and a $2 billion equity stake in Parnassus, a unit of Platinum, which has submitted the only bid so far to take Delphi out of bankruptcy.
Platinum would invest $250 million in Delphi under terms of the plan.
But the deal still has to get approval from the judge overseeing Delphi's bankruptcy.
The deadline for other potential bids -- "credit bids" by Delphi's lenders -- is set for later this week, with the auction for Delphi scheduled for Friday. A sale hearing is scheduled for July 23 in federal bankruptcy court in Manhattan.
Under the terms of the deal, GM would buy Delphi's steering business, as well as plants in Kokomo, Indiana; Rochester and Lockport, New York; and Grand Rapids, Michigan.
The case is In re: Motors Liquidation Company, U.S. Bankruptcy Court, Southern District of New York, No 09-50026
Reporting by Phil Wahba, editing by Gerald E. McCormick