NEW YORK (Reuters) – A federal judge postponed the auction for the assets of bankrupt auto parts maker Delphi Corp (DPHIQ.PK) on Tuesday for a second time, in an effort to give bidders more time to work out a deal.
The auction was postponed until Friday after a meeting in chambers on Tuesday, according to a document filed by U.S. Bankruptcy Judge Robert Drain, who wrote in his motion there was “good and sufficient cause” to delay the auction.
A hearing to approve Delphi’s reorganization plan or sale was postponed by six days to July 29.
In a statement on Tuesday, Delphi said it expects to announce the outcome of the auction around July 27.
The bankruptcy auction was originally scheduled to begin last week before being postponed a first time.
Delphi, which has been in bankruptcy protection since 2005, was spun off by automaker General Motors in 1999 and is its largest supplier.
Talks between Delphi and its lenders have been progressing toward a compromise deal that would supersede a bid by private equity firm Platinum Equity favored by GM and the U.S. Treasury, sources told Reuters last week.
Platinum Equity’s offer includes buying some Delphi assets and shifting its steering business to GM in a deal Delphi values at about $3.6 billion.
Delphi’s lenders — which include Elliott Management Corp, Monarch Alternative Capital and Silver Point Capital LP — have opposed that deal, calling it a “sweetheart arrangement” to acquire most of Delphi’s global operations while leaving them with less than a complete recovery.
The lenders have said in court filings they plan to make a bid to counter Platinum Equity’s offer.
In a statement late Tuesday, Delphi said it had reached agreements with its official unsecured creditors’ committee and Wilmington Trust Corp (WL.N), which it said will now withdraw their objections to Delphi’s reorganization plan.
The agreement calls for unsecured creditors to get distributions of as much as $300 million instead of $180 million when Delphi emerges from bankruptcy.
Delphi also said it had reached a deal on Tuesday with the U.S. Pension Benefit Guaranty Corp, which insures corporate pensions, to settle various claims against Delphi.
Under terms of the deal, which is subject to court approval, PBGC will get $3 billion as a general unsecured non-priority claim and further consideration from GM in return for assuming the pension liabilities.
The case is In re Delphi Corp, U.S. Bankruptcy Court, Southern District of New York, No. 05-44481.
(Reporting by Phil Wahba; Editing by Andre Grenon)