NEW YORK (Reuters) – A U.S. bankruptcy judge on Wednesday gave U.S. auto parts supplier Delphi Corp (DPHIQ.PK) preliminary approval to access $250 million in funding from General Motors Corp (GMGMQ.PK) that is expected to fund Delphi until it can emerge from bankruptcy.
U.S. Bankruptcy Judge Robert Drain gave Delphi preliminary approval to access the funds, but said he may want to clarify that decision, depending on the outcome of further proceedings before the court on Wednesday.
Delphi, which was spun off from GM in 1999 and filed for bankruptcy in 2005, said last week it reached a deal to sell most of its global operations to private equity firm Platinum Equity, allowing the car parts supplier to emerge from Chapter 11 bankruptcy protection.
The $250 million from General Motors is expected to support Delphi while it tries to exit its near four-year bankruptcy. GM, which has also filed for bankruptcy, received court approval at a hearing last week to continue providing support to its suppliers.
“For the first time in fourteen months the debtors (Delphi) believe they are here with a fully funded, feasible set of emergence transactions that will allow this company to emerge and provide a resolution to these Chapter 11 cases,” John Butler, a lawyer representing Delphi told the court on Wednesday.
The court is also considering modifications to Delphi’s reorganization plan on Wednesday.
Delphi remains one of the GM’s key suppliers and GM has taken more than $11 billion of charges to help the company’s reorganization along.
The case is In re: Delphi Corp et al, U.S. Bankruptcy Court, Southern District of New York, No. 05-44481.
(Reporting by Emily Chasan, editing by Matthew Lewis)