Things may be looking up for Delphi Corp., which recently announced a deal reached with a group of lenders who made a successful bid to take over control of the bankrupt auto parts supplier.  The Troy, Michigan-based company, which split off from General Motors in 1999, supplies mobile electronics and transportation systems, including power train, safety, steering, thermal and security systems.

The group of lenders who has made the takeover bid includes Elliott Management and Silver Point Capital, and own $3.4 billion of Delphi’s debt, according to a report run by the Wall Street Journal.  The group has been in negotiations with Delphi and GM since June, attempting to finalize the credit bid, which uses the debt creditors are owed from bankruptcy loans.

Since Delphi has the support of General Motors, as stated by both Delphi and GM in separate company statements, now it just needs the approval of U.S. Bankruptcy Court Judge Robert Drain.  “GM supports this bid, which is still subject to Delphi bankruptcy court approval, and we are pleased that Delphi is now positioned to move forward in its restructuring,” the Detroit-based automaker said in its statement.  Should the court not approve this bidding process, Delphi said that it plans to liquidate its assets via a 363 sale.

If the bankruptcy court does approve the creditors’ bid, it would beat out an offer by private Equity firm Platinum Equity.  Creditors are against this bid because it calls for the lowest among three tiers of lenders to be paid cents on the dollar.  The creditors’ bid is “based on a transaction structure that is similar” to Platinum’s offer, which proposed purchasing certain Delphi assets and transferring the steering business to Detroit-based GM.

Related to this whole process, Delphi stated in June that it can’t afford to continue funding its pension benefit plan for retirees and current workers once it is released from Chapter 11.  Fortunately for current and former employees, the company has reached an agreement with the U.S. Pension Benefit Guaranty Corp. to take over the pension plan.  That’s one less thing for the workers to have to worry about during this period of uncertainty.

Call for a bankruptcy attorney today