DELPHI Corp, a Unite States auto parts maker once owned by General Motors Corp, has won court approval of a US$3.4 billion investment by five financial firms, paving the way for an exit from bankruptcy.
The offer, led by Cerberus Capital Management LP, was approved on Friday by US Bankruptcy Judge Robert Drain in New York.
The decision puts Cerberus and its partners a step closer to taking a 30 percent to 70 percent stake in Delphi. Delphi, which had supported the Cerberus proposal, said it will continue to study a rival bid by Highland Capital Management LP.
"This is a positive step," John Novak, a Morningstar Inc analyst in Chicago, told Bloomberg News. "All parties, including GM, are ready to get this resolved."
Friday's hearing, originally scheduled for a week before, was postponed after Highland made its US$4.7 billion offer on December 21, three days after the Cerberus accord was announced. Delphi met with Highland officials on January 2, raising the prospect of a showdown over the future of GM's biggest parts supplier.
Highland said it will study its options. The ruling "does a grave disservice to the vast majority of Delphi shareholders," the company said in a statement.
GM wants Delphi to exit bankruptcy as quickly as possible. A strike at Delphi by union workers over proposed pay and benefit cuts could cause a shutdown of GM plants.
GM, which spun off Delphi in 1999, also backed the Cerberus bid.
"What we have is a framework," said Delphi lawyer Jack Butler in an interview after the hearing.
Butler said the company remains committed to emerging from bankruptcy protection in the first half of this year. "It could be mid-summer," he said.
Highland and the Cerberus group are seeking to profit by buying Troy, Michigan-based Delphi at a discount, cutting costs and increasing sales to non-US based auto makers.