Judge OKs Delphi's use of $250M credit facility

NEW YORK — A bankruptcy judge on Tuesday gave final approval for Delphi Corp. to access a $250 million credit facility designed to keep the struggling auto supplier going until it can sell its assets and emerge from bankruptcy protection.

U.S. Bankruptcy Judge Robert Drain had given preliminary approval to Delphi's use of the credit facility at a hearing last week. The Troy, Mich.-based auto supplier has been operating under Chapter 11 for nearly four years.

Under a deal reached earlier this month, Delphi plans to sell some of its assets to an affiliate of private equity firm Platinum Equity, which will operate Delphi's businesses both in the U.S. and abroad.

In connection, General Motors Corp., Delphi's former parent and still largest customer, will contribute $2 billion to finance the deal. GM also will acquire some of Delphi's North American plants, including its global steering business. Other "non-core" plants and assets will be sold off over time.

GM also will supply the $250 million credit facility, as well as a $500 million loan facility following the sale. If all goes well, Delphi expects to emerge from bankruptcy protection later this summer.

But Delphi could face resistance from its creditors. Some of them have argued in court that they or other parties should also have a chance to submit bids for the assets in order to ensure the best possible return for Delphi's stakeholders.

If Delphi can not convince creditors to support a deal with Platinum or another party before a July 23 hearing, it would resort to a 363 sale, which refers to the section of the bankruptcy code that outlines the process for an auction of assets that the court oversees.