UPDATE 1-Delphi gets extension, equity committee disbanded

By Tom Hals

NEW YORK, April 23 (Reuters) - Bankrupt auto parts maker Delphi Corp (DPHIQ.PK: Quote, Profile, Research) received court approval on Thursday to extend the deadline to reach agreement with the U.S. Treasury Department and other parties regarding funding from General Motors GM.N.

Delphi, which has been in bankruptcy since 2005, has until May 4 to deliver details of its agreement for an additional $150 million from GM. The deadline for that agreement has been postponed several times, most recently by the intervention of the U.S. Treasury.

Failing to meet the deadline could put the parts maker in default of some of its financing agreements.

The U.S. government has kept GM afloat with more than $13 billion in emergency loans, which give Washington the right to block large transactions by the automaker, such as its deal with Delphi.

GM agreed earlier this year to increase to $450 million the payments it has promised to the parts maker, from an originally agreed $300 million.

GM is also seeking court approval to buy Delphi's steering business, a transaction opposed by various parties and also blocked by the U.S. Treasury. The court will hold hearings on the matter next month.

The court also approved a motion to disband the committee that represents shareholders, who have the lowest priority claims in a bankruptcy. Delphi has been arguing since 2005 that it is "hopelessly insolvent" and the existence of an equity committee, whose administration fees are paid by Delphi, would continue to drain funds from the company.

The equity committee attorneys said in court documents that Delphi has no value beyond its debtor-in-possession financing, which is funding to get it through bankruptcy. They argued the committee should remain to pursue claims against GM.