NEW YORK (AP) -- A bankruptcy judge said Monday that auto supplier Delphi can continue to access the proceeds of $4.35 billion in loans after the Dec. 31 expiration date.

The ruling effectively allows Delphi to default on the loans when they mature Dec. 31, and lets the supplier move back its repayment deadline to June 30. The company has used the loans, known as debtor-in-possession financing, to fund operations while under bankruptcy protection.

Delphi said it needed to continue to access the DIP financing because of the severe tightness in the credit markets. The supplier has been relying on financing from former parent General Motors Corp., which has agreed to lend Delphi an additional $600 million, contingent on Delphi gaining the extension and access to an additional $3.2 billion to $3.4 billion in DIP financing.

GM faces its own cash crunch and could be forced to file for bankruptcy unless Congress agrees to provide it with billions of dollars in loans.

Troy, Mich.-based Delphi has received an extension twice before, but certain lenders objected this time to changing the terms of the loan agreement.

Some lenders had objected that Delphi did not have the authority to change the loan agreement without unanimous approval from lenders, and that even if Delphi had the authority to change the loan terms, that it couldn't change them the way the company had proposed.

But U.S. Bankruptcy Judge Robert Drain overruled those objections, and said Delphi did have the authority to modify the agreement.

Delphi Chief Financial Officer John Sheehan said in court that GM's own problems securing credit were an aspect of the discussions over Delphi's need to change its loan agreement. GM, Delphi and lenders negotiated additional changes over the past week, after GM had asked for more time to modify the agreement. Lenders in the Tranche C group who had objected said the changes left them worse off. Sheehan was hopeful that GM would be able to continue to offer loans to its former subsidiary.

"They are taking all actions they can to preserve liquidity," Sheehan said about GM. "It's been well documented in the public that those actions include discussions in Washington.

"We understand they are working to preserve liquidity and to honor the obligations they have to all parties, including Delphi."

Delphi was a GM parts subsidiary until it was spun off as an independent supplier in 1999. The interests of the two companies remain intertwined because Delphi is GM's biggest supplier.

Delphi has been operating under Chapter 11 protection since October 2005. It was forced to redraw its reorganization plan after a group of investors, led by the Appaloosa Management LP hedge fund, pulled out of the deal in April. The Appaloosa group had planned to invest up to $2.55 billion into Delphi in exchange for equity in the reorganized company. Appaloosa's withdrawal has led to a separate fraud lawsuit.

Delphi lawyer Jack Butler said Monday that the company now expected to submit further modifications to its plan by Feb. 27. That would push back its current timeline, since it had been scheduled for a Dec. 17 hearing to ask the judge to approve its latest plan changes. Butler said the company needed to re-examine its plan in light of the significant turmoil that has hit the capital markets, the auto industry and the overall economy since its last revision on Oct. 3.

The company's emergence from court protection has been postponed repeatedly due to a lack of credit availability.