NEW YORK (AP) -- A bankruptcy judge on Thursday granted Delphi Corp. more time to come up with a plan to restructure itself without its lenders taking actions that could force the struggling auto supplier into liquidation.
Judge Robert Drain extended the deadline for the Troy, Mich.-based company to submit its plan to its lenders until May 4. The lenders will then have until May 8 to approve it.
In the meantime, Delphi, its former parent General Motors Corp., members of President Barack Obama's automotive task force and other stakeholders will be taking, with a court hearing scheduled for May 7.
"Clearly it makes sense to continue the talks with the auto task force given their involvement with GM," Drain said in making his ruling.
In exchange for the extra time, Delphi will pay a higher interest rate on its bankruptcy financing and an undisclosed amount of other fees.
Delphi attorney Jack Butler said after Thursday's hearing that talks continue between Delphi, GM and the task force. Progress has been made, but the sides need more time to hammer out a deal, he said.
Delphi has been operating under Chapter 11 bankruptcy protection for more than three years, and industry observers have speculated the Delphi could ultimately be forced to shutdown if it fails to get the financing it needs from Detroit-based GM.
Butler declined to comment on the possibility that Delphi could liquidate. But he noted that the term sheet deadlines have been pushed back before and that all sides involved in the case -- including the company's lenders -- remain focused on helping Delphi emerge from bankruptcy protection.
"We want to complete our work as soon as we can, but we need to come to an agreement that works for everyone," Butler said.
Meanwhile, GM's future remains in doubt. It's living on $13.4 billion in government loans and faces a June 1 deadline to cut its debt, reduce labor costs and take other restructuring steps. If it doesn't meet the deadline, the company's CEO has said it will file for bankruptcy protection.
Both Delphi and GM have cut thousands of jobs and shuttered plants over the last several months in hopes of riding out one of the worst U.S. vehicle sales declines in more than 25 years.
GM said Thursday that it is planning to temporarily close 13 factories for up to nine weeks starting in May to control inventories due to sagging sales.
Delphi has sold off businesses that it has deemed "noncore" in an attempt to cut costs and raise the funding it needs to emerge from court protection.
But the auto industry's troubles and tighter credit have made it tougher for the supplier to find the financing it needs. It has had to rely on GM, which still needs Delphi to supply parts for many of its models.
Earlier this year, Delphi attempted to sell its global steering business back to GM, as part of a deal where GM would increase its credit commitments to Delphi by $150 million to a total of $450 million. But the proposed sale met with resistance from the task force, which must approve these kinds of transactions under the terms of GM's current federal aid.
Both the sale and the increase in credit commitments scheduled to be discussed at Delphi's May 7 hearing.
Also at Thursday's hearing, Drain approved a Delphi motion to disband its shareholder's committee, saying that given the current industry environment, the shareholders will not be able to recoup any of their investments.
"Unfortunately while the debtor has been able to transform itself, the transformation of the industry has gone in a different direction," Drain said. "At this point, it appears that the debtor under any circumstance will not be able to make any distribution to its shareholders."