DETROIT — The U.S. Treasury Department has rejected a deal between General Motors and Delphi Corp., under which GM would increase payments to its former parts spin-off and also acquire Delphi’s steering business. The transaction had an estimated value of more than $100 million.
The move was said to be a strategy that would help both parties, as GM works to restructure under the watch of the U.S. Automotive Task force, and as Delphi works to emerge from Chapter 11 bankruptcy protection. This means Delphi now has until May 9 to resolve its bankruptcy case. If the supplier is unable to emerge from Chapter 11 by that time, it may be forced to liquidate assets, according to some media reports. This in turn could affect GM operations as well.
The U.S. Treasury Department also said it will not provide an additional $150 million to GM, which was requested to help keep the company operating through next month.