GM allowed to make confusing purchase of Delphi assets

In a rather strange development in the ongoing GM bankruptcy case, the old GM has been given permission by the judge to purchase assets from also-bankrupt Delphi, which will then likely be transferred to the new GM after their partner in the deal completes the purchase of the rest of Delphi. Automotive News explains the way it works:

Judge Robert Gerber of U.S. Bankruptcy Court in Manhattan gave “Old GM,” now known as Motors Liquidation Corp., permission to buy Delphi’s steering business and a number of its plants, deemed essential to GM’s ability to build cars.

Delphi is by far GM’s largest supplier, accounting for approximately 11.3 percent of its purchases in 2008.

If GM’s partner in the bid for Delphi, private equity firm Platinum Equity, won the auction for Delphi that is set for later this week, “New GM” or General Motors Co. — which emerged from bankruptcy on Friday after the carmaker sold the bulk of its best assets to a U.S. government-led group — would reimburse Old GM and receive the Delphi assets.

The upshot of all of this is that the New GM should be able to make sure their most important supplier continues to supply them with parts once their factories reopen.