Business life: My finance news blog

Delphi got the green light Thursday to pay almost $50 million in fees to lawyers and financial advisers for four months of work, as the company struggles to emerge from court protection.

U.S. Bankruptcy Judge Robert Drain also approved the sale of Delphi’s steering business to the Platinum Equity LLC private equity firm.

Delphi had previously said it would exit Chapter 11 court protection by the end of March, but that looks increasingly unlikely as it struggles to get $6.1 billion in loans in the tight credit market.

In a Securities and Exchange Commission filing Tuesday, Delphi said "there can be no assurances that such exit financing can be obtained."

The company’s lead law firm, Skadden, Arps, Slate, Meagher & Flom LLP, had the biggest bill, $15.39 million in fees and $837,950 in expenses. Other big earners included FTI Consulting Inc., Ernst & Young LLP, KPMG LLP and PriceWaterhouseCoopers LLP, which all were paid more than $4 million in fees and expenses for work from June to September.

That was near the end of a year in which Delphi posted a net loss of $3.1 billion, compared with a net loss of $5.5 billion in 2006. Revenues fell by $400 million to $22.3 billion for the year.

The deal to sell the steering business was valued at $447 million, including the assumption of $190 million in liabilities and $257 million in value contributed by General Motors Corp (GM, Fortune 500).

Troy, Mich.-based Delphi was GM’s parts supply unit until a 1999 spin-off online payday advance free credit report and score. The automaker remains one of Delphi’s biggest customers.

There were no other viable bids for the steering and halfshaft business, Delphi lawyer Jack Butler said.

If exit financing can’t be found, former parent GM may be forced to provide some financial backing to be sure it gets the parts it needs. GM’s Chief Financial Officer Fritz Henderson said last week that GM is exploring alternatives with Delphi, but he wouldn’t discuss GM’s specific options.

Without the exit financing, equity investors led by hedge fund Appaloosa Management LP could abandon a deal to invest as much as $2.55 billion. The deal is crucial to Delphi’s ability to emerge from bankruptcy.

Delphi has operated in bankruptcy since October 2005. 

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