Treasury rejects GM's plan to help Delphi

WASHINGTON, April 28 (UPI) -- The U.S. Treasury rejected two General Motors Corp. attempts to ensure that parts-supplier Delphi Corp. would keep parts flowing to the automaker.

When GM accepted a emergency federal loan in January, it agreed the Treasury could veto company deals valued at $100 million or above.

Delphi, a former GM subsidiary, has been under bankruptcy protection since 2005. GM had offered to increase payments to Delphi by $150 million. The company also proposed buying Delphi's steering division. But the Treasure Department rejected both plans, the Detroit Free Press said.

Delphi has until May 9 to find a long-term solution for its financial woes. After that, creditors could chose to liquidate the company.

GM would be crippled without Delphi, observers said.

"If they're going to run out of money, that could halt production, that could bring GM to its knees," restructuring expert Van Conway said