The new deal announced Sept. 12 has faced intense criticism from Delphi's creditors, who complain Delphi has given up too much in exchange for more money from GM -- an additional $4.6 billion contribution to Delphi's transformation.

That total of now $10.6 billion includes $1.2 billion in cash payments through the end of this year to assure Delphi's liquidity. GM also agreed to assume $3.4 billion of Delphi's underfunded hourly pension plan. GM is using its overfunded pension plan to fund some of Delphi's pension liabilities.

The Pension Benefit Guaranty Corp. said the deal would ensure the pensions of 64,000 Delphi hourly employees and retirees. It said it would drop $1.2 billion in liens it had placed against Delphi's foreign-based assets. The PBGC said it would be a 'financial nightmare' if the contribution were not made before Sept. 30, when a law governing the funding of pensions changes.

The PBGC, the government's insurer of private pensions, said the new law would require Delphi to make a cash lump-sum payment before emerging from bankruptcy. 'The overhanging pension obligations would make it virtually impossible for (Delphi) to emerge from bankruptcy,' the agency said.

Drain said he was 'very mindful of the time pressure' in reaching a deal before Sept. 30.

Delphi's creditors object to GM's added involvement and note that GM gets released from Delphi asserting any claims against it over the 1999 spinoff of Delphi. They argue that GM committed accounting fraud and other misdeeds, including 'saddling' Delphi with expensive labor contacts making it nearly impossible for Delphi to succeed as a stand-alone company.

GM spokeswoman Renee Rashid-Merem didn't return calls seeking comment.

'The simple fact is (Delphi has) once again knuckled under GM's demands...These agreements represent no less than the complete abdication by (Delphi) of all control over their destiny,' wrote Robert Rosenberg, a lawyer for the creditors. He called the deal 'a surrender' by Delphi and 'an incredibly good deal for GM.'

'GM is paying over $1 billion to compensate (Delphi) for the fact that GM has been forcing (Delphi) to sell parts to GM below cost and to partially offset the labor obligations GM had foisted upon' Delphi, Rosenberg wrote. 'GM will, as it has from the beginning, run these cases for its own benefit, without regard to anyone else. The court should not countenance such a heavy-handed exercise of brute power.'

Delphi's shareholders committee chose not to object to the deal with GM, but sharply criticized it. Delphi has 'been harmed and damaged since their inception and every day thereafter by GM's domination and control,' wrote Bonnie Steingart, a lawyer for the shareholders committee, in a court filing Monday. They criticized the fact that Delphi is seeking emergency approval of its request just 11 days after announcing the deal. Delphi has 'systematically put forth the proposition that the sky is falling and that it therefore is essential that the relief du jour that they are seeking must be granted immediately because dire ramifications will otherwise result,' Steingart wrote. 'One constant in this Chicken Little process has been that when the sky stars to fall, (Delphi) ensures that it falls on their existing (shareholders).'

Highland Capital, one of Delphi's largest shareholders and holders of Delphi bonds, objected to the deal saying that 'GM had simply pushed (Delphi) too far.'

Delphi filed a response this morning, disclosing new details of its negotiations with GM. On June 25, GM told Delphi it couldn't provide the additional financing Delphi said it needed to emerge under its plan approved earlier this year. Delphi spent the next few weeks considering its options, meeting with its creditors on July 16. 'In mid-July, Delphi and GM re-engaged in constructive discussions' and finally reached the deal on Sept. 12. Delphi said it 'firmly' believes the deal is in Delphi's best interests and denied it had 'surrendered' to GM.

They also noted that the United Auto Workers union isn't opposing the new deal with GM. Two unions representing a small number of employees including the United Steelworkers Union filed reservations, but expected to resolve their differences.

Delphi has filed claims against GM under seal with the bankruptcy court, but would drop them if U.S. Bankruptcy Judge Robert Drain approves the new deal with the automaker.

GM remains under investigation by the Securities and Exchange Commission for its conduct related to Delphi's spinoff and its treatment of transactions with Delphi, among other issues. Last month, GM agreed to settle a class action lawsuit by its shareholders for $277 million alleging it filed misleading financial statements.

GM has booked $11 billion in charges related to Delphi. Under its deal with Delphi, it can assert a $2.1 billion claim against Delphi's estate in bankrutpcy court, ahead of unsecured creditors.

The supplier is also seeking approval of another round of management bonuses for its top 416 employees, including the 21 members of Delphi's strategy board.The maximum value of the bonuses is $36.1 million for the six-month period ending Dec. 31. Delphi has won approval for five similar programs, which it says are necessary to retain key leaders and tie pay to performance.

Delphi burned through nearly $1 billion in the first half of the year and disclosed in a court filing on Sept. 12 to plans to significantly trim its remaining hourly and salaried staff, as it sells off unprofitable product lines.

By next year, Delphi plans to have eight factories in the United States, down from its current 14 plants, and a high of 37 plants.

It plans to cut another 25 percent of its salaried staff, from its 10,243 as of June 30, to less than 7,700 by next year.That's down from 14,500 in 2005, the year it filed for bankruptcy.

Its blue-collar work force will shrink to less than 5,000, down from 10,665 as of June 30, compared with 32,869 in 2005. The company also said it will cut another 500 of its 3,200 suppliers by next year, down from more than 5,000 it had in 2005.

Delphi's hourly manufacturing cost has been cut to under $40 an hour from $73 an hour in 2005, and will be about $27 an hour next year. When Delphi filed for bankruptcy in October 2005, it was the largest auto sector bankruptcy in history, and the 11th largest overall.

Delphi's lead bankruptcy attorney Jack Butler wrote in a court filing outlining the cuts that the differences 'are striking.'

Delphi nearly emerged in April from bankruptcy but a group of investors led by Appaloosa Mangement LP withdrew from a deal to invest up to $2.55 billion in a recapitalized Delphi. The investors argued Delphi didn't live up to the terms of its deal. Delphi in turn filed suit against the investors in May, seeking to force them to follow through with the deal to allow the company to emerge.