A judge yesterday approved the use of $950 million in financing for auto supplier Delphi, which is expected to consolidate or divest a significant...

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NEW YORK — A judge yesterday approved the use of $950 million in financing for auto supplier Delphi, which is expected to consolidate or divest a significant portion of its U.S. plants during its stay in bankruptcy court.

That sum is part of a $2 billion debtor-in-possession loan assembled by a consortium of lenders led by J.P. Morgan Chase and Citigroup Global Markets, which will help the company operate during its bankruptcy, expected to end in early 2007.

Delphi lawyers said the company would need only $565 million until the next financing hearing on Oct. 27 but that a “cushion” was necessary.

At yesterday’s hearing, U.S. Bankruptcy Judge Robert Drain also said he would extend an order allowing Delphi to continue paying employees’ salaries and benefits. A temporary order to do so had been granted on Saturday, when the auto supplier filed for Chapter 11 bankruptcy protection from creditors.

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Earlier, an attorney for Delphi said the company had filed for bankruptcy “to deal with our legacy liabilities in the U.S.” He added that much of Delphi’s profit is generated abroad and that “we don’t make money on what we produce here in the U.S.”

Attorneys for the company also defended the recent extension of a severance package for executives, saying the company had sought “noncompete” agreements from them to protect its business interests.

Delphi beefed up the severance agreements for 21 of its top executives on Friday, the day before it filed for bankruptcy. Under the new agreement, executives will be eligible for 18 months of pay and at least a portion of their bonus if Delphi lays them off or they leave voluntarily. Previously packages were capped at 12 months. In exchange, the executives signed agreements promising not to work for competitors for 18 months.

The United Auto Workers, which represents nearly half of Delphi’s U.S. employees, recently lambasted the company for sweetening executive packages before filing.

Delphi has 31 plants in 13 states. The company has 185,000 employees worldwide, 50,600 of which are U.S. employees.

Delphi, No. 63 on the 2005 Fortune 500 list of the largest U.S. corporations, listed $17.1 billion in assets and $22.2 billion in debt in Saturday’s bankruptcy petition.