Bankrupt Delphi is facing a fight with its creditors over plans to pay suppliers some of the $1bn it owes

The company has applied to the bankruptcy court for the right to negotiate terms with suppliers without seeking court approval. The negotiations would take place when contracts came up for renewal.

8,000 important suppliers would be paid up to 75% of the debts they are owed in return for new two year supply contracts. The alternative is not to pay the debts till the firm leaves Chapter 11 in 2007.

Unsecured creditors and the Wilmington Trust, representing bondholders are expected to ask the court to reject the motion.

Suppliers are also angry, with over sixty filing objections with the court. Indeed many demanded full payment in return for new contracts.

Delphi counter with the argument that they will not be subjected to "hostage bargaining".

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