Delphi’s efforts to exit bankruptcy protection early last month were thwarted, leaving the giant auto parts supplier at the mercy of the courts. On Wednesday, the U.S. Bankruptcy Court extended Delphi’s reorganization until August and approved a new debtor-in-possession financing deal.

The court granted Delphi an extension to work out alternate financing without outside interference, and approved $4.1 billion of debtor-in-financing that expires at the end of the year in place of $4.5 billion in loans. GM also took on an additional $731 charge for its former division, raising it to a total of $8.3 billion. Throughout 2008, the automaker will also advance $650 million for settlement agreements that it would have paid had Delphi successfully exited protection last month.

Last month, Delphi was ready to exit bankruptcy protection when Appaloosa Management pulled its $2.55 billion equity plan at the last minute, though vowed to participate in an alternate way. Delphi formed a litigation committee as it considers taking legal action against the group.

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