Delphi said it still has a way to go before emerging from bankruptcy

Delphi, which also will shake up its top management and showed how it would pay back creditors, called the plan "a major milestone" in its reorganization.

The deal will need to be approved by the bankruptcy court and trade unions.

Delphi filed for bankruptcy in 2005, a move that hurt its former parent and top client US carmaker General Motors.

"It's kind of a breakthrough in the process and, although it needs some approvals yet, it certainly seems very detailed in its approach," said Pete Hastings, corporate bond analyst at Morgan Keegan.

Factors

Should it emerge from Chapter 11 bankruptcy protection in the US, then a large chunk of the company will be owned by the group of private equity firms.

Appaloosa Management and Cerberus Capital Management are leading the group, which also includes Harbinger Capital Partners Master Fund, Merrill Lynch, and UBS Securities.

Once Delphi is out of bankruptcy protection, the group would own between 25-30% had it invested a minimum of $1.4bn, and more than two-thirds should it have paid the full $3.4bn, Reuters quoted an unidentified source as saying.

As part of the reorganisation plan, Delphi's chairman and chief executive Steve Miller will step down as CEO on 1 January. He will be succeeded by chief operating officer Rodney O'Neal.