Federal-Mogul Corp (FDML.O) is readying a renewed bid for the assets of Delphi Corp (DPHIQ.PK) after breaking off talks with the bankrupt auto parts maker in late May, three people with knowledge of the situation said on Tuesday.

Federal-Mogul, controlled by billionaire investor Carl Icahn, had discussions about buying all or part of Delphi before the supplier agreed to sell most of its global operations to private equity firm Platinum Equity, the sources said.

But Federal-Mogul is considering a second run at Delphi after U.S. Bankruptcy Judge Robert Drain ordered Delphi to allow other bids that could compete with Platinum's offer, the sources said.

The sources asked not to be identified because information about potential Delphi bidders has not been released by the Troy, Michigan-based company or the New York bankruptcy court.

One of the sources said Icahn and Federal-Mogul have not made a final decision to move ahead with a bid for Delphi because it was not clear they would be able to match the terms of the government-brokered Platinum offer.

Delphi was spun off by General Motors Corp (GMGMQ.PK) in 1999 and filed for bankruptcy in 2005.

GM, which is coming through its own bankruptcy process with $50 billion in U.S. government financing, has agreed to provide $2 billion of funding to Beverly Hills, California-based Platinum.

The Platinum deal for Delphi was negotiated with the involvement of U.S. officials at the same time that the White House-appointed autos task force was readying the June 1 bankruptcy filing for GM, court documents show.

But Delphi creditors have complained that the Platinum and GM transaction was negotiated in secret and would short change their interests.

Any Federal-Mogul offer for Delphi would be aimed at its international operations and car electronics offerings, which are considered its most valuable assets, the sources said.

Drain has set a Friday deadline for bids on Delphi. An auction will take place on July 17 if any other qualified bids are made. A hearing is scheduled for July 23 to approve the sale plan.

Southfield, Michigan-based auto parts supplier Federal-Mogul declined to comment. Icahn could not be immediately reached for comment.

Delphi spokesman Lindsey Williams said there were several potential suitors but declined to identify them.

Since we started this process we have not identified any of the bidders, Williams said. The bottom line is, multiple parties are interested. We can't confirm who the parties are or whether they are going to place a bid.

ROSS, ELLIOTT ALSO POTENTIAL BIDDER

Other sources told Reuters last week that billionaire investor Wilbur Ross was among those considering a bid for Delphi's assets.

Hedge fund Elliott Management is also preparing a credit bid for Delphi based on the over $3 billion of bankruptcy financing extended to the supplier.

As part of a deal brokered by the White House-appointed autos task force, GM would take over Delphi's steering business and four other U.S. plants with workers represented by the United Auto Workers union.

By taking back those Delphi operations, GM hopes to protect itself from the risk of a supply disruption from its former supplier, the companies have said.

The rest of the Delphi business, which includes its international operations, would be sold to Platinum in a $3.6 billion deal.

The four-year Delphi bankruptcy has been a cash drain for GM, which is now also operating in bankruptcy as it seeks permission to sell most of its assets to a new company funded by the U.S. Treasury.

Delphi has confirmed that it had been in talks with another parts supplier over a potential sale of its assets but it had not named Federal-Mogul.

In a statement filed with the bankruptcy court last month, Delphi Chief Financial Officer John Sheehan said GM and the task force had negotiated a deal with Platinum and an unidentified auto parts supplier in April and May.

But the unidentified supplier withdrew its interest because it was unwilling to support a reorganization plan or assume substantial administrative liabilities, Sheehan said.

The case is In re: Delphi Corp et al, U.S. Bankruptcy Court, Southern District of New York, No. 05-44481.

(Additional reporting by David Bailey in Chicago and Kevin Krolicki in Detroit; Editing by Steve Orlofsky and Richard Chang)

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