As part of its brankruptcy reorganisation plan, Collins & Aikman and GM have agreed that GM will transfer some interior parts business to another supplier.

GM will pay the cost of the transfer and award new business to Collins & Aikman to offset a significant part of the lost revenue, according to Reuters.

The agreement avoids a potential major conflict between the two companies.

Collins & Aikmann filed for Chapter 11 bankruptcy protection in May 2005. Under that it has the right to file a reorganisation plan with the bankruptcy court by 15 May, but it has sought an extension to 12 September.

According to Reuters, the company has said it needs more time to develop its business strategy, financing alternatives and a plan for treating creditors fairly. A number of parties have reportedly expressed an interest in acquiring assets or financing the reorganisation.