Hedge fund Highland Capital Management is in discussions with Delphi to lead a potential deal to take the parts maker out of Chapter 11 bankruptcy, according to a regulatory filing with the Securities and Exchange Commission this week.

Noting that Highland Capital is Delphi’s second-largest shareholder, The Associated Press (AP) said that Highland Capital said in its filing that representatives recently met Delphi and General Motors to discuss a potential deal, in which Highland would be the lead investor.

Highland amended its confidentiality agreement with Delphi on Monday, which gives it access to the information necessary to prepare an offer, AP said, citing the filing. Highland reportedly noted that a deal may not be finalised, or proposed at all.

The news agency said Highland previously offered to invest $US4.7bn to help one-time GM components unit Delphi emerge from bankruptcy but the offer was rejected in favour of a $3.4bn proposal by a group of investors.

Highland and Delphi entered into a confidentiality agreement with Pardus European Special Opportunities Master Fund LP as a potential co-investor to discuss a potential new deal last May, the Associated Press added.

Delphi has been under US Chapter 11 bankruptcy protection since October 2005.