PARIS – A bankruptcy court this week rejects a last-minute $3 million offer from a Belgian company to buy a former General Motors Co. transmission plant in eastern France, deciding a €1.00 ($1.27) buy-back offer from the auto maker is a better deal.

Management reportedly is telling employees at the GM Strasbourg factory the sale could be final by the end of the month. Belgium’s Punch Corp. has 15 days to appeal the Sept. 7 decision on its offer with the U.S. Bankruptcy Court for the Southern District of New York.

Additionally, BMW AG has withdrawn its objection to transferring its contract for automatic transmissions from the plant and its current owner, Motors Liquidation Co. (the entity charged with selling off the unwanted assets of the former General Motors Corp.) to the new GM. BMW buys about half of the factory’s production.

The news is welcomed by workers at Strasbourg, most of whom recently voted to accept a 10% wage cut in order to have the new GM repurchase the plant. During the auto maker’s bankruptcy last year, the facility was considered non-core and left behind as part of Motors Liquidation.

BMW challenged the transfer of its supplier contract late last month, claiming GM Strasbourg’s engineers were not able to develop a version of the 6L45 transmission that would work with its plans for stop/start and shift-by-wire systems.

The German auto maker has scheduled the new version of the transmission to be used in an upcoming BMW model for which the start of production is August 2011.

Additionally, BMW claimed Motors Liquidation irreparably harmed its future business by publicly revealing confidential documents regarding the BMW-GM contract.

Johann Wieland, BMW senior vice president-purchasing, told the court a breach of confidentiality by Motors Liquidation during earlier proceedings cost BMW a minimum of €59 million ($75 million).

BMW lawyers apparently have reached at least a temporary agreement with GM and abandoned their legal attack on the contract. However, the objection they filed with the court sheds light on how difficult relationships are between suppliers and buyers, even when the supplier is another OEM.

The BMW filing says from 2004 until 2007, “the parties enjoyed a mutually beneficial arrangement,” with GM Strasbourg delivering the 6L45 transmission to BMW and getting paid for it.

In 2008, BMW updated the specifications for future transmissions the plant was to provide, demanding they be compatible with a stop/start system and shift-by-wire technology for launch in a new model, code-named L7, that was to start production in 2011.

“Given the highly competitive nature of the automotive industry and customer demand, BMW not only must keep up with current trends, technologies and regulations, BMW must stay ahead of the proverbial curve to maintain its competitiveness against other premium automotive manufacturers,” BMW’s New York attorneys from Mayer Brown LLP argue.

During earlier court proceedings, BMW says, Motor Liquidation filed a complaint about the auto maker’s intention to reduce its purchases from the plant, “attaching the delivery agreement, with exhibits (including the confidentiality agreement) and certain letters between the parties concerning the delivery agreement.

“Because these documents were not filed under seal, they were readily accessible to the public,” BMW complains. Although Motors Liquidation evidently asked the court to pull the documents from public view shortly afterward, the auto maker says damage already had occurred.

“(The) debtor’s publication of highly sensitive and confidential information to the public, including BMW’s competitors and suppliers, has caused and will continue to cause severe and irreparable damage to BMW,” the auto maker’s attorneys argue.

For example, they say, Robert Bosch GmbH contacted BMW after analyzing the documents and demanded more favorable commercial conditions for a purchasing agreement regarding several powertrain components.

Additionally, BMW had been engaged in lengthy negotiation on transmission prices with ZF Friedrichshafen AG. After analyzing the GM agreement, ZF said it “was no longer willing to concede more favorable pricing.”

In a separate statement filed with the bankruptcy court, BMW purchasing chief Wieland writes, “although BMW is still in the process of assessing the economic impact of the debtor’s wrongful action, it believes that its damages will be a minimum of E59 million.

“Moreover, now that this confidential information concerning pricing and specifications is in the public domain, BMW will be subjected to irreparable damage – indefinitely.”

News of this week’s court hearing giving the nod to GM’s proposed buy-back quickly spread throughout the Strasbourg plant. Jean-Marc Ruhland, secretary of the CFDT union and a member of the company workers’ committee, tells Reuters workers are crossing their fingers, “hoping the long-term future of the site is now assured.”