NEW YORK (CNNMoney.com) - The answer to whether General Motors stays out of bankruptcy could well be found in another company's bankruptcy court hearing that started Tuesday.

At the hearing, which started in federal court in New York Tuesday morning, auto parts maker Delphi (Research) is arguing it needs to dump labor contracts that run through September 2007, while three unions will argue their members shouldn't be penalized for what they call management mistakes.

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The United Auto Workers union has threatened a strike at Delphi if the auto parts maker is allowed to void its labor contract, a move that would bring GM (Research)'s operations to a virtual halt. UAW members are voting on whether to authorize a strike and another union at Delphi, the International Union of Electrical and Communications Workers, has already approved a walkout.

Delphi, which is seeking pay cuts of 40 percent from its unions, has 33,000 hourly workers in North America, while GM employs 113,000 workers who are members of the UAW in the United States.

Union officials did not return calls seeking comment, but they have taken a hard line against Delphi's demands.

"In the event the court rejects the UAW-Delphi contract and Delphi imposes the terms of its last proposal, it appears that it will be impossible to avoid a long strike," UAW President Ron Gettelfinger and union VP Richard Shoemaker said the day Delphi filed its motion to void the contracts with the bankruptcy court in March.

There is virtually no chance that GM can keep running during a shutdown at Delphi; the former GM unit was spun off in 1999 but is still the automaker's largest supplier. A 54-day strike at just one Delphi plant in 1998 shut down production at GM and caused a $2 billion reduction in earnings at GM and Delphi.

And most industry observers believe a prolonged shutdown at GM would cause losses severe enough to force GM into bankruptcy.

"If Delphi strikes, it's not just the parts situation. It's the psychological damage," said industry observer Robert Farago, publisher of TheTruthAboutCars.com. "All the experts, all the other suppliers, all the lenders who are assuming a strike will never happen would be proved wrong. It could be like a run on the bank, your basic perfect storm."

It wouldn't just be GM that would be hurt by a Delphi strike, said David Cole, chairman of the Center for Auto Research. North American assembly plants at Ford, Chrysler as well as nonunion plants owned by Toyota, for example, would find themselves shut down from lack of parts, he said.

"Delphi was [one of] Toyota's 'suppliers of the year' last year," said Cole. "It wouldn't cut down on imports, but it doesn't take much of a parts shortage to shut down production."

A spokesman for Toyota couldn't immediately quantify what impact it would see on North American production from a Delphi strike. Ford spokesman Paul Wood said his company gets only a small fraction of its purchases from the Delphi plants that could be struck, and that it believes it could find those parts elsewhere. Chrysler Group spokesman Ed Saenz said that his company has yet to quantify the impact on its production from a Delphi strike, although he confirmed there will be an impact.

"We can say our exposure is significantly less than GM," said Saenz. "But if a car has 2,000 parts and you can't get one of them, you still have a problem."

Still, most experts believe that when push comes to shove the unions, Delphi and GM will reach some kind of agreement without a long strike. A bankruptcy filing at GM would endanger well over $10 billion in pay to GM workers and put pensions and retiree health care plans worth billions more at risk.

"I think that [a settlement] is still the most likely outcome, but the risk of a strike is still higher than anyone would like," said Bob Schnorbus, chief economist at J.D. Power & Associates, the auto research firm. "Nerves are on edge on all sides. The court is going to give both sides as much wiggle room as it can, probably at least through the end of June."

Some experts say that heated rhetoric on pay cuts could make it difficult for the UAW to win rank-and-file approval of any wage-cutting deal reached with Delphi. University of Maryland professor Peter Morici noted that UAW members at Ford Motor Co. (Research) last year only narrowly approved relatively modest changes in health care coverage.

But Cole believes that the two sides are making far more progress toward an agreement than the court filings and tough talk would indicate.

"This is doable. This is not the irresistible force and the immovable object. All sides want this to happen, and the judge wants this happen," said Cole. "But the union leadership has to be perceived as strong in eyes of rank and file, which means walking a fine line between being tough and being conciliatory."

Other unions faced with having bankruptcy courts throw out their contracts have talked tough and still eventually reached an agreement on concessions. The most recent was the Air Line Pilots Association, which was vowing to shut down Delta Air Lines (Research), probably forever, right up until the union reached an 11th-hour deal last month to cut wages.

Spokesmen at GM and Delphi both say they are hopeful that a negotiated agreement can be reached.

"We honestly believe the best solution here is a consensual agreement," said Delphi spokesman Lindsey Williams. "We'll just continue to negotiate until all measures to reach a consensual deal have been exhausted."

GM spokesman Jerry Dubrowski said it's important to realize that there is no imminent threat of a strike, and that the GM is committed to helping the unions and Delphi reach an agreement without one.

"We all understand the stakes," he said. "We understand what would happen if there is a lengthy strike. It would not be good for General Motors, it would not be good for Delphi, and it would certainly not be good for the UAW, its members or retirees."

But he wouldn't comment on whether GM would be able to keep its pledge of top executives to stay out of bankruptcy if there is a long strike at Delphi.

"We're focused on coming up with a solution, and we're not going to spend a lot of time on speculation," he said.

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Is the worst over for GM? Click here.

For more on Delphi's motion to dump its labor contracts, click here.

For more on GM offering workers up to $140,000 to leave, click here.