WILMINGTON, Delaware (Reuters) - A lawyer for Chinese auto parts maker Wanxiang Group Corp said on Thursday it plans to make a superior bid for the battery business of A123 Systems than what a U.S. company has offered.

Wanxiang intends to bid at the auction for A123, which filed for bankruptcy earlier this week, Bojan Guzina said at a court hearing in Delaware. The Chinese company also plans to fight Johnson Controls Inc for the role of initial bidder for A123, the attorney said.

A123, a maker of lithium-ion batteries used in hybrid and electric vehicles, declared bankruptcy amid a backdrop of quality-control problems and a disappointing market for electric vehicles. The company had won a $249 million U.S. government grant in 2009.

Wanxiang has been pursuing A123 for months. The bankruptcy came after a $465 million rescue deal by the Chinese company unraveled after the U.S. battery maker was unable to meet some conditions of the agreement.

"My client feels it has been left at the altar a couple of times," Guzina, a lawyer for law firm Sidley Austin, which represents Wanxiang, said in U.S. Bankruptcy Court in Wilmington.

A123 entered bankruptcy with an agreement to sell its automotive operations, including two factories in Michigan, to Milwaukee-based Johnson Controls for $125 million.

But that deal is subject to a court-supervised auction, and Wanxiang plans to contest Johnson Controls as the initial bidder -- or "stalking horse" -- in the sale process. Funds raised in the auction will go to repaying A123's creditors.

"We believe our stalking horse proposal will be materially better than Johnson Controls'," Guzina said.

A spokesman for Johnson Controls did not immediately respond to a request for comment.

Judge Kevin Carey, who welcomed competitive bidding for A123, is scheduled to rule on the initial bidder on October 30.

"It's nice that the debtor has become the popular girl at the dance with at least two bidders, maybe more," he said.

A123 also has attracted bidders for its non-automotive operations, which includes grid storage batteries.

Wanxiang must receive approval from the Committee on Foreign Investment in the United States and the government of China to acquire A123. The Chinese company will submit its proposals next week, Guzina said.

The A123 bankruptcy has quickly became politicized with less than four weeks before the U.S. presidential election. Republican candidate Mitt Romney said the government grant awarded to A123 was an example of the Obama administration "gambling away billions of taxpayer dollars."

The White House has allotted about $90 billion for various clean-energy programs as part of its economic stimulus plans.

Obama campaign spokesman Adam Fletcher said this week that the investments helped to more than double renewable energy production from wind and solar, "creating good-paying jobs and bringing manufacturing back to our shores."

Wanxiang arrived in court armed with its own proposed bankruptcy loan, known as a debtor-in-possession (DIP) loan, to counter the financing Johnson Controls arranged with A123. Carey approved on an interim basis the Johnson Controls loan after concessions were made to bring it in line with Wanxiang's proposal.

DIP loans often place stringent requirements on a bankrupt company, such as ordering asset auctions on tight deadlines. The loans give a lender influence over the outcome of a case.

Guzina said Wanxiang would seek to replace the Johnson Controls DIP loan at the October 30 hearing, when A123 will also seek final approval for its bankruptcy finance.

The attorney also said Wanxiang wants to extend the bidding period for the battery maker's business closer to the end of the year, compared to A123's proposed auction on November 19. Given the time it needs for approvals, Wanxiang has an interest in slowing down the bidding process.

The case is A123 Systems Inc, Delaware Bankruptcy Court, No. 12-12859.

(Reporting By Tom Hals; Editing by Martha Graybow and Phil Berlowitz)

A lawyer for Chinese auto parts maker Wanxiang Group Corp said on Thursday it plans to make a superior bid for the battery business of A123 Systems than what a U.S. company has offered.

Wanxiang intends to bid at the auction for A123, which filed for bankruptcy earlier this week, Bojan Guzina said at a court hearing in Delaware. The Chinese company also plans to fight Johnson Controls Inc for the role of initial bidder for A123, the attorney said.

A123, a maker of lithium-ion batteries used in hybrid and electric vehicles, declared bankruptcy amid a backdrop of quality-control problems and a disappointing market for electric vehicles. The company had won a $249 million U.S. government grant in 2009.

Wanxiang has been pursuing A123 for months. The bankruptcy came after a $465 million rescue deal by the Chinese company unraveled after the U.S. battery maker was unable to meet some conditions of the agreement.

"My client feels it has been left at the altar a couple of times," Guzina, a lawyer for law firm Sidley Austin, which represents Wanxiang, said in U.S. Bankruptcy Court in Wilmington.

A123 entered bankruptcy with an agreement to sell its automotive operations, including two factories in Michigan, to Milwaukee-based Johnson Controls for $125 million.

But that deal is subject to a court-supervised auction, and Wanxiang plans to contest Johnson Controls as the initial bidder -- or "stalking horse" -- in the sale process. Funds raised in the auction will go to repaying A123's creditors.

"We believe our stalking horse proposal will be materially better than Johnson Controls'," Guzina said.

A spokesman for Johnson Controls did not immediately respond to a request for comment.

Judge Kevin Carey, who welcomed competitive bidding for A123, is scheduled to rule on the initial bidder on October 30.

"It's nice that the debtor has become the popular girl at the dance with at least two bidders, maybe more," he said.

A123 also has attracted bidders for its non-automotive operations, which includes grid storage batteries.

Wanxiang must receive approval from the Committee on Foreign Investment in the United States and the government of China to acquire A123. The Chinese company will submit its proposals next week, Guzina said.

The A123 bankruptcy has quickly became politicized with less than four weeks before the U.S. presidential election. Republican candidate Mitt Romney said the government grant awarded to A123 was an example of the Obama administration "gambling away billions of taxpayer dollars."

The White House has allotted about $90 billion for various clean-energy programs as part of its economic stimulus plans.

Obama campaign spokesman Adam Fletcher said this week that the investments helped to more than double renewable energy production from wind and solar, "creating good-paying jobs and bringing manufacturing back to our shores."

Wanxiang arrived in court armed with its own proposed bankruptcy loan, known as a debtor-in-possession (DIP) loan, to counter the financing Johnson Controls arranged with A123. Carey approved on an interim basis the Johnson Controls loan after concessions were made to bring it in line with Wanxiang's proposal.

DIP loans often place stringent requirements on a bankrupt company, such as ordering asset auctions on tight deadlines. The loans give a lender influence over the outcome of a case.

Guzina said Wanxiang would seek to replace the Johnson Controls DIP loan at the October 30 hearing, when A123 will also seek final approval for its bankruptcy finance.

The attorney also said Wanxiang wants to extend the bidding period for the battery maker's business closer to the end of the year, compared to A123's proposed auction on November 19. Given the time it needs for approvals, Wanxiang has an interest in slowing down the bidding process.

The case is A123 Systems Inc, Delaware Bankruptcy Court, No. 12-12859.

(Reporting By Tom Hals; Editing by Martha Graybow and Phil Berlowitz)