A123 Systems Inc., the failed electric-car battery-maker backed with U.S. government funds, won court approval to sell most of its assets to Wanxiang Group Co. for about $256.6 million.

U.S. Bankruptcy Judge Kevin Carey in Delaware approved the sale at a hearing in Wilmington on Tuesday. The deal, which has raised concern from Republican lawmakers, is still subject to review by the interagency Committee on Foreign Investment in the U.S.

Wanxiang, China's biggest auto-parts maker, will acquire substantially all of A123's assets including its automotive, grid, and commercial business. A123 also received approval to sell its government business to Navitas Systems L.L.C. of Woodridge, Ill., for about $2.25 million.

A123, which was awarded a federal grant of as much as $249.1 million, held an auction last week at which Wanxiang beat a joint bid from Milwaukee's Johnson Controls Inc. and NEC Corp. of Tokyo.

The Waltham, Mass., battery maker filed for bankruptcy protection in October after a previous deal with Wanxiang was scuttled amid congressional Republicans' reluctance to allow its sale to a Chinese company. A123 listed assets of $459.8 million and debt of $376 million as of Aug. 31 in court documents.

Electric carmaker Fisker Automotive Inc. has said it awaited the sale of A123's Michigan battery plant so it could resume production of its $103,000 Karma plug-in sedan.