We constantly stress the importance for a bankruptcy creditor to confirm the identity of its client in bankruptcy (see our article “10 Questions a Commercial Bankruptcy Creditor Must Ask and Answer ASAP”). If there was ever a poster child for the need to identify your customer it is the bankruptcy of Noble International, Ltd.
According to filings made with the SEC, Noble International, Ltd. “is the world’s largest laser welder and global provider of 21st Century Auto Body Solutions®. Noble provides the automotive industry with laser-welded blanks and tubes, as well as advanced roll-formed and hot-formed structural components.”
On April 15, 2009, Noble International, Ltd. (Case No. 09-51720) (“Noble International”) and 14 of its operating subsidiaries (the “Debtors”) filed petitions for relief under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Michigan. The name of each subsidiary and the bankruptcy case number for each is:
09-51730 Noble Advanced Technologies, Inc.
09-51732 Noble Land Holdings, Inc.
09-51734 Noble Manufacturing Group, Inc.
09-51735 Noble Metal Processing-Kentucky, G.P.
09-51737 Noble Metal Processing, Inc.
09-51738 Noble Metal Processing-Indiana, Inc.
09-51741 Noble Metal Processing-New York, Inc.
09-51742 Noble Metal Processing-Ohio, LLC
09-51744 Noble Metal Processing-West Michigan, Inc.
09-51745 Noble Swiss Holdings, LLC
09-51746 Noble TSA, LLC
09-51748 Noble Tube Technologies, LLC
09-51751 Prototech Laser Welding, Inc.
09-51752 Tailor Steel America, LLC
While 14 subsidiaries filed bankruptcy with the parent, 31 Nobel International subsidiaries are not in bankruptcy. Noble International is the owner, directly or indirectly, of all of the outstanding capital stock or equity interests in 27 “non-debtor” subsidiaries. Additionally, Noble International owns a substantial equity interest in 4 more “non-debtor” subsidiaries: (i) 51% of the outstanding capital stock of Noble Summit Metal Processing de Mexico, S. de R.L. de C.V., (ii) 50% of the outstanding capital stock of WISCO Noble (Wuhan) Laser Welding Technology Co. Ltd., (iii) 25% of the outstanding capital stock in Shanghai Baosteel & Arcelor Tailor Metal Co. Ltd., and (iv) 50% of the outstanding capital stock of Arcelor Neel Tailored Blank Pte. Ltd.
Among the wholly owned subsidiaries that has not filed bankruptcy is Noble European Holdings, B.V. This “non-debtor” subsidiary, through its subsidiaries, it operates seven facilities, primarily in Western Europe, as well as joint ventures in China, India, and Mexico.
The cases have been administratively consolidated. Please remember that administrative consolidation only means that the case is procedurally consolidated – there will be only one docket for all the cases. Consolidation of all the cases on a single docket has numerous advantages. It allows the Debtors and other parties in interest to avoid filing multiple duplicative documents in the Debtors’ various individual cases. Administrative consolidation avoids the need for monitoring of each of the Debtors’ individual dockets, and maintaining individual case files for each of the Debtors that will largely duplicate one another. In addition, joint administration also relieves the bankruptcy court of the burden of entering duplicative orders and maintaining duplicative files.
Unfortunately, administrative consolidation can become a trap of the unwary. Remember despite administrative consolidation (versus substantive consolidation):
- a bankruptcy creditor must still file claims against the correct Debtor or its estate (or against multiple Debtors and their respective estates);
- evaluation of elements of bankruptcy rights and defenses will be done on a debtor by debtor basis;
- intercompany claims among the Debtors will be preserved; and
- the Debtors is required still to maintain separate records of assets and liabilities.