27 Automotive Suppliers File Chapter 11 Bankruptcies in 2009; End of Year Status Summary; Likelihood of Bankruptcy Preference Recovery

Date: January 9, 2010 Author: burbageweddell

Pressures in the global automotive industry forced 27 FN1 automotive parts and component manufacturers and 2 automakers to seek Chapter 11 bankruptcy protection in 2009.  The number of filings is only the headline of the story.  While estimated trade creditor distributions on prepetition claims swung the spectrum of 100% to 0%, estimated recoveries of less than 2 percent predominate.  And more trade creditor pain looms in several bankruptcies, as bankruptcy preference action recoveries are either included in liquidation budgets, are necessary to avoid administrative insolvency or are likely to be sought by plan administrators and liquidation trustees.

This article provides a comprehensive list of the 27 automotive supplier Chapter 11 bankruptcies in 2009, together with status at the end of 2009, estimated trade creditor recoveries and the potential for avoidance actions.

The Filing Trends

The 2009 calendar year turned the reorganization catchphrases “overleveraged”, “tightening covenant requirements”, “cost structure” and “deteriorating automotive markets” into company epitaphs.  Of the 27 automotive supplier bankruptcies, 14 ended or are in the process of ending in Section 363 sales followed either by plans of liquidation, conversions to Chapter 7 or dismissals.  In better times, many of these 363 sales may have been reorganizations.

The only good news came in the last two months of the year.  In November, 2009 there was only one Chapter 11 filing by an automotive supplier.  There were no filings in December, 2009.  The filings clearly peaked in May, June and July.  In that 3 month period, there were 12 automotive supplier bankruptcies.

There potentially was one signal that the credit markets for automotive suppliers are starting to improve.  Cooper-Standard was able to arrange for replacement DIP financing at a lower interest rate.

Who is and is not on the List of 2009 Automotive Supplier Bankruptcies

The following list does not include the bankruptcies of the General Motors or Chrysler, raw material suppliers or automotive industry manufacturers serving only the aftermarket segment.  For example, we did not include Proliance International or Holley Performance because each serves only the aftermarket segment.  The list also does not include the numerous companies that simply closed their doors with or without the filing of a Chapter 7.

There also was a necessary element of subjectivity in deciding what companies are and are not automotive suppliers.  Our decision was based on two factors – (1) the identification in the bankruptcy filings of at least one automotive OEM or substantial automotive Tier 1 customer and (2) the type products manufactured.  If we missed someone, please send us a comment (see below) or email.

FN1 In adding up the bankruptcies, each “administratively consolidated” bankruptcy was only counted as a single bankruptcy.  If all of the co-debtors in these filings are counted, there were actually 241 automotive supplier debtors filing Chapter 11 in 2009.

LIST OF 2009 AUTOMOTIVE SUPPLIER BANKRUPTCIES
(Information as of 1/7/2010)

Accuride Corporation

Filed: 10/8/2009

Status: Plan of Reorganization Pending

Headquarters:
Evansville, Indiana

Court:
District of Delaware

Discussion:
Third Amended Plan Filed December 21, 2009); Confirmation hearing is scheduled for February 10, 2010

Co-Debtors: 19

Case No.: 09-13449

Products:
wheels, wheel-end components and assemblies, truck body and chassis parts, seating assemblies

Trade Creditor Recovery:
Allowed general unsecured claims will be paid 100%

Major Customer(s):
Daimler Truck North America, PACCAR, Navistar Corporation, Volvo/Mack

Preference Claims:
Unknown

Auto Cast, Inc.

Filed: 8/24/2009

Status: Plan of Reorganization Pending

Headquarters:
Grandville, Michigan

Court:
Western District of Michigan

Discussion:
Plan filed on December 11, 2009

Co-Debtors: 0

Case No.: 09-9958

Products:
zinc and aluminum die cast products; decorative parts such as the Cadillac emblem and CTS decorative air intake vents, the Corvette emblem; engine mounts for trucks and heavier vehicles.

Trade Creditor Recovery:
Allowed general unsecured claims will be paid 100% in installments ($10,000/mth split pro rata) or, at Debtor’s election, 70% of claim in full

Major Customer(s):
Chrysler, Ford, Paulstra CRC, Johnson Controls, General Motors

Preference Claims:
Payment of unsecured claims at 100% effectively precludes supplier avoidance actions.

B&C Machine Co., LLC

Filed: 7/27/2009

Status: 363 Sale Pending

Headquarters:
Barberton, Ohio

Court:
Northern District of Ohio

Discussion:
Order entered December 22, 2009 granting sale motion

Co-Debtors: 0

Case No.: 09-53294

Products:
full-service machining business for the automotive, heavy truck, railroad, motorcycle and appliance industries.

Trade Creditor Recovery:
Unknown

Major Customer(s):
Dana Corp.; Ford Motor Co.; GE Transportation Systems; Arvin Meritor

Preference Claims:
unknown

Checker Motors Corporation

Filed: 1/16/2009

Status: 363 Sales Closed

Headquarters:
Kalamazoo, Michigan

Court:
Western District of Michigan

Discussion:
Sales of substantially all the assets occurred on or about June 11, 2009 and November 27, 2009

Co-Debtors: 0

Case No.: 09-00358

Products:
metal stampings and welded assemblies for various car and truck OEMs and Tier 1 suppliers and for the heavy truck market

Trade Creditor Recovery:
Unknown but likely none or very low percentage;  sales generated minimal proceeds

Major Customer(s):
General Motors

Preference Claims:
Bankruptcy preference actions likely.

Contech U.S., LLC

Filed: 1/30/2009

Status: 363 Sales Closed; Case Converted

Headquarters:
Portage, Michigan

Court:
Eastern District of Michigan

Discussion:
Substantially all of the operating assets sold pursuant to orders entered April 7, 2009, June 3, 2009, June 15, 2009, and June 23, 2009; Pursuant to Debtors’ motion, cases converted on July 13, 2009.

Co-Debtors: 2

Case No.: 09-42392

Products:
light metals die casting and machining company; tubing, forging and protective paint coatings

Trade Creditor Recovery:
unknown

Major Customer(s):
Delphi, Ford, BMW, Linamar

Preference Claims:
In motion to convert, Debtor implied that preference actions might be pursued.

Cooper-Standard Holdings Inc.

Filed: 8/3/2009

Status: Seeking to Reorganize

Headquarters:
Novi, Michigan

Court:
District of Delaware

Discussion:
Interim order authorizing execution of replacement DIP financing documents was entered on December 18, 2009.

Co-Debtors: 12

Case No.: 09-12743

Products:
fluid handling, body sealing, and noise, vibration and harshness control components, systems, subsystems, and modules

Trade Creditor Recovery:
unknown

Major Customer(s):
Ford Motor Company, General Motors Company, Chrysler Group LLC, Audi, Volkswagen, BMW, Fiat, Honda, Mercedes Benz, Porsche, PSA Peugeot Citroen, Renault/Nissan, Toyota

Preference Claims:
unknown

Crowe Manufacturing Services, Inc.

Filed: 9/25/2009

Status: 363 Sale Pending

Headquarters:
Dayton, Ohio

Court:
Southern District of Ohio

Discussion:
Sale motion filed on December 10, 2009; Debtor intends to file a plan of liquidation.

Co-Debtors: 0

Case No.: 09-35939

Products:
CNC machining;  assemblies for the truck, bus industry

Trade Creditor Recovery:
unknown

Major Customer(s):
Honda of America Manfuacturing Inc.

Preference Claims:
The debtor has not indicated if avoidance actions will be pursued.

Edscha North America, Inc.

Filed: 10/19/2009

Status: Seeking to Reorganize

Headquarters:
Pontiac, Michigan

Court:
Northern District of Illinois

Discussion:
Chapter 11 Plan due by 1/19/2010

Co-Debtors: 0

Case No.: 09-39055

Products:
convertible roofs, hinge systems and driver controls for most major carmakers.

Trade Creditor Recovery:
unknown

Major Customer(s):
Ford, General Motors, Nissan and Mercedes

Preference Claims:
unknown

Fluid Routing Solutions, Inc. n/k/a Carolina Fluid Handling Intermediate Holding Corp.

Filed: 2/6/2009

Status: 363 Sale-Credit Bid-Closed; Case Converted

Headquarters:
Big Rapids, Michigan

Court:
District of Delaware

Discussion:
Sale to affiliate of Sun Capital closed on March 27, 2009;  October 2, 2009, Chapter 7  Trustee was appointed

Co-Debtors: 3

Case No.: 09-10384

Products:
fuel management systems, fluid handling systems and hose extrusion products for major original equipment manufacturers in the automotive industry

Trade Creditor Recovery:
Appears likely to be administratively insolvent;  Likely trade creditor recovery is 0%.

Major Customer(s):
General Motors, Chrysler, Ford and Toyota

Preference Claims:
The debtor had estimated potential recovery from preference actions of $2 million.  The trustee has not indicated whether it intends to pursue preference recovery.

Foamex International Inc. (2009)

Filed: 2/18/2009

Status: 363 Sale-Credit Bid-Closed;  Dismissal Motion Pending

Headquarters:
Media, Pennsylvania

Court:
District of Delaware

Discussion:
Order entered May 27, 2009 approving sale;  Debtor motion for an order dismissing cases pending

Co-Debtors: 7

Case No.: 09-10560

Products:
polyurethane foam products, among other things, foam rolls, flame and adhesive laminated composites, thermoformable foams, acoustical foams, basic foam products,  energy absorbing foams.

Trade Creditor Recovery:
None

Major Customer(s):
General Motors, Ford, Chrysler, Honda,  Nissan

Preference Claims:
Avoidance actions excluded from 363 sale assets.  Potential for claims will end if case is dismissed.

FormTech Industries, LLC

Filed: 8/26/2009

Status: 363 Sale-credit bid-closed

Headquarters:
Royal Oak, Michigan

Court:
District of Delaware

Discussion:
Order entered October 1, 2009 authorizing sale to HHI, an affiliate of KPS Special Situations Funds; Debtors are in the process of selling additonal assets

Co-Debtors: 2

Case No.: 09-12964

Products:
hot forgings, including gears and shafts for transmissions and transfer cases, clutch housings, bearing races and wheel spindles

Trade Creditor Recovery:
$1.025 million “Creditors’ Fund” established for the sole benefit of general unsecured creditors

Major Customer(s):
Chrysler Group, LLP, Honda Trading America Corporation, Magna Powertrain USA, Inc. and Magna Powertrain, Inc.

Preference Claims:
The Purchase Agreement with HHI provides for the Purchaser to acquire, waive and release claims against non-insider trade creditors of the Debtors

Fort Wayne Foundry Corporation

Filed: 6/3/2009

Status: Plan of Reorganization Confirmed

Headquarters:
Fort Wayne, Indiana

Court:
Northern District of Indiana

Discussion:
Plan confirmed on August 11, 2009

Co-Debtors: 1

Case No.: 09-12423

Products:
high-volume sand casting technology; intake manifolds, front covets, water pumps, earn carriers and brackets

Trade Creditor Recovery:
unsecured creditors will receive 50% of net earnings or the reorganized Debtors for up to 10 years

Major Customer(s):
General Motors; Delphi Automotive, Unisia, Skilled Manufacturing, Inc., Innovative Cooling Dynamics.

Preference Claims:
Uncertain if avoidance actions will be pursued.

Global Safety Textiles Holdings LLC

Filed: 6/30/2009

Status: Plan of Reorganization Confirmed

Headquarters:
Greensboro, North Carolina

Court:
District of Delaware

Discussion:
Plan confirmed on November 30, 2009

Co-Debtors: 8

Case No.: 09-12234

Products:
automotive airbag fabrics and airbag cushions for automotive airbag modules

Trade Creditor Recovery:
No distributions will be made against other general unsecured claims (approximately $121.8 million);  “Convenience Claims”, general unsecured claims $15,000 or less (approximately $115,000), will be paid 100 percent;

Major Customer(s):
“large, global Tier 1 suppliers”

Preference Claims:
the right to pursue avoidance actions is preserved under the Plan of Reorganization

Grede Foundries, Inc.

Filed: 6/30/2009

Status: 363 Sale-Credit Bid-Authorized

Headquarters:
Reedsburg, Wisconsin

Court:
Western District of Wisconsin

Discussion:
Order authorizing sale entered December 22, 2009; purchaser is an affiliate of Wayzata Opportunity Fund II, L.P.

Co-Debtors:  2

Case No.: 09-14337

Products:
“largest cast-iron foundry companies in the United States“

Trade Creditor Recovery:
Unknown whether the Debtor will be able to propose a plan of liquidation or be forced to convert.

Major Customer(s):
Akebono Brake Corporation; Allison Transmission, Inc.; Automotive Component Holdings, LLC; BorgWarner Inc.; Bosch Rexroth Corporation; Cummins, Inc.; Eaton Corporation; General Motors; Honda; Linamar Corporation; Magna Powertrain; Robert Bosch, LLC; Toyota

Preference Claims:
Prior to Section 363 sale, Debtor brought preference actions against suppliers filings 503(b)(9) requests.  However, avoidance actions were among assets sold in Section 363 Sale.

Hayes Lemmerz International, Inc.

Filed: 5/11/2009

Status: Plan of Reorganization Confirmed

Headquarters:
Northville, Michigan

Court:
District of Delaware

Discussion:
Confirmation order effective as of December 16, 2009

Co-Debtors: 24

Case No.: 09-11655

Products:
aluminum and steel wheels for passenger cars and light trucks and of steel wheels for commercial trucks and trailers

Trade Creditor Recovery:
allowed general Unsecured Claims ($817 million, including $398 million deficiency claim with respect to Prepetition Secured Lender Claims) are predicted to be paid 0.3% – .06%.

Major Customer(s):
GM, Ford,  Chrysler, BMW, Daimler, Fiat, Honda, Hyundai, Kia, Nissan/Renault, PSA, Porsche, Toyota and Volkswagen

Preference Claims:
The Debtors reserved their rights with respect to all avoidance actions arising under Chapter 5 of the Bankruptcy Code.  At the time of submission of the Plan, the Debtors state that they had not  undertaken a thorough analysis of the value of potential avoidance actions.

J.L. French Automotive Castings, Inc.

Filed: 7/13/2009

Status: Plan of Reorganization Effective

Headquarters:
Sheboygan, Michigan

Court:
District of Delaware

Discussion:
Plan effective on September 25, 2009

Co-Debtors: 6

Case No.: 09-12445

Products:
high-pressure aluminum die-castings, including engine blocks, oil pans, transmission cases, engine covers, bedplates, ladderframes, cam covers, and front end accessory drive brackets.

Trade Creditor Recovery:
estimated percentage recovery of allowed general unsecured claims is  7.4%

Major Customer(s):
Ford, General Motors Corporation, Magna International, Inc., Chrysler, LLC

Preference Claims:
Avoidance actions are not anticipated.

Lear Corporation

Filed: 7/7/2009

Status: Plan of Reorganization Confirmed

Headquarters:
Southfield, Michigan

Court:
Southern District of New York

Discussion:
Plan confirmed on November 5, 2009

Co-Debtors: 23

Case No.: 09-14326

Products:
seat systems, electrical distribution systems and electronic products, primarily wire harnesses, junction boxes, terminals and connectors, various electronic control modules, wireless systems and high voltage components,audio sound systems and in-vehicle television and video entertainment systems.

Trade Creditor Recovery:
sllowed general unsecured claims relating to and arising solely from the receipt of goods or services from continuing suppliers to be paid 100%

Major Customer(s):
BMW, ChangAn, Chery, Chrysler, Daimler, Dongfeng, Fiat, First Autoworks, Ford, GAZ, General Motors, Honda, Hyundai, Isuzu, Mahindra & Mahindra, Mazda, Mitsubishi, Nissan, Porsche, PSA, Renault, Subaru, Suzuki, Tata, Toyota, Volkswagen

Preference Claims:
Payment of unsecured claims at 100% effectively precludes supplier avoidance actions.  Likelihood of avoidance actions against other unsecured creditors is unknown.

Mark IV Industries, Inc.

Filed: 4/30/2009

Status: Plan of Reorganization Effective

Headquarters:
Rochester Hills, Michigan

Court:
Southern District of New York

Discussion:
Plan effective November 13, 2009

Co-Debtors: 17

Case No.: 09-12795

Products:
engine-related products using mechanical power transmission technology

Trade Creditor Recovery:
Estimated Percentage Recovery of allowed general unsecured claims is 3.5%

Major Customer(s):
automotive and heavy duty original equipment manufacturers.

Preference Claims:
Unknown

Metaldyne Corporation nka Oldco M Corporation

Filed: 5/27/2009

Status: 363 Sale-Credit Bid-Closed; Plan of Liquidation Proposed

Headquarters:
Plymouth, Michigan

Court:
Southern District of New York

Discussion:
Sale of Chassis and Powertrain operations to MD Investors closed on October 16, 2009.

Co-Debtors: 31

Case No.: 09-13412

Products:
powertrain components, including steel powder metal connecting rods and engine bearing caps, aluminum castings (including valve bodies, clutch modules, balance shaft modules, front cover assemblies, differential cases and crankshaft dampers) and tubular fabricated products; engineered chassis applications, including wheel-ends, knuckles and minicorner assemblies

Trade Creditor Recovery:
allowed general Unsecured Claims ($193,311,000 – $307,586,000) are predicted to be paid 0.4 – 2.1%

Major Customer(s):
Ford Motor Company, Chrysler LLC and its successor, Chrysler Group LLC, and General Motors Corporation and its successor, General Motors Company

Preference Claims:
Distribution Trustee may enforce preference claims

Michael Day Enterprises, Inc.

Filed: 11/10/2009

Status: 363 Sale-Pending

Headquarters:
Wadsworth, Ohio

Court:
Northern District of Ohio

Discussion:
363 Sale Procedures Motion Approved on December 15, 2009

Co-Debtors: 1

Case No.: 09-55159

Products:
engineering thermoplastic compounds, including specialized nylon and other ETP blends

Trade Creditor Recovery:
unknown

Major Customer(s):
Dura Automotive Systems, Inc.;  T.R.W. Automotive Electonics; other Tier I and Tier II Automotive Suppliers

Preference Claims:
unknown

Noble International, Ltd.

Filed: 4/15/2009

Status: 363 Sale; Plan of Liquidation Confirmed

Headquarters:
Warren, Michigan

Court:
Eastern District of Michigan

Discussion:
Sales occurred prusuant to orders entered May 29, 2009, June 16, 1009, june 23, 2009; Plan confirmed on November 30, 2009

Co-Debtors: 14

Case No.: 09-51720

Products:
flat, tubular, shaped and enclosed formed structures for use in automobile applications, including doors, fenders, body side panels, pillars, bumpers, door beams, load floors, windshield headers, door tracks, door frames, and glass channels

Trade Creditor Recovery:
Debtor estimates that approximately $8 million would be available for distribution to the holders of allowed general unsecured claims.

Major Customer(s):
General Motors Corporation, Ford Motor Company, Chrysler, LLC

Preference Claims:
Total estimated recovery of $3.85 million in avoidance actions.

PTC Alliance Corp.

Filed: 10/1/2009

Status: 363 Sale-Credit Bid-Pending

Headquarters:
Wexford, Pennsylvania

Court:
District of Delaware

Discussion:
Order approving sale procedures entered November 6, 2009;  Stalking Horse Bidder affiliate of BDCM Opportunity Fund, L.P., BDC Finance, L.L.C., and Black Diamond International Funding, Ltd.; qualifying bid deadline December 10, 2009; objections pending.

Co-Debtors: 6

Case No.: 09-13395

Products:
tubular steel products and chrome plated bar

Trade Creditor Recovery:
anticipated purchase insufficient to pay all secured claims;  Trade creditor recovery likely 0%.

Major Customer(s):
Daimler, Chrysler, Volkswagen, BMW, Volvo, Delphi, Ryerson

Preference Claims:
Preference actions to be sold to 363 purchaser under stalking horse asset purchase agreement

Recticel North America, Inc.

Filed: 10/29/2009

Status: Seeking to Reorganize

Headquarters:
Auburn Hills, Michigan

Court:
Eastern District of Michigan

Discussion:
DIP Financing provided by European parent corporation;  Primary objective to reject unprofitable customer contracts

Co-Debtors: 1

Case No.: 09-73411

Products:
polyurethane sprayed skins and components for car interior trim including dashboards, glove boxes and door panels

Trade Creditor Recovery:
unknown

Major Customer(s):
Johnson Controls, Inc.; Inteva Products, LLC

Preference Claims:
unknown

Sanderson Industries, Inc.

Filed: 5/11/2009

Status: 363 Sale-Credit Bid-Closed; Plan of Liquidation Confirmed

Headquarters:
Atlanta, Georgia

Court:
Northern District of Georgia

Discussion:
Sale to Laward Holdings, Inc. closed on September 15, 2009; Plan confirmed December 16, 2009

Co-Debtors: 0

Case No.: 09-72311

Products:
metal stampings; welded assemblies

Trade Creditor Recovery:
Estimated Percentage Recovery of allowed general unsecured claims is 1.13%

Major Customer(s):
Ford Motor Company

Preference Claims:
Unknown

Stant Parent Corp. n/k/a SPC Seller, Inc

Filed: 7/27/2009

Status: 363 Sale-Closed

Headquarters:
Connersville, Indiana

Court:
District of Delaware

Discussion:
Sale to Vapor Acquisition Corp., an affiliate of HIG Capital, closed on October 27, 2009

Co-Debtors: 5

Case No.: 09-12647

Products:
fuel systems, fuel caps, radiator caps and thermostats

Trade Creditor Recovery:
Unknown but likely none.

Major Customer(s):
Chrysler, General Motors

Preference Claims:
All avoidance claims sold to 363 purchaser.

Vincent Industrial Plastics, Inc.

Filed: 7/29/2009

Status: Case Dismissed

Headquarters:
Henderson, Kentucky

Court:
Western District of Kentucky

Discussion:
Debtor could not reorganize or propose a confirmable plan; case dismissed November 25, 2009.

Co-Debtors: 0

Case No.: 09-41207

Products:
plastic injection molding, post-molding, decorating and assembly, product engineering and design, injection mold design and mold building

Trade Creditor Recovery:
None

Major Customer(s):
“Plastic injection molded components used on virtually every vehicle made in North America“

Preference Claims:
Dismissal of the case ends any risk of preference recovery.

Visteon Corporation

Filed: 5/27/2009

Status: Plan of Reorganization Pending

Headquarters:
Van Buren Township, Michigan

Court:
District of Delaware

Discussion:
Hearing on plan sheduled for January 28, 2010.

Co-Debtors: 30

Case No.: 09-11786

Products:
core product groups—a climate group, an electronics group, which includes a significant lighting subset, an interior systems group.

Trade Creditor Recovery:
Holders of general unsecured claims ($1.229.6 billion) will receive no recovery under the Plan.

Major Customer(s):
Ford; Hyundai/Kia; Nissan/Renault; PSA Peugeot Citroen; Chrysler; General Motors; Volkswagen

Preference Claims:
Debtors are analyzing the potential avoidance of prepetition transfers. © 2010 Burbage Weddell LLC