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

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.

Edscha North America Bankruptcy – Debtor Background, Creditor Picture, Top Unsecured Creditors

Edscha North America, Inc. d/b/a Edscha USA (“Edscha North America” or the “Debtor”) filed for bankruptcy on October 19, 2009 leaving Ford, General Motors, Nissan and Mercedes on its top 20 unsecured creditor list for accommodation payments made to keep the Debtor going.  The OEM unsecured creditors’ and other unsecured creditors’ chances for any recovery of pre-petition claims appear to be slim.

The bankruptcy was filed in the Bankruptcy Court for the Bankruptcy Court for the Northern District of Illinois (case number is 09-39055) for relief under Chapter 11 of the US Bankruptcy Code.