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.

FormTech Industries – 30 Largest Unsecured Bankruptcy Creditors

FormTech Industries, LLC. (“FormTech”) together with its parent, FormTech Industries Holdings, LLC (collectively “Debtors”) filed petitions on August 26, 2009 in Bankruptcy Court for the Delaware for relief under Chapter 11 of Title 11 of the United States Code (Case Nos. 09-12964 and 09-12965, respectively).   FormTech is a leading manufacturer of precision hot forgings for sale to automotive equipment manufacturers and Tier 1 automotive suppliers.  The filing represents the continued ravaging of the ranks of suppliers serving the automotive industries.  Due to the large lead times for re-validation of new suppliers, close attention from the FormTech customers can be expected.

FormTech has requested authority to file a consolidated list of the 30 largest unsecured creditors (the “Top Unsecured Creditor List”) in lieu of a separate list for each of the Debtors. The list is heavily populated with raw material suppliers and automotive supplier subcontractors. The complete list is provided below.