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.

Pittsburgh Tube – PTC Alliance Bankruptcy – Debt Picture and Largest Unsecured Creditors

PTC Alliance Corp. d/b/a Pittsburgh Tube Company (“Pittsburgh Tube”) and its 6 affiliates who also filed bankruptcy on October 1, 2009 (the “Debtors”) have filed a consolidated list of the 30 largest unsecured creditors (the “Top Unsecured Creditor List”).  The total of claims of the 30 top unsecured creditors is substantial, exceeding $3.9 million.  All of the top 30 unsecured creditors are listed as trade creditors.  The vast majority of the top unsecured creditors are material providers and subcontractors.

With no essential supplier or other motion for payment of any pre-petition supplier claims, a first day motion to restrict exercise of reclamation and 503(b)(9) rights and a planned 363 sale to an insider, this is shaping up to be a bloody ugly bankruptcy from a supplier perspective.

Pittsburgh Tube Bankruptcy – Background, Identification of Debtors, Case Numbers and Petition Statistical Information

PTC Alliance Corp. d/b/a Pittsburgh Tube Company (“Pittsburgh Tube”) and 6 affiliated entities (“Debtors”) filed petitions on October 1, 2009 in the Bankruptcy Court for the District of Delaware for relief under Chapter 11 of Title 11 of the United States Code.  The Debtors have moved for joint administration of the Debtors’ cases under case number 09-13395.  The case has been assigned to Judge Christopher S. Sontchi.