For any supplier and other bankruptcy creditor in the bankruptcy of Contech U.S., LLC [1], timely and properly filing an administrative expense claim under 11 USC § 503(b)(9) may provide the only prospect for payment of any portion of the creditors prepetition claims. Click this link for an article on this site discussing 503(b)(9), including answers to the most common questions regarding making these claims.
Articles tagged with: automotive suppliers
Noble International-Two Debtors not Insolvent?
As discussed in a prior post on the bankruptcy of Noble International Ltd., the parent and 14 subsidiaries have filed for bankruptcy. We have stressed the need to carefully identify your customer. We wanted to use the Noble International bankruptcy as a case study for point and were surprised to find that two debtors did not appear to be “insolvent” when they filed their Chapter 11 petitions.
»» Continue reading about the statistical information in the Chapter 11 petitions
Noble International – No Supplier Breadcrumbs in First Day Motions
The bankruptcy of another substantial automotive supplier (the fifth in 2009) came with no first day motions that might help the supplier base. However, General Motors Corporation, Ford Motor Company and Chrysler, LLC once more have stepped up with DIP financing to keep a supplier operating while the parts are resourced.
Noble International, Ltd. Bankruptcy – Score: Subs In 14 – Subs Out 31
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.
»» Continue reading about customer identification importance in Noble International bankruptcy
Contech Confirms there will be No Money for Unsecureds
Contech U.S. LLC and two affiliates, MAG Contech, LLC and Contech, LLC filed bankruptcy in Michigan on January 30, 2009 – another victim of the automotive sector downturn. The most unique aspect of the case has been the willingness of 5 automotive customers (Delphi, Ford, BMW, Linamar and Automotive Components Holdings) to provide $7,200,000 DIP financing to keep Contech manufacturing components until a buyer can be found. For the suppliers to and other unsecured trade creditors of Contech, there never seemed to be much to try and salvage. This was confirmed in a March 26, 2009 filing by Contech.
Fluid Routing Solutions’ Purchaser Takes Automakers Off List
We discussed in a prior post the completion of the auction and bankruptcy court approval of sale of assets to an affiliate of Fluid Routing Solutions. Despite its success in getting the sale approved, Fluid Routing Solutions was unable to obtain the concurrence of its automaker customers to the Proposed Sale Order. Fluid Routing Solutions advised the bankruptcy court in submitting the Proposed Sale Order to the bankruptcy court that Toyota, Chrysler, Ford and General Motors (the “Automaker Customers”) provided comments to the proposed order that were “wholly inconsistent with, and went far beyond, the requirements of the Agreement”.
Fluid Routing Solutions – Auction Over, Asset Sale Approved
On March 26, 2009, 48 days after the Chapter 11 filing, the sale of the fluid routing business and assets of Fluid Routing Solutions was approved. The winning bidder a/k/a the only bidder was FRS Holding Corp., (“FRS Deux”) who was the “stalking horse bidder” and an admitted “affiliate of an insider of the Debtors” and affiliate of the DIP lender, Sun Fluid Routing Finance, LLC (“Sun”). The purchase price is $11 million “less Cure Amounts less Prorated Taxes, minus/plus the Closing Net Assets Shortfall/Surplus.”
Cadence Innovation, GM Settle Round 3 – Split Baby
In another blow to maintaining administrative solvency (much less any hope of recovery by the unsecured creditors on prepetition claims), on March 23, 2009, Cadence Innovation settled its $4,914,075 claim against GM for $2,830,000 ($2,000,000 cash and $830,000 GM loan reduction). For Cadence Innovation this result certainly represents a disappointment. The $4,914,075 certainly would have been viewed as “in the bank.”
Bankruptcy Preference Claims will Pay the Bills in Cadence Innovation Bankruptcy
Looking at the Cadence Innovation November 30, 2008 balance sheet, you would see total assets of $88 million. The December 31, 2008 balance sheet shows total assets of only $6.5 million. What happened?
Foamex International Bankruptcy – Another Automotive Supplier Files
See the Foamex International Docsheet™ Report for subsequent developments in the Foamex International bankruptcy proceedings.
Feb. 23, 2009 – Foamex International, Inc., together with 7 affiliates, filed for Chapter 11 protection in Delaware on February 18, 2009. The affiliates are: Foamex, L.P.; Foamex Latin America, Inc.; Foamex Asia, Inc.; FMXI, LLC; Foamex Carpet Cushion LLC; Foamex Mexico, Inc.; and Foamex Canada Inc..
We have made the following preliminary observations:
- There is a high risk of bankruptcy preference claims in this bankruptcy;
- This is yet another automotive supplier casualty, although the press has not noted it as such;
- A very high amount, in both dollars and percentage, is being sought for payment of prepetition amounts to “critical cendors”;
- A realistic but expansive definition of “critical vendors” is being used;
- Inclusion on the critical vendor list is not immunity from a bankruptcy preference claim.
We discuss each of these observations in more detail below.