The Auto Writer

Nearly two months after its British unit was placed into administration (insolvency), the American operation of Visteon Corporation has filed for Chapter 11 bankruptcy (reorganization).  At one time a part of the Ford Motor Company, Visteon was spun off in 2000 and eventually began to work with other automakers including Hyundai, Nissan, General Motors and Toyota in addition to maintaining its business relationship with Ford.

Visteon is a significant parts supplier to the auto industry supplying car companies with a wide variety of products including electronics, interiors, lighting, climate, engine induction and power train controls. Were Visteon to file for liquidation instead of reorganization its loss would severely impact the operations of several automakers but especially Ford.

Filing Does Not Include Foreign Operations

According to a Visteon press release announcing the bankruptcy filing, none of the company’s subsidiaries or joint ventures outside of the United States are included with the filing.

“Visteon is taking this step to maximize the long-term value of the company,” said Donald J. Stebbins, chairman and chief executive officer. “During the reorganization period, we will seek to address our capital structure and legacy costs that are not sustainable given the current economic environment. The results of these actions, combined with our innovative products and excellent product quality, will allow Visteon to emerge a financially sound and well-positioned company.”

Automakers Line Up To Offer Their Support

Knowing that Visteon’s demise would severely harm their own operations, several of Visteon’s automotive manufacturer customers have expressed support for the company as it seeks to reorganize. Ford, which has been keeping itself away from the bankruptcy and reorganization fate of its American rivals, has agreed to supply debtor-in-possession financing (DIP). With DIP, Ford’s investment is given precedence over most other claims which means that if Visteon failed to reorganize, Ford might be able to assume some of its assets. Ford has also agreed to continue to use Visteon as a supplier.

Visteon’s filing comes just as Chrysler LLC heads back to bankruptcy court expecting the judge to rule that it can sell its assets to a group of automotive investors lead by Fiat SpA. General Motors, who will likely slip behind Ford over the coming months in US sales, is expected to head to bankruptcy court no later than next Monday. GM has had no success convincing bondholders to accept terms offered to them an issue that looks likely to be settled under bankruptcy protection.

Source: Visteon Corporation

See Also — Auto Suppliers Now Seeking Fed Cash Support