The automobile industry has battled financial distress in the last year with several companies filing bankruptcy.
The most significant bankruptcy in the auto industry occurred on June 18 when electric vehicle maker Fisker Group filed for Chapter 11 protection to shut down operations and liquidate its assets.
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Auto parts companies under financial distress include e-commerce auto parts retail business PartsID, which filed for Chapter 11 in December 2023. The company sells auto parts to consumers online through various websites, such as TruckID.com, CardID.com and CamperID.com.
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Wheel Pros, which operates as auto parts distributor and retailer Hoonigan, filed for a prepackaged Chapter 11 bankruptcy on Sept. 9 that would eliminate $1.2 billion in debt and provide about $570 million in new capital through an exit facility.
Under the restructuring support agreement and prepackaged bankruptcy filed in the U.S. Bankruptcy Court for the District of Delaware, Wheel Pros reached agreements with its equity sponsor Clearlake Capital Group and lenders for a consensual restructuring that will hand 85% of its new equity interests to holders of first lien claims and the remaining 15% to new first-lien lenders who will backstop the debtor’s exit term loan.
Auto parts suppliers are filing for Chapter 11 bankruptcy.
Image source: Pixabay.
Accuride seeks a consensual restructuring in bankruptcy
Finally, Accuride Corp, a leading manufacturer of wheels and wheel end products for commercial trucks and trailers, on Oct. 9 filed for Chapter 11 bankruptcy protection seeking a consensual restructuring of its debt to continue operating as a going concern.
Accuride, which produces popular brands Accuride, Gunite, and KIC, is one of the largest and most diversified manufacturers and suppliers of wheels and wheel end components worldwide. The company produces 20 million wheels per year globally and commands 40% of the North American steel and aluminum wheel market for commercial vehicles.
The company distributes its products to original equipment manufacturers of trucks and trailers and to aftermarket distributors.
The Livonia, Mich., wheel manufacturer listed $500 million to $1 billion in assets and liabilities in its petition, including $22.7 million owed to its largest unsecured creditor Matalco Inc.
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Accuride and 15 affiliates filed their petition in the U.S. Bankruptcy Court for the District of Delaware after facing significant headwinds from the lingering effects of the Covid-19 pandemic on the debtor’s business, operational difficulties, business integration challenges, inflation, supply chain disruption, and other geopolitical and macroeconomic forces that depressed revenue and increased costs, according to a declaration by Charles Moore, the debtor’s chief restructuring officer.
The debtor’s financial distress was exasperated by sanctions against the Russian Federation for its invasion of Ukraine, which prevented Accuride from accessing cash from its non-debtor Russian affiliate which was not having financial difficulties.
Accuride’s prepetition efforts to apply operational initiatives to improve its financial situation were unsuccessful. The debtor in June 2024 began negotiations with an ad hoc committee of its first lien term loan lenders for an investment or purchase of some or all of its assets.
The debtor decided its best option was a post-petition transaction with the ad hoc group under a Chapter 11 bankruptcy reorganization plan. The debtor also reached an agreement with the ad hoc group to provide $103 million in debtor-in-possession financing, which includes $30 million in new money and rolls up $73 million in debt.
Accuride was founded in 1986 through a carve-out acquisition from Firestone Tire & Rubber Co. The company traces its roots back almost 150 years to when its affiliate Gunite was founded in 1854 as a manufacturer of bicycle, wagon, and buggy tires.
The wheel maker in 2005 merged with Transportation Technologies Industries Inc., acquiring one of the largest North American producers of truck components for the heavy- and medium-duty trucking industry and the Gunite brand. Following the merger, the company became a dominant parts supplier to the medium- to heavy-trucking industry.
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