Auto parts supplier Visteon Corp. has filed for Chapter 11 bankruptcy protection. The company has struggled with reduced demand from automakers amid plans for extended plant shutdowns this summer. The company filed its petition in the U.S. Bankruptcy Court for the District of Delaware. The company's Visteon UK Ltd. unit separately filed for bankruptcy protection last month and closed three British plants.
Visteon, which is based in Van Buren Township, Michigan, posted a sharp drop in first-quarter revenue (although it did post a first-quarter 2009 profit, this was largely a one-time accounting quirk resulting from the UK bankruptcy). Visteon's revenue dropped as automakers cut back on their output in the face of dwindling car sales. According to Visteon's latest quarterly filing with regulators, the company had total liabilities of $3.96 billion and total assets of $4.56 billion at March 31. Cash and short-term investments totaled $625 million. "During the reorganization period, we will seek to address our capital structure and legacy costs that are not sustainable given the current economic environment," said Donald J. Stebbins, chairman and chief executive, in a statement reported by the Associated Press.
Visteon expects to fund its operations with cash on hand, cash flows from operations and a debtor-in-possession facility. Former parent Ford Motor Co., from which Visteon was spun off in 2000, has committed to support such debtor-in-possession financing for Visteon's restructuring efforts and to ensure long-term continuous supplies. Ford is still Visteon's biggest customer and accounted for about 31 percent of its $1.35 billion of sales last quarter. Earlier this month, Ford assumed a $163 million secured revolving credit facility from Visteon's lenders.
Along with its Chapter 11 filing, Visteon filed a first day motion request seeking the authority to continue serving customers and paying suppliers and employees. The company has facilities in 27 countries and employs approximately 31,000 people. Visteon's legal adviser is Kirkland & Ellis LLP; its restructuring adviser is Alvarez & Marsal and Rothschild Inc. is serving as financial adviser.
Although Visteon's Chapter 11 petition comes just weeks after Chrysler's Chapter 11 filing, and in the midst of an apparently imminent filing by General Motors, the extent to which Visteon's bankruptcy is directly related to those manufacturers' troubles is unclear. As noted above, Ford - which has not sought government aid or bankruptcy protection - was Visteon's largest customer. Moreover, it has been reported that Visteon had not posted an annual profit since being spun off from Ford in 2000.
-Drew Broaddus