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.

Cooper-Standard Automotive Combo 503(b)(9) Claims, Essential Supplier and Foreign Vendor Motion

Cooper-Standard Holdings Inc. and its affiliated debtors (“Cooper-Standard Automotive” or the “Debtors”) have combined into one motion a request to allow payment of 503(b)(9) administrative expense claims, a request to allow payment of critical vendors a/k/a essential suppliers, and a request to allow for payment of foreign vendors. The dollar amount of pre-petition claims Cooper-Standard Automotive is seeking to pay seems to vary between the motion and the interim and final orders. However, the relief requested in the interim order is for authority “to pay, in their sole discretion, as and when they come due, Essential [including 503(b)(9)] and Foreign Suppliers Claims in an amount that shall not exceed $19.5 million.”

Cooper-Standard – 30 Largest Unsecured Bankruptcy Creditors

Cooper-Standard Holdings Inc., (“Cooper-Standard Holdings”) has requested authority to file a consolidated list of the 30 largest unsecured creditors of Cooper-Standard Holdings and its affiliated Debtors (the “Top Unsecured Creditor List”) in lieu of a separate list for each of the Debtors. As could be expected, the Top Unsecured Creditor List is heavily populated with automotive suppliers.

Cooper-Standard Automotive Bankruptcy – Debtors and Petitions

Cooper-Standard Holdings Inc. and 12 affiliated entities (”Debtors”) filed a petitions in Bankruptcy Court for the District of Delaware for relief under chapter 11 of title 11 of the United States Code.  The Debtors are a leading global automotive manufacturer of fluid handling, body sealing, and noise, vibration and harshness control components, systems, subsystems, and modules, primarily for use in passenger vehicles and light trucks for global original equipment manufacturers and replacement markets.

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