DETROIT - Suppliers and creditors of Key Plastics LLC are threatening lawsuits to get their money back. They're worried the troubled auto plastics maker might soon file for Chapter 11 bankruptcy protection.
The suppliers, worried about their stability if they aren't paid by Key, are withholding parts and trying to take back parts for which they were never paid.
'These guys are killing me,' said a mold-maker to Key who asked to remain anonymous. 'I'll never see my money; their accountants are saying a Chapter 11 is close, and my business is going down the tubes because of them.'
Key, in Novi, Mich., is assuring employees, customers and investors it will be able to negotiate extra time or money to solve its liquidity problems.
On March 15, Key missed a $6.8 million payment on $125 million in bond debt. The company has a 30-day grace period to pay.
On March 13, Key CEO David Benoit sent a letter to Key's more than 4000 employees, acknowledging a liquidity problem and saying the company had a March 17 deadline to secure more funding.
A copy of the letter was obtained by Automotive News' sister publication Plastics News.
The letter said Key customers 'have agreed to make certain accommodations on our behalf in order to ensure continued uninterrupted operations with them.' Key's largest customers are Ford Motor Co., which provides 52 percent of Key sales; and General Motors, with 16 percent of sales.
Benoit was unavailable for comment.
Key reported 1999 sales of $550.8 million and has about 1,100 workers in the Detroit area. It had $428 million in debt as of last September.
As part of its restructuring plan, which could include the sale of the company, Key hired the New York investment-banking firm of Peter J. Solomon Co. David Resnick, managing director at Solomon, said it was 'too early in this assignment for us to comment' about Key's future or its suppliers' concerns.
Suppliers to Key that are owed amounts from $5,000 to $50,000 said they think Key may soon file for bankruptcy, so they might as well pursue legal action. They spoke on condition of anonymity.
'I plan to talk to my lawyer because now is the time to press Key and see if I can get (a) lien against their machinery,' a tooling supplier said. 'I've talked to them about what they owe me, and they gave me some snow job, then practically begged me not to do anything.'
Key met earlier this month with its unsecured creditors, including small Tier 2 suppliers and told them the company only had enough money to pay off secured creditors.
Creditors hire lawyer
Those unsecured creditors formed a committee, which hired a law firm from Birmingham, Mich.
Among the companies owed money by Key are large interests such as GE Plastics and BASF, according to a list of creditors obtained by Automotive News' sister publication .
Several small suppliers are on the list, such as Motor City Mold Inc., of Livonia, Mich., and Dimen-sional Mold Engineering of Ro-chester Hills, Mich. Both GE and BASF are owed nearly $2 million, committee members said.