DETROIT -- Cash-strapped interiors and trim supplier Collins & Aikman Corp. on Tuesday filed for Chapter 11 bankruptcy protection from creditors, five days after former CEO David Stockman abruptly quit.
Collins & Aikman said it has a commitment to get as much as $300 million in financing from JPMorgan Chase & Co. to keep the business running.
The company said John Boken, of financial advisers Kroll Zolfo Cooper of New York, was named chief restructuring officer. The company also has hired law firm Kirkland & Ellis LLP and investment bank Lazard to help with the restructuring. The company filed Tuesday at the U.S. Bankruptcy Court for the Eastern District of Michigan in Detroit.
Collins & Aikman of Troy, Mich., said it will keep all its plants running and will continue to pay employees and suppliers. The company ranks No. 11 on the Automotive News list of the top 150 suppliers to North America with North American original-equipment automotive parts sales of $3.90 billion in 2004.
The bankruptcy filing is not a surprise. The supplier sent shock waves through the auto industry on Thursday, May 12, with the announcement that Stockman, 57, had quit as chairman and CEO. Plastics industry veteran Charles Becker was named acting CEO.
The beleaguered auto interior and trim supplier also revealed that it had fully used its credit line and was relying on payments from customers to fund operations.
The company said on Wednesday, May 11, it had only $13.4 million in available cash and financing. It expects to have available cash and financing of $15 million or less daily for the near future.
Before its bankruptcy filing, Collins & Aikman had scheduled debt interest payments of $26.9 million on June 30 and $26.7 million on Aug. 15. The company's total debt is about $2 billion.
Collins & Aikman's most recent troubles were triggered by the debt-rating downgrade for customers Ford Motor Co. and General Motors. The supplier was forced to get new terms from its lenders in the wake of the downgrades, which triggered a loan covenant that required the supplier to make a payment of $70 million - money it did not have.
Collins & Aikman's ills could cause trouble for Ford. In October 2003, Collins & Aikman was named a primary supplier of interior components for the 2006 Ford Futura sedan, which debuts in the fall. The deal meant that as many as 300,000 Ford Motor Co. vehicles each would have $1,000 of content from Collins & Aikman and its suppliers.
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