The future of bankrupt auto-parts maker, Chassix, will be put to a vote from company shareholders as they decide whether it's proposed restructuring plans receive the green light.
Following the bankruptcy declaration by Chassix last month, a restructuring plan will now be voted on by its creditors after gaining approval from the United States Bankruptcy Court for the Southern District of New York.
Chassix will begin the process of soliciting votes for the plan from eligible stakeholders immediately, with the Bankruptcy Court setting a voting deadline of June 19.
Chassix is one of the largest auto-parts maker in the world, with the Michigan based company having more than 3,700 employees in 26 locations and production plants in North America, South America, Europe and China.
The maker of cast-iron and machined aluminium chassis components for companies such as General Motors and BMW AG, lists its assets at $833m and a debt of $784m.
Chassix filed for bankruptcy in March this year after recent earnings plunged and it missed two debt repayments.
A December 15 deadline was missed for an interest payment to holders of 10% of the company’s senior unsecured notes worth $150m and due to mature in December 2018.
Another deadline was missed in March when Chassix missed a $17.4m payment in interest due to holders of $375m (9.25%) worth of secured notes which are due to mature in August 2018.
Chassix CEO Mark Allan said the company was losing $16m a month partly due to under-priced contracts and an inability to meet demand.
Chassix blamed a spike in demand last year for chassis components and powertrain products from customers such as Ford, BMW and Nissan and its inability to keep up led to numerous quality issues and missed released dates that increased manufacturing costs, contributing to its recent file for bankruptcy.
Chassix’s financial situation could have an impact on current customers like Ford, BMW and Nissan, with the potential scenario of it cutting back its production of chassis components as part of cost cutting hampering the ability of those companies to meet the surging demand of its customers.
While its restructuring and recapitalization plan goes to the vote, Chassix has received assistance to help in its financial rebuilding.
The company has secured $250m of debtor-in-possession financing, including a $150m asset-based loan from PNC Bank and a $100m from its bondholders.
Customers also agreed to give Chassix $45m in annual price increases and new business, according to court papers.