Visteon files for Chapter 11 bankruptcy protection

[May 28, 2009]  VAN BUREN TOWNSHIP, Mich. (AP) -- Auto parts supplier Visteon Corp. said Thursday it -- along with some of its U.S. units -- has filed for Chapter 11 bankruptcy protection, as the company struggles 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.

The Van Buren Township, Mich.-based auto parts supplier earlier this month posted a sharp drop in first-quarter revenue 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.

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 accounted for about 31 percent of the company's first-quarter product sales.

Concurrent 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.

Visteon's filing comes as Detroit-based automaker Chrysler LLC heads back to bankruptcy court, angling for a judge's permission to sell most of its assets to a group headed by Italian automaker Fiat Group SpA. Rival U.S. automaker General Motors Corp. appears likely to also file for Chapter 11 bankruptcy protection, after bondholders' overwhelmingly rejected GM's offer to swap a 10 percent stake in a reorganized company for the $27 billion they are owed.

[Associated Press]

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