Another iconic auto parts brand files for Chapter 11 bankruptcy

The auto industry has struggled with financial difficulties over the past year, with several companies filing for bankruptcy.

The most significant bankruptcy in the auto industry occurred on June 18, when electric vehicle maker Fisker Group filed for Chapter 11 protection to shut down operations and liquidate its assets.

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Auto parts companies in financial distress include auto parts e-commerce PartsID, which filed for Chapter 11 in December 2023. The company sells auto parts to consumers online through various websites such as TruckID.com, CardID.com and CamperID.com.

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Wheel Pros, which operates as a Hoonigan auto parts distributor and retailer, filed for prepackaged Chapter 11 bankruptcy on Sept. 9, which would eliminate $1.2 billion in debt and provide about 570 million dollars in new capital through an exit facility.

Under the restructuring support agreement and prepackaged bankruptcy filed in the U.S. Bankruptcy Court for the District of Delaware, Wheel Pros has reached agreements with its equity sponsor Clearlake Capital Group and creditors for a consensual restructuring that will surrender 85% of its new holdings to equity holders. first lien claims and the remaining 15% to new first lien lenders who will support the borrower’s exit term loan.

Auto parts suppliers file for Chapter 11 bankruptcy.

Image source: Pixabay.

Accuride is pursuing a consensual restructuring in bankruptcy

Finally, Accuride Corp, a leading manufacturer of wheels and wheel end products for commercial trucks and trailers, filed for Chapter 11 bankruptcy protection on Oct. 9, requesting a consensual restructuring of its debt to continue to operate as a going concern.

Accuride, which produces the popular Accuride, Gunite and KIC brands, is one of the largest and most diversified manufacturers and suppliers of wheels and wheel end components worldwide. The company produces 20 million wheels per year globally and has 40% of the North American steel and aluminum wheel market for commercial vehicles.

The company distributes its products to truck and trailer original equipment manufacturers and aftermarket parts distributors.

The Livonia, Mich.-based wheel maker listed assets and liabilities of $500 million to $1 billion in its petition, including $22.7 million owed to its largest unsecured creditor, Matalco Inc.

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Accuride and 15 affiliates filed their petition in the US Bankruptcy Court for the District of Delaware after facing significant headwinds from the lingering effects of the Covid-19 pandemic on the debtor’s business, operational difficulties, integration challenges business, inflation, supply chain disruption and other geopolitical and macroeconomic forces depressed revenues and increased costs, according to a statement from Charles Moore, the debtor’s chief restructuring officer.

The debtor’s financial difficulties were exacerbated by sanctions imposed on the Russian Federation for its invasion of Ukraine, which prevented Accuride from accessing cash from its non-debtor Russian affiliate, which was not in financial difficulty.

Accuride’s prepetition efforts to implement operational initiatives to improve its financial condition have been unsuccessful. In June 2024, the borrower began negotiations with an ad hoc committee of its first secured term loans for an investment or acquisition of some or all of its assets.

The debtor decided that the best option was a post-petition settlement with the ad hoc panel under a Chapter 11 bankruptcy plan of reorganization. The debtor also reached an agreement with the ad hoc panel to provide 103 million in debtor-in-possession financing, which includes $30 million in new money and raises $73 million in debt.

Accuride was formed in 1986 through a separate acquisition of Firestone Tire & Rubber Co. The company traces its roots back nearly 150 years to its Gunite affiliate, founded in 1854 as a manufacturer of bicycle, wagon and buggy tires.

In 2005, the wheel manufacturer merged with Transportation Technologies Industries Inc., acquiring one of the largest North American manufacturers of truck components for the heavy and medium truck industry and the Gunite brand. Following the merger, the company became a dominant supplier of parts to the medium to heavy truck industry.

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