Auto Parts Manufacturer UCI International Files for Bankruptcy

by San Antonio Attorney

UCI International LLC, a manufacturer of replacement auto parts owned by the wealthiest man in New Zealand, filed for Chapter 11 bankruptcy on June 1, following discussions with bondholders regarding a failed debt restructuring.

According to the company, it failed to reach an agreement outside of court with its bondholders that includes Credit Suisse Asset Management, J.P. Morgan Chase & Co. and BlackRock Inc.

UCI failed to make a payment on a $17.25 million interest to the bondholders in February. The company owes $400 million to the lenders.

Graeme Hart, the billionaire owner from New Zealand, bought UCI for $980 million about five years ago.

The bankruptcy filing includes UCI-owned companies operating in the United States— Champion Laboratories, ASC Industries and Airtex Products—which manufactures pumps and filtration parts to automotive aftermarket and General Motors Co.

UCI is reorganizing its debts amid the cheaper pricing of Chinese products, a decrease manufacturing of American vehicles, an increasing concentration of consumer purchasing power and longer lasting auto parts owing to technological advances.

Moreover, UCI got in trouble last year with its three main clients: Advance Stores Co., AutoZone Inc. and General Motors Co.

Court papers filed by UCI revealed that Advance and AutoZone have discontinued selling Airtex fuel pumps, and the company lost a deal with General Motors to supply water pumps. Losing Advance alone will likely cause $80 million sales loss for the company.

UCI said they probably won’t have to obtain financing for the Chapter 11 proceeding, as long as it can maintain its accounts receivable financial transaction measures in order. Bondholders are prepared to provide loan for the bankruptcy proceeding, in case the company needs it, court documents say.

A business like UCI can file for Chapter 11 bankruptcy to reorganize its finances while it continues to operate without interruption. For personal bankruptcy, Chapter 13 is the option for adjustment of debts. To know the right bankruptcy option for your financial situation, you should consult a Debt Relief Attorney.

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