Valeo has announced that its North American subsidiary Valeo Electrical Systems, Inc. (VESI) has been cleared to emerge from the protection of Chapter 11 of the US Bankruptcy Code after the US Bankruptcy Court confirmed the company’s plan of reorganisation.
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VESI’s plan is expected to become effective on October 7, 2002, and payments to creditors holding allowed claims will commence shortly thereafter. Under the terms of the plan, unsecured creditors will receive 95% of their allowed claims against the company.
Valeo has agreed to fund the terms of the plan by contributing $226 million ($190 million on the effective date and the balance in 2003) to recapitalise VESI.
VESI filed for Chapter 11 on December 14, 2001 ‘to protect its operations in the face of its difficult competitive situation’.
At that time the IUE-CWA labour unoin claimed that Valeo filed for bankruptcy in an attempt to void an eight-year collective bargaining agreement it signed in August 2000.
However, on 5 May this year union members voted to approve revisions to the collective bargaining agreement.
