Marelli Holdings, a technology partner in the automotive industry, has filed for voluntary Chapter 11 proceedings in the US Bankruptcy Court for the District of Delaware.
This strategic move is aimed at restructuring the company’s long-term debt obligations.
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The filing has garnered the support of approximately 80% of Marelli’s lenders, who have signed a restructuring support agreement to deleverage the company’s balance sheet and enhance its liquidity.
Marelli president and CEO David Slump said: “At Marelli, we have been proactive in making necessary adjustments to stabilize our financial position so that we can continue to deliver long-term benefits for our valued customers, partners and employees. While we are pleased with our recent progress and profitability, industry-wide market pressures have created a gap in working capital that must be addressed.”
Throughout the Chapter 11 process, Marelli anticipates no operational disruptions, maintaining its commitment to innovation and investment in advanced automotive technologies.
These efforts are expected to shape the future of mobility and distinguish upcoming vehicle models.
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By GlobalDataTo facilitate its restructuring, Marelli has secured $1.1bn in debtor-in-possession financing from its lenders.
Subject to court approval, this financing, along with the company’s operational revenue, will provide the necessary liquidity for Marelli during the Chapter 11 process.
The restructuring support agreement also outlines a plan for the lenders to assume ownership of Marelli upon its emergence from Chapter 11, following a 45-day overbid process.
Marelli has filed customary motions to ensure business continuity during the restructuring, which includes uninterrupted payment of employee wages and maintenance of essential customer programs.
The company expects to receive court approval for these motions and plans to uphold its commitments to stakeholders, including fulfilling payment obligations to suppliers for post-filing goods and services.
Marelli is actively engaging with suppliers to negotiate terms for pre-filing obligations.
Slump added: “After careful review of the Company’s strategic alternatives, we have determined that entering the chapter 11 process is the best path to strengthen Marelli’s balance sheet by converting debt to equity, while ensuring we continue operating as usual.
“Taking this action now provides access to new liquidity to fund our long-term growth and innovation pipeline and ensures our customers and partners all over the world can continue to rely on Marelli for on-time delivery of advanced technologies that shape the vehicles of the future.”
