Already financially stressed North American suppliers are feeling more pressure now that Chrysler has said it will temporarily idle much of its manufacturing capacity while it is in Chapter 11.
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Dow Jones reported that two suppliers have already refused to ship parts to Chrysler, forcing the auto maker to close a Warren, Mich., factory ahead of the planned shutdown from Monday.
Along with lost production, suppliers are at risk of having their payments from Chrysler disrupted as its finances are managed in bankruptcy.
Chrysler is seeking approval from the US Bankruptcy Court in Manhattan to extend up to a total of USD550m in financing to its troubled suppliers.
Chrysler is also asking the court for permission to continue participating in the US government’s Troubled Supplier Program, through which Chrysler identifies suppliers that need federal assistance.
Standard & Poor’s has said it is considering a downgrade to its ratings on six parts suppliers due to the impact of production cuts in the wake of the Chrysler bankruptcy.
