Cockpit specialist Collins & Aikman Corporation on Tuesday announced in a statement that it and “substantially all of its domestic subsidiaries” have filed voluntary petitions to reorganise under Chapter 11 of the United States Bankruptcy Code.
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The company said its Chapter 11 filing was prompted by mounting liquidity problems and the need for immediate cash to fund operations.
In conjunction with the filing, C&A has received a commitment from JPMorgan Chase for up to $US300 million in debtor-in-possession (DIP) financing, with an interim approval request of $US150 million. Subject to court approval, the DIP financing, combined with the company’s cash from operations, is expected to provide sufficient liquidity to meet Chapter 11 filing operating expenses, including supplier obligations and employee wages, salaries and benefits.
C&A’s operations world-wide are expected to continue in the normal course of business without interruption.
Collins & Aikman said that it intends to use the Chapter 11 process to “de-leverage” its balance sheet and restore profitability.
Acting CEO Charles Becker said: “We believe that this is the best course of action for our customers, employees, suppliers and other business partners. The protections afforded by the Chapter 11 process allow Collins & Aikman to gain immediate liquidity, continue operations in the ordinary course and focus on maximising the value of the business.”
None of the company’s affiliates outside of the US were included in the filing. JPMorgan Chase has also agreed to provide funding under the DIP facility to support Collins & Aikman’s non-U.S. operations, which is expected to provide the non-US affiliates with sufficient liquidity in future.
Becker emphasised that C&A expects day-to-day operations to continue as usual during the Chapter 11 process.
“We do not anticipate that customers and suppliers will experience a change in the way we do business with them,” he said. “We have taken steps to make sure that suppliers get paid in full in the ordinary course of business for all goods and services provided after the filing date, and that customers continue to receive the same quality products to which they are accustomed.”
