just-auto.com

US: Remy to sell Knopf unit back

By just-auto.com editorial team | 8 November 2007

Remy International has signed an agreement to sell its M&M Knopf Auto Parts unit back to its original owners for $US18.5m, according to a US report.

The Knopf business remanufactures parts and deals in scrap metal and is not essential to Remy's reorganisation, the Associated Press (AP) said, citing papers Remy filed on Tuesday in the US bankruptcy court in Wilmington, Delaware.

Remy, based in Anderson, Indiana, filed for Chapter 11 bankruptcy protection last month, with plans for a rapid debt reorganisation, AP noted.

While most assets sold in bankruptcy are exposed to competitive bidding to ensure creditors get the best price, the company said there was no need for an auction of the Knopf business - search of the market turned up no offers better than the proposed buyers, Heywood and Marshall Knopf, Remy reportedly said.

The Knopfs are landlords on five of six leases related to the business, so a sale to someone else would likely saddle Remy with liabilities for lease cancellation damages, the news agency added.

The Associated Press said Remy is due to go before a court on 20 November to seek confirmation of its pre-packaged Chapter 11 plan on which creditors had already voted favourably before Remy filed its bankruptcy petition.

The company wants to sell off the Knopf business before it exits bankruptcy because of "unreasonable cash control risks" and inventory problems stemming from practices in the scrap and used parts industry, the court papers said, according to AP.