U.S. auto parts maker Visteon Corp
Visteon filed for bankruptcy on Thursday, becoming the latest casualties of the global auto industry crisis and adding to the pressure on cash-strapped automakers.
The interim approval to use its cash to operate in bankruptcy and to pay critical suppliers so it continues to get necessary parts to remain in business came during a hearing in U.S. Bankruptcy Court in Delaware. Visteon will have a hearing on June 19 to seek final approval.
U.S. Bankruptcy Court Judge Christopher Sontchi said Visteon may spend up to $43.5 million for parts, warranty guarantees and payments to shippers or vendors.
Visteon, the former parts unit of Ford Motor Co
Visteon said its failure would have a ripple affect, putting financial strain on many of its suppliers and disrupting manufacturing operations at its large customers such as Ford.
If Visteon failed, I believe it would provide significant disruption to Ford in the near-term, Visteon's Chief Financial Officer William Quigley said in court testimony on Friday.
At the same time, Visteon depends on Ford, its largest customer, for its survival.
I don't think Visteon could survive without Ford, Quigley said.
Ford plays a dual-role in the Visteon bankruptcy, serving both as a customer and a lender.
Ford, the No. 2 U.S. automaker had made a commitment to support bankruptcy financing for Visteon's restructuring efforts, but the details have not been disclosed.
Ford has made it clear it's not interested in bearing the entire burden of financing Visteon through its bankruptcy restructuring, Visteon attorney Marc Kieselstein of Kirkland & Ellis said on Friday.
All of our customers are concerned that their support doesn't subsidize production (of parts) for other customers, Kieselstein said.
Many details are unresolved on a financing package.
Our thoughts on this are advanced, but out discussions with term lenders and customers are not advanced, Kieselstein added.
(Reporting by Jessica Hall; writing by Martha Graybow, editing by Dave Zimmerman and Andre Grenon)