The automobile industry has faced significant financial challenges over the past year, leading several companies to file for bankruptcy. The most notable case occurred on June 18, when electric vehicle manufacturer Fisker Group filed for Chapter 11 protection, shutting down operations and liquidating its assets.
In the auto parts sector, PartsID, an e-commerce auto parts retailer, filed for Chapter 11 bankruptcy in December 2023. The company sells auto parts to consumers through various websites, including TruckID.com, CardID.com, and CamperID.com. Another major player, Wheel Pros, which operates as the auto parts distributor and retailer Hoonigan, filed for prepackaged Chapter 11 bankruptcy on September 9. This restructuring aims to eliminate $1.2 billion in debt while securing approximately $570 million in new capital through an exit facility.
As part of its restructuring support agreement, Wheel Pros has reached an accord with its equity sponsor, Clearlake Capital Group, and its lenders. The agreement will result in 85% of the new equity interests being allocated to first-lien claim holders, with the remaining 15% going to new first-lien lenders who will support the debtor’s exit term loan.
In another significant development, Accuride Corp, a leading manufacturer of wheels and wheel end products for commercial trucks and trailers, filed for Chapter 11 bankruptcy protection on October 9. The company is seeking a consensual restructuring of its debt to ensure its continued operation. Accuride produces well-known brands such as Accuride, Gunite, and KIC, and is one of the largest manufacturers of wheels globally, producing 20 million wheels per year and holding 40% of the North American steel and aluminum wheel market for commercial vehicles.
In its bankruptcy petition, Accuride listed assets and liabilities between $500 million and $1 billion, including $22.7 million owed to its largest unsecured creditor, Matalco Inc. The Livonia, Michigan-based manufacturer filed its petition in the U.S. Bankruptcy Court for the District of Delaware after facing several challenges, including the lingering impacts of the COVID-19 pandemic, operational difficulties, inflation, supply chain disruptions, and other geopolitical and macroeconomic factors that have hindered revenue and increased costs.
The financial distress faced by Accuride was compounded by sanctions against Russia due to its invasion of Ukraine, which restricted the company’s access to cash from its non-debtor Russian affiliate, which remained financially stable. Despite efforts to improve its situation through operational initiatives, Accuride’s prepetition measures were unsuccessful.
In June 2024, Accuride began negotiations with an ad hoc committee of its first-lien term loan lenders regarding an investment or sale of some or all of its assets. The company ultimately decided that a post-petition transaction with the ad hoc group under a Chapter 11 bankruptcy reorganization plan was its best option. They have also secured $103 million in debtor-in-possession financing, which includes $30 million in new funds and a roll-up of $73 million in existing debt.
Founded in 1986 as a carve-out from Firestone Tire & Rubber Co., Accuride’s history dates back nearly 150 years to the founding of its affiliate, Gunite, in 1854, which originally produced bicycle, wagon, and buggy tires. In 2005, Accuride merged with Transportation Technologies Industries Inc., becoming a leading parts supplier to the medium- and heavy-duty trucking industry after acquiring one of North America’s largest producers of truck components.
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