Released on January 30, 2009

Automotive part supplier Contech LLC, Portage, Mich., announced it has filed for Chapter 11 bankruptcy for its domestic facilities under the U.S. Bankruptcy Code.

Contech, which in addition to die castings manufactures steel forged automotive components and steel tube fabrications, said the bankruptcy would allow it to sell certain existing domestic operations and relieve it from debt obligations, which together would bring its costs in line with low demand from the North American automotive industry.

According to a statement released by Contech, the filing with the U.S. Bankruptcy Court for the Eastern District of Michigan will commence reorganization for the company’s plants in Portage, Dowagiac, Mich., Auburn, Ind., Pierceton, Ind., Clarksville, Tenn., and Alma, Mich. Its Welshpool, U.K., plant will not be affected.

The company said the decision to file was made with the consent of some of its key customers and that it will continue to conduct business as usual. Contech is in discussions with those customers and lenders to arrange interim financing to fund operations during the restructuring. In accordance with the Bankruptcy Code, the company will be expected to pay all suppliers for goods and services provided after the filing.
 
“Over the past year, we have faced the same challenges many of our competitors and colleagues in the automotive industry have faced, resulting from significantly reduced production levels at our largest customers,” said Morris Rowlett, chairman and chief executive officer of Contech. “[The company] expects to proceed quickly and intends to emerge from these proceedings this year with a significantly improved balance sheet and greater operating flexibility.”