Another major automotive supplier has turned to bankruptcy protection. In late August, $746 million Cadence Innovation (Troy, MI; www.cadenceinnovation.com) filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code, citing a poor economy, high fuel and material costs, falling OEM production volumes, and substantial changes in the types of vehicles being made in the United States as reasons for its filing.
Only the company’s six U.S.-based operations (located in Michigan and Indiana) are affected by the restructuring, and not its European operations.
“The cause-and-effect in this situation is obvious and the cause is a clear set of external factors—collapsing revenue and material costs increasing at double-digit rates,” says Jerry Mosingo, president and CEO. “The Cadence team has managed the internal issues exceptionally, and in most cases, we were prepared in advance of the next OEM plant shutdown or price increase from our supply base. We find the need to file for bankruptcy protection as a dreadful development, particularly given the commendable efforts of our workforce and the many sacrifices the Cadence Innovation team has made. The reality is that this groundswell of external factors and environmental change exceeds the flexibility of our business model.”
Staffing levels are expected to go unchanged as are customer deliveries. Cadence will fund ongoing operations from debtor-in-possession financing that is supplementing working capital. Worldwide, the company has 4200 employees.