Post by TonyV on Dec 18, 2009 2:59:39 GMT -5
Visteon creditors targeting Ford
Financial responsibility for spin-off probed
BY JEWEL GOPWANI
FREE PRESS BUSINESS WRITER
A committee that represents unsecured creditors in Visteon Corp.'s bankruptcy case is investigating the history of the supplier's relationship with its former parent, Ford Motor Co., to see whether Ford could be held financially responsible for the supplier's financial distress, according to court records filed this week.
The committee is asking a judge to order the release of documents related to Visteon's spin-off from Ford in 2000 and several agreements between the two companies since then.
"Since the spin-off transaction, there has been no semblance of arm's length bargaining between Visteon and Ford," the committee said in court documents seeking information. "Ford appears to have utilized its insider status to control Visteon to Visteon's detriment."Ford declined to comment on the filing.
Visteon spokesman Jim Fisher said it has responded to the committee's requests and declined to comment further.
Creditors committees are bound to recover as much money as possible for their clients as possible. It is common for these groups to look into transactions that took place before a bankruptcy filing to see whether the insolvent company was short-changed, bankruptcy lawyers said.
A viable claim could mean unsecured creditors, who are paid after nearly every other party in a bankruptcy case, recover more of their money.
The committee's claims against Ford could give the committee leverage to negotiate better terms for creditors, said Richard Kruger, a bankruptcy lawyer at Jaffe Raitt Heuer & Weiss.
That's because, Kruger said, "There's very little doubt that Ford needs Visteon."
This case is unique because Ford has several roles in Visteon's business, as its former parent, customer and lender, said Joel Applebaum, bankruptcy lawyer with Detroit-based law firm Clark Hill.
Earlier this year, Ford bought up Visteon's loans, making the automaker a primary lender to the supplier. Visteon filed for bankruptcy protection May 28 after the company defaulted on its loans. Visteon was one of several companies to file this year, as vehicle production plummeted and credit tightened.
Contact JEWEL GOPWANI: 313-223-4550 or jgopwani@freepress.com
Financial responsibility for spin-off probed
BY JEWEL GOPWANI
FREE PRESS BUSINESS WRITER
A committee that represents unsecured creditors in Visteon Corp.'s bankruptcy case is investigating the history of the supplier's relationship with its former parent, Ford Motor Co., to see whether Ford could be held financially responsible for the supplier's financial distress, according to court records filed this week.
The committee is asking a judge to order the release of documents related to Visteon's spin-off from Ford in 2000 and several agreements between the two companies since then.
"Since the spin-off transaction, there has been no semblance of arm's length bargaining between Visteon and Ford," the committee said in court documents seeking information. "Ford appears to have utilized its insider status to control Visteon to Visteon's detriment."Ford declined to comment on the filing.
Visteon spokesman Jim Fisher said it has responded to the committee's requests and declined to comment further.
Creditors committees are bound to recover as much money as possible for their clients as possible. It is common for these groups to look into transactions that took place before a bankruptcy filing to see whether the insolvent company was short-changed, bankruptcy lawyers said.
A viable claim could mean unsecured creditors, who are paid after nearly every other party in a bankruptcy case, recover more of their money.
The committee's claims against Ford could give the committee leverage to negotiate better terms for creditors, said Richard Kruger, a bankruptcy lawyer at Jaffe Raitt Heuer & Weiss.
That's because, Kruger said, "There's very little doubt that Ford needs Visteon."
This case is unique because Ford has several roles in Visteon's business, as its former parent, customer and lender, said Joel Applebaum, bankruptcy lawyer with Detroit-based law firm Clark Hill.
Earlier this year, Ford bought up Visteon's loans, making the automaker a primary lender to the supplier. Visteon filed for bankruptcy protection May 28 after the company defaulted on its loans. Visteon was one of several companies to file this year, as vehicle production plummeted and credit tightened.
Contact JEWEL GOPWANI: 313-223-4550 or jgopwani@freepress.com