NORTHVILLE, Mich. (AP) -- Auto parts supplier Key Plastics LLC said Tuesday it has filed for Chapter 11 bankruptcy protection and submitted a pre-packaged reorganization plan.
Key Plastics, which makes plastic parts such as door handles and other molded components for carmakers and suppliers, said it secured up to $20 million in debtor-in-possession financing to continue operating in bankruptcy. Key asserted that its workers, trade creditors, suppliers and customers won't be affected by the restructuring plan, as it is seeking court approval to pay them in due course.
The company expects confirmation of its reorganization in late January. It received support from about 90 percent of holders of its senior secured notes for the bankruptcy filing, the company said, which took place in U.S. Bankruptcy Court for the District of Delaware.
Key Plastics said it will reduce its long-term debt by converting all $115 million of its senior secured notes to equity. At the end of the restructuring, investment firm Wayzata Investment Partners LLC will become the company's controlling shareholder. The firm is backstopping a rights offering of $20 million in new equity to fund the reorganization.
Parts suppliers like Key Plastics have been battered by the sharp downturn in the automobile market, as automakers slash production to cope with reduced demand.
"The global automotive industry is going through a period of historic change, and Key Plastics is taking the necessary steps to position the company to succeed," said Ralph Ralston, president and chief operating officer, in a statement.
