CHICAGO (Reuters) – A group of private U.S. auto suppliers has filed for liquidation under the bankruptcy code as the industry continues to suffer from a slump in sales, according to court documents.
Eaton County, Michigan-based Specialty Motors Holding Corp filed for liquidation at the U.S. Bankruptcy Court for the District of Delaware.
The other entities listed in the filing include Von Weise Inc — which produces small motors for cars and starters for garden tractors, lawn mowers and snow blowers — Von Weise Gear Co and Auto Specialty Products Inc.
The Chapter 7 court filing lists the group’s estimated assets at up to $50,000 with liabilities between $10 million and $50 million and up to 49 creditors.
The U.S. auto industry industry has been hit hard by the slowing U.S. economy and the credit crunch, which has cut off access to car loans for many consumers.
U.S. auto sales dropped 18 percent in 2008, pushing General Motors Corp (GM.N: Quote, Profile, Research) and Chrysler LLC to the brink of collapse. In December the Bush administration approved $17.4 billion in emergency loans for GM and Chrysler.
But conditions attached to that bailout include automakers proving their long-term viability by March 31, plus obtaining fresh concessions from the United Auto Workers union and from holders of their debt.
Ford Motor Co (F.N: Quote, Profile, Research)> has not sought federal loans but asked for a $9 billion credit line if economic conditions worsen.
The Detroit Big Three automakers have scaled back their output because of the slump in sales, including halting production over the holidays.
At the Detroit auto show last week, GM Chief Operating Officer Fritz Henderson told reporters that “we should see some pressures in the (auto) supplier community” as the U.S. automakers ramp up production again.
Some suppliers might have difficulty paying for raw materials to meet renewed demand after being idle, he said.
The private suppliers’ case is In re: Specialty Motors Holding Corp, U.S. Bankruptcy Court for the District of Delaware. Case No. 09-10183.