Metro Detroit auto parts suppliers Visteon and Metaldyne filed for bankruptcy protection Thursday, as both parts makers struggle amid steep declines in demand for vehicles and face cash droughts with extended plant shutdowns this summer.
The two companies employ more than 35,000 workers, many in the Detroit area.
But it appears the two companies will take different courses in their respective bankruptcy cases.
Visteon filed for Chapter 11 in with the intent of reorganizing its business. Meanwhile, Metaldyne, a U.S. subsidiary to Japanese auto supplier Asahi Tec, filed for bankruptcy expecting to sell parts of its U.S. operations.
The bankruptcy filings from the suppliers come as the U.S. auto industry is working through a massive restructuring. General Motors, Detroit's largest automaker, is expected to file for Chapter 11 bankruptcy by June 1.
Chrysler also heads back to bankruptcy court Thursday, angling for a judge's permission to sell most of its assets to a group headed by Italian automaker Fiat Group.
Those struggles have had a trickle-down effect on the suppliers who sell parts to the automakers.
Metaldyne, with $1.6 billion in revenue last year and 4,400 employees, has lined up two private equity firms, RHJ International and the Carlyle Group, to purchase portions of its business. "Metaldyne has been advised that Asahi Tec will now focus on its Japanese businesses and will no longer continue its economic support for Metaldyne," Metaldyne said in a statement today.
Meanwhile, Visteon, with 31,000 employees around the world, filed its petition for its U.S. operations in the U.S. Bankruptcy Court for the District of Delaware. The company's Visteon UK unit separately filed for bankruptcy protection last month and closed three British plants.
"During the reorganization period, we will seek to address our capital structure and legacy costs that are not sustainable given the current economic environment," said Donald Stebbins, chairman and chief executive, in a statement.