Visteon, the top parts supplier and former subsidiary of Ford Motor f, has filed for Chapter 11 bankruptcy reorganization as it struggles with a drop in sales to ailing automakers.
Ford — which buys Visteon's climate control, powertrain and other components — said the Chapter 11 filing hasn't disrupted the flow of parts to its assembly plants, and it doesn't expect future interruptions.
To help Visteon continue to operate, Ford said it will provide financing during Chapter 11 protection. A spokesman declined to say how much money Ford would provide. Visteon was spun off from Ford in 2000.
"Because Visteon is an important, preferred supplier to Ford, we have committed to providing financial support to help Visteon meet its business challenges," Tony Brown, Ford's head of global purchasing, said in a statement.
He said Ford will not be changing its "fundamental business relationship" with Visteon and has no plans to buy back its businesses or manufacturing plants.
Visteon filed in federal bankruptcy court in Delaware. Its U.K. unit separately filed for bankruptcy protection last month.
"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 of Visteon.
Ford is Visteon's biggest customer, accounting for 31% of Visteon's first-quarter sales. South Korea's Hyundai and Kia are next, accounting for a combined 25%.
Jim Gillette, automotive analyst for the consulting firm CSM Worldwide, said the financing was unlikely to prove a major burden for Ford.
"The reality of the situation is that Visteon still supplies a lot of parts" for Ford, Gillette said. "One way or another, Ford is going to have to pay."
General Motors gm has been heavily burdened by its former supply unit, Delphi, which filed for bankruptcy protection in 2005 and has yet to emerge. GM has sunk hundreds of millions of dollars into Delphi over the years to maintain its supply of parts. A tentative contract deal between GM and its union calls for GM to take back five Delphi factories.
With GM now on the brink of a Chapter 11 filing of its own, Delphi's future remains unclear.
Gillette said Ford is unlikely to find itself in the same situation. Visteon is smaller and more stable at this time than Delphi, he said.