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Client Alert: Considerations for Supplier Bankruptcies

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Pace Industries (Pace) recently filed for Chapter 11 bankruptcy in Delaware. It makes die-cast parts for the automotive industry, among others. Pace cited supply-chain problems caused by COVID-19 (coronavirus) and mandatory stay-at-home orders as one of the precipitating reasons for the bankruptcy, as it temporarily shut down a majority of its U.S. die-casting facilities.

This case was pre-negotiated with Pace’s lenders and bondholders. Having filed as a “prepack” case, Pace may exit bankruptcy early this summer with those creditors as new equity owners. Nonetheless, most cases are not that tidy. Additional OEM suppliers are sure to be forced into bankruptcy throughout 2020.

Bankruptcy Basics

Chapter 11 Or Chapter 7

Automatic Stay

Executory Contracts

Key Considerations

We Can Help You

Barack Ferrazzano's Bankruptcy & Creditor Rights Group has 80 years of combined experience representing parties in bankruptcies, business reorganizations, and non-judicial workouts of debtors throughout the U.S. We represent large national companies in all of their significant bankruptcy disputes, including negotiation of pre- and post-bankruptcy claims, counseling on extending credit to bankruptcy entities, adversary proceedings related to preference and fraudulent transfer actions, assumption of contracts, and critical vendor status. We have represented supply agreement contract parties in some of the largest auto parts maker bankruptcies, and regularly represent OEM clients in dealer bankruptcies.

COVID-19 Resources

We recommend reviewing the following pandemic-related business and legal considerations we have been discussing with our clients:

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