Bankruptcy court approves Plastech sale plan

DETROIT -- According to Reuters, U.S. Bankruptcy Court judge on Friday gave troubled auto parts supplier Plastech Engineered Products Inc. approval to sell its businesses and other assets in a June auction.

Plastech has been seeking court approval to sell its businesses and has been in talks to sell its interiors unit to Johnson Controls Inc., its largest direct customer.

Judge Phillip Shefferly granted Plastech permission to proceed with a proposed June 16 auction at a hearing in U.S. Bankruptcy Court in Detroit.

Privately held Plastech filed for Chapter 11 bankruptcy protection in February in a move that prompted a legal dispute with Chrysler LLC and briefly idled five of the automaker's assembly plants.

Other major customers for Plastech, which supplies components such as door panels, floor consoles and engine covers, include the other two Detroit-based automakers, General Motors and Ford Motor Co., as well as Toyota Motor Corp.

The suburban Detroit supplier plans to pick a lead bidder by June 11 to establish a floor for the auction and accept other bids by June 13. The lead bidder would be entitled to a break-up fee of up to 2.5 percent of the purchase price.

"Even though this is a very short timeframe, I think it's proper to move forward with the timeframe," Shefferly said at the hearing. "The bidding procedures are satisfactory."

Representatives of Plastech said at the hearing the supplier had solicited "half a dozen" potential bidders for some of its units and remained confident it would receive multiple bids by the June 13 deadline.

The supplier aims to close the transactions by June 30.

Plastech filed for bankruptcy with $488 million in debt in a bid to stop Chrysler from seizing tools used to manufacture parts for the automaker. Shefferly later ruled against Chrysler, denying the No. 3 U.S. automaker's request to seize tools and move business away from Plastech.

Plastech is one of dozens of suppliers forced into bankruptcy by rising material costs, declining vehicle production and pressure for price cuts from the troubled Detroit-based automakers.

In addition to the interiors business, Plastech intends to auction its exteriors, stamping and carpet-installation businesses. The firm is proposing to hold a separate auction for each of the four businesses on June 16.

Lazard Freres & Co LLC as an investment banker. It has also retained McKinsey & Co as a financial adviser.