Fenwick Automotive Products Ltd. and Introcan Inc., separately capitalized subsidiaries of Motorcar Parts of America Inc. (MPAA:US), sought bankruptcy protection to liquidate their assets.
The companies both listed debt of as much as $500 million and Fenwick listed assets of more than $10 million, while Introcan listed assets of less than $10 million, in Chapter 7 documents filed today in U.S. Bankruptcy Court in Wilmington, Delaware. Five other affiliates also sought court protection.
Under Chapter 7 of the U.S. Bankruptcy Code, a trustee is automatically appointed to take over, dismantle the company and sell its assets for the benefit of creditors.
“While Fenco had made progress in its transition plans for the undercar segment since the acquisition, the cost savings and operational efficiencies were not sufficient for Motorcar Parts to continue its involvement with Fenco under the current financial structure,” Motorcar Parts of America Chief Executive Officer Selwyn Joffe said in a statement today.
Motorcar Parts, a remanufacturer of alternators and starters, said it has written off its investment in the companies, which will be disclosed in its fiscal 2013 year-end results. The company will realize tax benefits as a result of the losses incurred through Fenwick and Introcan, Joffe added.
The Torrance, California-based company rose 12.6 percent (MPAA:US), the most since (MPAA:US) December 2008, with shares rising 84 cents to $7.53 in Nasdaq Stock Market trading. Today’s share surge was 17th-biggest gain for companies with a market capitalization of more than $50 million. It reached its 52-week high of $7.80 earlier in the day after it announced its units would be seeking bankruptcy and it had written off its investment.
The lead case is In re Introcan Inc., 11-bk-11499, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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