Proliance International (“Proliance” or “Debtor”), an automotive heating and cooling parts manufacturer, filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware on July 12, 2009.  The Debtor is represented by Jones Day of New York.  This bankruptcy proceeding is before the Honorable Christopher S. Sontchi of the Delaware Bankruptcy Court.  A review of the docket shows that the Court recently entered several of the Debtor’s “first day motions” including a motion allowing the Debtor to honor certain pre-bankruptcy obligations and customer programs.  The United States Trustee has scheduled a meeting of creditors for August 14, 2009 at 4:00 p.m. (click here to read a prior post on section 341 meeting of creditors).

Debtor’s Business

According to Proliance’s Declaration in Support of First Day Motions (the “Declaration”), the company’s origins go back to 1915 when it began manufacturing radiators for automobiles and fire engines.  Proliance today is the product of a merger between Transpro Inc. and Modine Aftermarket Holdings, Inc..  There are two primary component’s to the Debtor’s business – domestic and international operations.

On February 5, 2008, a tornado destroyed Proliance’s domestic distribution center in Southaven, Mississippi.  The tornadoes ruined a substantial portion of Proliance’s auto and truck heat exchange inventory.  With the loss of this inventory, Proliance encountered “severe liquidity constraints” which the company views as “one of the major precipitating factors for these cases.”  See Debtors’ Declaration at p. 5.

Debtor’s Financials

Within the U.S., Proliance is one of the largest manufacturers of heat exchange products.  The company list net sales for 2008 of $350 million.  According to the Declaration, sales for 2008 were down 11.1% when compared to 2007.  The Debtor attributes most of its drop in sales in 2008 to the destruction of its Mississippi distribution center.

In 2007, Proliance entered into a prepetition credit agreement with Silver Point Finance as administrative agent and collateral agent for the prepetition lenders.  Although the prepetition credit facility provides up to $100 million in debt, going into bankruptcy the company owed $33.6 million under a term loan and $6.5 million under a revolving loan facility.

The Debtor estimates its trade debt totals $51.7 million.  This amount includes moneys owed to both domestic and foreign vendors.  According to Proliance’s Bankruptcy Petition, its ten largest unsecured creditors include the following:

  1. Enterex Industrial … $17.1 million
  2. Transtec Global … $11.8 million
  3. U&C Auto Parts … $2.6 million
  4. Alcoa Mill Products … $1.8 million
  5. Luvata Netherlands … $1.3 million
  6. Foshan Guang Dong Automotive … $1.2 million
  7. President Automotive Industries … $1.2 million
  8. Lumei Auto Radiator … $1.1 million
  9. Sapa/Norca Heat Transfer … $918,685
  10. Tianjin Xinyue Auto Part Co. …$878,026

The company lists total assets of $160 million against debts totaling $133 million.