Mark IV files Chapter 11 petition
Mark IV Automotive, the corporation that includes Dayco Products, a manufacturer of automotive belts and hoses, has filed for Chapter 11 bankruptcy.
Dayco has a production plant in Williston. It employs approximately 175 people.
On April 30, Mark IV made voluntary filings or petitions for bankruptcy for 18 of its business subsidiaries, one of which is Dayco. The filings were done in the U.S. Bankruptcy Court in the Southern District of New York.
"They filed several petitions. Each entity files Chapter 11 petitions separately," said Brenda Adrian, a Mark IV spokesperson.
The bankruptcy proceedings will only affect Mark IV's American holdings, she said.
Adrian was contacted by The People-Sentinel at her New York City office.
All Dayco and Mark IV employees were informed of the Chapter 11 petitions, said Adrian.
"They all received an informational package about the Chapter 11 restructuring," she said.
The bankruptcy will not affect the benefits or wages of Dayco or Mark IV employees, she said.
"They will continue without pause," she said.
Likewise, the bankruptcy will not touch an employee's 401(k) retirement pensions, although an employee's investments might have suffered from the downturns of the economy in general, Adrian said.
"It can't be touched by any creditor. It is an independent entity in its set-up," she said.
In the last year, Mark IV has been streamlining its expenses. Mark IV closed one plant in Canada and laid off 300 workers throughout the corporation, leaving it with about 4,630 employees globally. The layoffs represent about a 20 percent reduction in force, she said.
However, Adrian doesn't anticipate anymore plant closings or layoffs, she said.
Chapter 11 is the form of bankruptcy where a company reorganizes its debt load and obligations while remaining in business. Chapter 11 can also allow a company more time to pay down its debts. A Chapter 7 bankruptcy is one where a company's assets are seized and sold off - liquidated - to pay off debts.
"The company was overleveraged," Adrian said of its debt level.
Mark IV in corporate news releases stated that the Chapter 11 proceedings are only to better manage its debt obligations and that daily operations and business at its factories nationwide would continue as usual.
April 30 acts as a dividing date for business for Mark IV.
Any creditors with claims against Mark IV before its petitions were filed will have to submit their claims through the Chapter 11 claims process for any outstanding invoices, Adrian said.
Business conducted with Mark IV companies after April 30 will be given priority for its shipments and orders as the bankruptcy code allows, according to corporate data.
Since declaring bankruptcy, Mark IV has gotten commitments for $90 million in "debtor-in-possession" financing, according to corporate data.
Debtor-in-possession means an indebted business still retains its own assets and management of the company.
Debtor-in-possession financing is a special form of financing for Chapter 11 companies which allows them to meet ongoing obligations of its business while undergoing restructuring through the bankruptcy proceedings.
The corporation has set up a Web site giving details at www.markivrestructuring.com as well as a toll-free number: (888) 248-4460.