Collins & Aikman files for bankruptcy, big automakers worried - update 1

05/18/05 - newratings.com

NEW YORK, May 17 (newratings.com) - Collins & Aikman (CKC) filed for bankruptcy on Tuesday, saying that the filing would help the company meet its post-filing operating expenses by a financing from JP Morgan Chase.

The performance of the Troy, Michigan-based supplier of auto parts is being adversely affected by weak sales at large car manufacturers in the US. The company supplies auto parts to the top three automakers in the country. Collins & Aikman said on Tuesday that it would receive $300 million in debtor-in-possessing financing from JP Morgan Chase. Collins & Aikman's acting CEO, Charles Becker, said that the company's worldwide operations would continue without any interruptions. "The management team is committed to making this reorganization successful and leading Collins & Aikman towards a bright future," he added. According to Detroit News, leading automakers have hired consulting firms to monitor Collins & Aikman's turnaround due to concerns regarding the company's ability to supply auto parts without disruptions. General Motors' spokesman, Tom Wickham, said that the company is working with and supporting Collins & Aikman's turnaround initiatives, Detroit News adds.