El Paso, Texas-based MSD Performance and its U.S. subsidiaries have initiated a voluntary Chapter 11 process in U.S. Bankruptcy Court for the District of Delaware to address liquidity needs and facilitate a restructuring.
Through the Chapter 11 filing, MSD Performance is seeking to preserve continuity for its customers, employees and business partners to the greatest extent possible while it continues discussions with potential buyers to secure the best outcome for its businesses, according to a press release posted on the MSD website.
“As an industry leader in the performance ignition systems market for over 40 years, MSDP brings significant value to customers, suppliers and potential buyers based on our longstanding customer relationships, robust product offering and proven focus on quality performance,” said Ron Turcotte, MSD chairman and CEO, in the release. “Selling operations on a going concern basis in an orderly sale through Chapter 11 is the best way to preserve as many jobs as possible, best serve our customers and will allow our operations to emerge from bankruptcy in a relatively short timeframe.
“The operations we are selling have strong product portfolios, advanced technologies and continue to perform well operationally,” he stated.
The release notes that employees will continue to be paid as usual, including their healthcare and other benefits; no layoffs or facility closings are anticipated. Customers will receive their orders as usual and the company anticipates that there will be no changes in warranties or other customer programs.
Additionally, suppliers will be paid for goods and services after the filing date in accordance with existing terms and contracts, the company noted.
Under the bankruptcy sale process, the proposed transaction is subject to the execution of a definitive asset purchase agreement, court approval and other customary conditions, according to the release. Interested parties will have an opportunity to submit higher or better offers for the company’s assets.
The company restructured its debt in 2009 following the financial downturn as well as a series of acquisitions by prior management, which burdened it with excessive debt, the release stated. Since that time, the company has reduced operating costs, introduced award-winning products and accelerated marketing initiatives, according to MSD.
The decision to file under Chapter 11 “is necessary to facilitate this transaction, which positions MSDP to take advantage of emerging growth opportunities.”
To fund its continuing operations, MSD has received the consent of the lenders under its existing secured credit facility to use the company’s cash collateral, it stated. Subject to court approval, the company’s cash collateral will be used for normal working capital requirements.
The bankruptcy filing does not include the company’s non-U.S. entities.