According to an article in the Star-Telegram, auto parts supplier Visteon Corp., along with some of its U.S. units filed Chapter 11 bankruptcy because of reduced demand from automakers.
The article said:
"During the reorganization period, we will seek to address our capital structure and legacy costs that are not sustainable given the current economic environment," said Donald J. Stebbins, chairman and chief executive, in a statement.
Visteon may only be the first of many auto parts suppliers who will be forced to file Chapter 11 bankruptcy. Because two of the major automakers Chrysler, who is in bankruptcy and GM who may be heading to bankruptcy are both pulling back on production and closing plants they need less auto parts.
Auto suppliers who are dependent on the high production needs of these automakers may need to cut back both production and expenses drastically. This can't always be done easily outside of bankruptcy. That's why auto parts suppliers such as Visteon file bankruptcy so that they can legally change or free themselves from some of their financial obligations. As a part of its bankruptcy, I'm confident that Visteon will attempt to shed jobs, close plants and relieve itself of some pension obligations.