bankruptcy – Tires & Parts News https://tiresandparts.net Your News Source for Everything Automotive Fri, 21 Feb 2020 04:56:15 +0000 en-US hourly 1 https://wordpress.org/?v=5.0.8 Cash Injection Rescues Aston Martin from Bankruptcy https://tiresandparts.net/news/cash-injection-rescues-aston-martin-from-bankruptcy/ https://tiresandparts.net/news/cash-injection-rescues-aston-martin-from-bankruptcy/#respond Tue, 04 Feb 2020 06:10:44 +0000 https://tiresandparts.net/?p=29802 British carmaker Aston Martin has received a cash injection from a consortium of investors helmed by Canadian billionaire, Lawrence Stroll, which will rescue the car maker from bankruptcy. In return for the funds he contributes, Stroll will get the position of executive chairman and a 20 percent stake in the company. This is not the […]

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British carmaker Aston Martin has received a cash injection from a consortium of investors helmed by Canadian billionaire, Lawrence Stroll, which will rescue the car maker from bankruptcy. In return for the funds he contributes, Stroll will get the position of executive chairman and a 20 percent stake in the company.

This is not the first time that Aston Martin has faced bankruptcy. Though Aston Martin is all set to launch its first sports utility vehicle (SUV), the car maker has gone through bankruptcy seven times in its history that goes back 107 years. The infusion of funds is expected to help stabilize the fortunes of the British car maker.

While Stroll and the consortium he leads will invest GBP 182 million (USD 239 million), other major current shareholders, who mainly include Italian and Kuwaiti private equity groups will participate in a rights issue to raise GBP 318 million pounds.

Stroll will replace outgoing chairwoman Penny Hughes, who said that the company’s difficult trading performance in 2019 led to serious liquidity issues. This was why Aston Martin was forced to seek substantial additional equity financing. The revenue that was generated from sales was not adequate to support the operations of the group.”

Now, it is up to Aston Martin to capitalize on the lifeline it has received and transform it into part of a sustainable plan, even while it delays investment in EVs and tries to minimize the costs of operations. One of the brand’s stated aims is to settle around 1 billion pounds worth of debt which is due to mature in 2022. According to automotive analysts Jeffries, Aston Martin has lower gross margins than close rival Ferrari, and to counter this it is just as important to scale up than to generate extra capital.

The feedback for the company’s first SUV will play a major role in its future as the SUV market is seen as a lucrative segment into which Aston Martin is a relatively late entrant. Aston Martin has set up a new factory in Wales to make the model, known as the DBX, which the brand is hoping will draw more women customers. It is also hoping that some buyers might like to purchase both the DBX and a vehicle from its traditional range. With the DBX model not due to roll off the production line until the second quarter of this year, so far Aston Martin has spent a lot on the model while receiving only some of the benefit.

According to Aston Martin, it has already received about 1,800 orders for the car which will be sold at the retail level for GBP 158,000 pounds, which is a far better rate than for any previous models. The model is expected to serve as a significant source of revenue for the British brand.

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Creditors to Get Control of EV Startup Faraday after Founder Files for Bankruptcy https://tiresandparts.net/news/automotive/creditors-to-get-control-of-ev-startup-faraday-after-founder-files-for-bankruptcy/ https://tiresandparts.net/news/automotive/creditors-to-get-control-of-ev-startup-faraday-after-founder-files-for-bankruptcy/#respond Tue, 15 Oct 2019 10:46:07 +0000 https://tiresandparts.net/?p=28955 Jia Yueting, the Chinese businessman who set up electric vehicle startup, Faraday & Future Inc has filed for personal bankruptcy in the United States. He ended up in debt to the tune of several billions as part of his effort to set up a business empire in China. Yueting plans to turn over Faraday &Future, […]

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Jia Yueting, the Chinese businessman who set up electric vehicle startup, Faraday & Future Inc has filed for personal bankruptcy in the United States. He ended up in debt to the tune of several billions as part of his effort to set up a business empire in China.

Yueting plans to turn over Faraday &Future, which is based in Los Angeles to the company’s creditors as part of the plan to restructure his debts.

He filed the proposed debt-restructuring plan in federal court in Wilmington, Delaware and according to the plan, he will use his stake in Faraday & Future Inc. to set up a creditor trust that will repay his debts.

According to the plan, Jia’s debts total up to USD 2.3 billion and they were owed to creditors in China. The plan is also meant to help Faraday to raise equity financing and prepare for an IPO. Depending on the amount that the IPO raises, creditors might be able to recover about 49 percent to 100 percent of what they are owed, according to the documents that were filed in federal court.

Faraday is engaged in the design and development of an electric vehicle that will be available in the US and Chinese markets. In view of Jia’s financial woes, the company had hired Carsten Breitfeld, an ex-BMW automotive veteran, to take over as the CEO from Jia.
Earlier in 2019, Faraday had received a much needed infusion of funds when it formed a joint venture with The9 Ltd., a Chinese online-gaming company, which is a part of China Evergrande Group. The Evergrande Group is owned by property tycoon Hui Ka Yan, who is the third richest man in China. He initially agreed to invest USD 2 billion in Faraday but later reduced this amount to USD 800 million for a 32 percent stake in the company.

Jia has previously been in the news for making disparaging comments about other ventures. In a 2016 TV interview, he called Apple Inc. “outdated” and said he expected Faraday to “lead the industry leapfrogging to a new age.”

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Takata Files for Bankruptcy https://tiresandparts.net/news/parts/takata-files-bankruptcy/ https://tiresandparts.net/news/parts/takata-files-bankruptcy/#respond Wed, 28 Jun 2017 13:19:20 +0000 https://tiresandparts.net/?p=20945 Japan’s Takata Corporation, which has been in the news for the biggest product recall in automotive history has officially filed for bankruptcy protection in Japan and the United States. The ammonium nitrate compound that was used in the airbags became volatile with age and prolonged exposure to heat causing the airbags to explode. Airbag inflators […]

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Japan’s Takata Corporation, which has been in the news for the biggest product recall in automotive history has officially filed for bankruptcy protection in Japan and the United States. The ammonium nitrate compound that was used in the airbags became volatile with age and prolonged exposure to heat causing the airbags to explode. Airbag inflators sourced from Takata have been held responsible for at least 180 injuries and 16 deaths across the world as they can rupture and send metal fragments flying.

The company has liabilities amounting to over USD 15 billion. The company has received backing from the Chinese company Key Safety Systems that is based in the United States and is owned by Ningbo Joyson Electronic Corporation. Key Safety Systems will acquire Takata in a USD 1.6 billion deal. The deal with Key Safety Systems was finalized over a period of 16 months and KSS would take over Takata’s viable operations while the others would be reorganized to keep producing replacement airbag inflators that will be used as part of the recall. KSS will keep Takata’s factories in Japan running and would retain its workforce of 60,000 employees in 23 countries. The takeover would allow Takata to continue operations and would have minimum impact on its supply chain.

Takata’s US subsidiary, TK Holdings, filed Chapter 11 bankruptcy in Delaware on June 25 while the Japanese parent company filed for protection with the Tokyo District Court on June 26. According to an affidavit filed by Scott Caudill, chief operating officer of TK Holdings, Takata owes billions of dollars to automakers and has either recalled or expects to recall about 125 million vehicles globally by 2019. The actual extent of the liabilities would depend on the results of the company’s discussions with automotive manufacturers who have borne most of the expenses related to the recalls.

Takata has been operating at a loss for the past three years and the company had to sell subsidiaries to pay fines and other liabilities. Takata was established initially as a textiles manufacturer in 1933. The company began making airbags in 1987 and soon grew into the second largest producer of airbags. The company also made one-third of all the seatbelts used globally as well as other safety components.

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