Sifco SA, a Brazilian auto-parts maker, asked a bankruptcy court in New York to block creditors from taking legal action against the company’s assets in the U.S. while it reorganizes in Brazil.
The Jundiai, Sao Paulo-based supplier of front axles for trucks and buses has assets of more than $100 million and debt of more than $500 million, according to a petition filed today in U.S. Bankruptcy Court in Manhattan. If the judge there grants the requested relief, creditor actions in the U.S. will be halted and a Brazilian court will oversee Sifco’s main bankruptcy case.
Yesterday, the company filed for bankruptcy in Brazil, citing a slowdown in the local economy that resulted in a reduction in revenue, according to a statement on its website. Sifco said it’s seeking to preserve jobs as it addresses its liabilities and rebalances cash flow.
It has distribution and supply agreements with Maumee, Ohio-based Dana Holding Corp. in Latin America, according to Standard & Poor’s.
Fitch Ratings affirmed Sifco’s default rating at B- in September, citing “weak liquidity, high financial leverage, and business risk in the cyclical automotive business.”
The case in New York was filed under Chapter 15 of the U.S. Bankruptcy Code, which is used by companies seeking to reorganize in another country. If the judge in Manhattan decides that Brazil is home to the primary bankruptcy, creditor actions in the U.S. will be halted.
The company didn’t immediately respond to e-mails and calls seeking comment on the U.S. filing.
The case is In re Sifco SA, 14-bk-11179, U.S. Bankruptcy Court, Southern District of New York (Manhattan).