Marelli Holdings Co., a global technology partner to the automotive industry, has commenced voluntary Chapter 11 cases in the United States Bankruptcy Court for the District of Delaware in order to comprehensively restructure its long‑term debt obligations. Approximately 80% of the company’s lenders have signed an agreement to support the restructuring, which will deleverage Marelli’s balance sheet and strengthen its liquidity position.
Throughout this process and moving forward, Marelli does not expect any operational impact from the Chapter 11 process, and the company will continue to work closely with its customers, suppliers and partners to innovate and invest in its portfolio of advanced technologies that will differentiate the vehicles of the future and transform mobility.
“At Marelli, we have been proactive in making necessary adjustments to stabilize our financial position so that we can continue to deliver long-term benefits for our valued customers, partners and employees,” David Slump, president and CEO of Marelli, said. “While we are pleased with our recent progress and profitability, industry-wide market pressures have created a gap in working capital that must be addressed. After careful review of the company’s strategic alternatives, we have determined that entering the Chapter 11 process is the best path to strengthen Marelli’s balance sheet by converting debt to equity, while ensuring we continue operating as usual. Taking this action now provides access to new liquidity to fund our long-term growth and innovation pipeline, and ensures our customers and partners all over the world can continue to rely on Marelli for on-time delivery of advanced technologies that shape the vehicles of the future.”
“Marelli’s focus on innovation, digitalization and technology has never been stronger,” Slump said. “As we move through this process, we will continue to serve our customers and work with our suppliers and partners as they have come to expect. We are also grateful for the hard work and dedication of our employees who remain focused on delivering the best service possible.”
To support the company during this process, Marelli has received a significant commitment for $1.1 billion in debtor-in-possession financing from its lenders. Upon Court approval, the DIP financing, coupled with cash generated from the company’s ongoing operations, is expected to provide sufficient liquidity to support the company through the Chapter 11 process. In addition to the DIP financing, the restructuring support agreement provides for a comprehensive deleveraging transaction through which the DIP lenders will take ownership of the business upon emergence from Chapter 11, subject to a 45-day overbid process.
Marelli filed a number of customary first day motions seeking court approval to continue its operations throughout the Chapter 11 process, including, among other things, payment of employee wages and benefits without interruption and continuation of programs that are integral to customer relationships. The company anticipates receiving court approval for these requests and intends to continue honoring its obligations to key stakeholders post‑filing, including by satisfying payment obligations to suppliers for goods and services provided in accordance with customary terms after the filing. The company will be working with its suppliers regarding obligations which arose before the Chapter 11 filing to reach agreements on payment terms.
Kirkland & Ellis is serving as legal counsel to Marelli. PJT Partners is serving as financial advisor and Alvarez & Marsal is serving as restructuring advisor to Marelli. Akin Gump Strauss Hauer & Feld, Houlihan Lokey and AlixPartners are serving as advisors to an ad hoc group of lenders.
