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Dura supplier asks court to force company to assume crucial contract
By Caroline Salls
Pittsburgh, July 12 - Dura Automotive Systems, Inc. electric motor supplier Johnson Electric North America, Inc. asked the U.S. Bankruptcy Court for the District of Delaware to force Dura to decide whether it wants to assume or reject its contract with Johnson by Aug. 15, according to a Thursday court filing.
Johnson said it has been manufacturing motors specially designed for Dura under a contract that has yet to be assumed by Dura.
The supplier said its motors are essential to Dura's operations and its eventual emergence from Chapter 11 bankruptcy.
According to the filing, before Dura filed for Chapter 11 bankruptcy, a dispute arose over its contract with Johnson, and Dura did not make payments for motors it received, which constituted a default under the supply contract.
Because of the default, Johnson said it would no longer manufacture the motors for Dura, and Dura subsequently filed a lawsuit against Johnson seeking a temporary restraining order to force Johnson to deliver the motors despite Dura's failure to pay.
Dura's request was denied. However, Johnson said Dura contended in the lawsuit that its operations would be crippled without the Johnson motors, and therefore Dura should assume the contract.
"Since it is clear that Dura needs Johnson to perform under the agreement, and Dura has had over eight months to determine whether the agreement is valuable to Dura's estate, Dura should be required to assume the agreement now," Johnson said in the motion.
A hearing is scheduled for Aug. 15.
Dura, a Rochester Hills, Mich.-based automotive parts maker, filed for bankruptcy on Oct. 30, 2006. Its Chapter 11 case number is 06-11202.
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