Motorcar Parts: Fenwick Chapter 7 bankruptcy filing triggers default

By Caroline Salls

Pittsburgh, July 15 - Fenwick Automotive Products Ltd.'s Chapter 7 bankruptcy filing triggered an event of default on an agreement with lender and supplier Wanxiang America Corp. and Motorcar Parts of America, Inc., according to an 8-K filed by Motorcar on July 9 with the Securities and Exchange Commission.

Fenwick and Introcan (collectively, Fenco) made Chapter 7 bankruptcy filings on June 10 in the U.S. Bankruptcy Court for the District of Delaware. As previously reported, Motorcar Parts of America said last month that it expected the separately capitalized subsidiaries to file bankruptcy.

Under the terms of the Wanxiang agreement, as a result of the event of default, all amounts outstanding under a revolving credit line extended to Fenwick by Wanxiang for purchases of automotive parts and components, together with all accrued interest and other amounts payable, were automatically accelerated. As of March 31, there was roughly $19 million outstanding under the credit line, the filing noted.

In addition, the interest rate applicable to all amounts remaining unpaid will increase to 1.25% per month, compounding monthly, on Dec. 10, 2013 and to 1.5% per month, compounding monthly, on June 10, 2014.

Motorcar Parts said it guarantees Fenwick's obligations under the Wanxiang agreement.

Additionally, under a subordination agreement between Wanxiang and lender Cerberus Business Finance, LLC, Wanxiang cannot take any enforcement action against Motorcar Parts until the earlier of July 31, 2018 and the date on which all credit line obligations are satisfied.

According to court documents, Fenwick had $10 million to $50 million in assets and $100 million to $500 million in debt when it filed bankruptcy. Introcan listed $1 million to $10 million in assets and $100 million to $500 million in debt.

Los Angeles-based Motorcar provides remanufactured alternators and starters for the automotive aftermarket. Fenwick's Chapter 7 case number is 13-11500 and Introcan's is 13-11499.

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