From Detroit Free Press
FRASER, MI — The protracted bankruptcy of auto supplier Venture Corp. continues, and the longer it drags on the less likely the plastics firm will survive, say automaker officials, supplier consultants and lawyers handling the case.
Based in Fraser, Mich., Venture is one of the world’s largest auto-plastics suppliers and at its peak employed about 13,000 worldwide, including thousands in Michigan.
Venture filed for Chapter 11 bankruptcy protection in March 2003. At the time it hoped to emerge by the end of 2003. Later it switched to a June 30, 2004, deadline.
The company has won almost no new business since that filing 18 months ago, leaving it with a financial hole that gets deeper every day, say lawyers involved the case, automakers’ officials who do business with Venture and supplier consultants familiar with Venture. What little new business it has won was given in return for Venture giving up current business, they say.
Some current business might also be in jeopardy. In court, it was recently revealed that General Motors Corp. intends on Oct. 1 to pull business from a Venture plant in Grand Blanc, Mich., that makes plastic bumper parts for the new Pontiac G6 sedan.
That business would be given to Dearborn, Mich.-based Plastech Engineered Products Inc., said automaker officials and lawyers on the case.
“This delay does not work in favor of this company. They are finding it harder to obtain the new business contracts that are the lifeblood of an auto supplier,” said Joel Applebaum, who represents Venture’s vendors. “Any company in bankruptcy this long is handicapped and struggles to get new business. They aren’t finding customers to award them new business.”
Venture has bid on about $165 million in new business but hasn’t won any of it. About $40 million in potential new business went to rivals while Venture has been in bankruptcy, said lawyers working on the case.
Venture has begun closing a plant in Grand Rapids, Mich., and another in Lancaster, Ohio, which will lead to hundreds of workers losing their jobs. Venture is one of Michigan’s largest privately owned companies with annual sales around $1 billion, making parts such as instrument panels.
The lack of new supplier parts contracts, awarded for vehicles still a few years away, will start to have an impact in 2005 and 2006, say supplier experts.
“The cash flow implications of not having new business are horrible. The old business falls off, and then there’s no new business to pick the company up,” said Jim Gillette, auto-supplier analyst for CSM Worldwide. “And if you’re a customer, would you trust your new products with a company that might not be around in the future?”
A trial began earlier this summer to determine if Venture’s plan to exit bankruptcy was sound and whether former owner and founder, Macomb County businessman Larry Winget, must hand over to Venture other businesses he owns as he had promised, or if he can opt out of that deal because Venture did not follow the precise terms of their agreement.
In late July, lawyers said the trial would wrap up in late August. Now they expect it to run at least a couple more weeks as lawyers wrangle over issues. For instance, Tuesday morning, lawyers for Venture and Winget debated whether an expert was really an expert and could testify about Venture’s exit financing plan.
Last fall Winget agreed to hand over his side companies, but he now says Venture violated its contract in several ways, namely by seeking more money to emerge from bankruptcy than he’d agreed to and doing so without his approval. Venture got $125 million in financing to get out of bankruptcy, while Winget says he approved only $85 million.
Venture needs to get out of bankruptcy by the end of October or else it might have to shut down and liquidate, said lawyers involved the case, automakers’ officials who do business with Venture and supplier consultants familiar with Venture.
The case has been contentious. Venture sued Winget and his family members in April alleging he siphoned more than $300 million from the company before it went into bankruptcy. Later, Venture blew the whistle on itself and Winget, filing papers with the U.S. Securities and Exchange Commission that said the company engaged in improper accounting under Winget.
Two automaker officials who do business with Venture, and two lawyers familiar with the case said they feel Winget is trying to prolong the case so that Venture will either go under or be so troubled that its banks and vendors will sell it to him at a low price.
“Larry wants to put the company under and then buy it back for a song. It’s such an ugly case, and it will just keep getting uglier,” said one automaker official who does business with Venture.
Winget’s attorneys declined to comment on their client’s plans but complained it sounded like their opponents were trying to make their case in the media.
“We’re in the middle of trial, so we can’t comment on our plans. But Mr. Winget built this company from the ground up and cares about the wellbeing of the employees, many of whom have been with him for some time,” said Joseph Davis III, a lawyer for Winget.
Venture general counsel David Barnes declined to comment.
Copyright 2004 Detroit Free Press. All Rights Reserved.
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