Tower joins Oxford in Chapter 11; Deal struck on Oxford plant here
Tower Automotive filed Friday for Chapter 11 bankruptcy protection, just two months after Oxford Automotive did the same. A source at Tower’s Corydon auto parts plant said the current projection is that all lines there will cease operations in August 2005.
Oxford Automotive filed for Chapter 11 on Dec. 7, and the Corydon plant is one of five U.S. plants to be sold as part of the company’s restructuring plan. The plant now has a buyer.
Canadian-based Martinrea plans to make the Corydon Oxford facility its 18th plant on Feb. 17 when legal approval of the sale is anticipated, said Robert Whitehouse, president of United Auto Workers local 2289.
The move will keep the operation in Corydon.
Production of Explorer frames is scheduled to continue through the 2006 model year, ‘which would mean that production will continue at the Corydon facility until sometime in mid-2005,’ said former Tower spokeswoman Bev Pierce in a November 2003 interview.
Tower said motions approved in federal bankruptcy court will allow the company to continue to pay employee salaries, wages and benefits, as well as honor warranties and other customer obligations, Forbes.com reported.
Information distributed to Tower employees described the purpose of Chapter 11 and the effects it would have on employees. It emphasized that Tower is not liquidating and day-to-day operations will be largely unchanged.
Some businesses have failed to receive monies owed by Tower as a result of the bankruptcy. One local business owner said she was owed more than $40,000 by Tower and might receive no reimbursement for the duration of the reorganization.
Trading of Tower stock was suspended on the New York Stock Exchange after the bankruptcy was made public. The stock had dropped to 77 cents a share. It has traded between 55 cents and $6.94 over the past 12 months.
Many employees received Tower stock as part of their 401k retirement portfolios and may not receive any compensation for that stock.
While the Corydon plant assembles frames for Ford Motor Co., the Tower Corp. makes structural components and assemblies for vehicles made by BMW, DaimlerChrysler, Fiat, Ford Motor Co., General Motors, Honda Motor, Hyundai, Kia, Nissan, Toyota, Volkswagen and Volvo, Forbes reported.