Released on July 13, 2009

Aluminum automotive diecaster J.L. French Automotive Castings Inc., Sheboygan, Wis., announced it plans to file for protection under Chapter 11 of the U.S. Bankruptcy Code, after an attempt to lean operations earlier this year.

According to a press release issued by the company, the bankruptcy is in response to U.S. automotive production declines and industry-wide credit restrictions.

“Our company has a strong business model; however, sales have dropped commensurate with the dramatic decline in the North American automotive production to the extent that we cannot service the existing debt structure,” said Thomas Musgrave, chairman, president and chief executive officer of J.L. French. “By significantly reducing our debt, we will remove the balance sheet barriers that have historically prevented us from securing awards of certain new business contracts.”

J.L. French, which makes oil pans, engine front covers, engine blocks and transmission cases, expects the filing to reduce its secured debt from approximately $280 million to $65 million. The company and its domestic affiliates will complete the pre-negotiated restructuring under Chapter 11; it indicated that none of its foreign operations were included in the filing.
 
Musgrave said the company expects to emerge from bankruptcy in 90 days. J.L. French currently is filing motions with the court to request permission to pay certain claims, including employee wages and benefits, shipping fees and essential vendor claims.

In January, J.L. French laid 479 workers off from two of its plants and consolidated operations. The company’s Sheboygan, Wis., diecasting operation lost 299 workers, and its Glasgow, Ky., facility reduced its numbers by 180. The company still employs more than 800 people in its U.S. operations.