GST AutoLeather files for bankruptcy
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GST AutoLeather, Inc. a Michigan-based developer and manufacturer of automotive leather interior trim solutions, announced that it has filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The company employs around 3,000 workers at seven production facilities in Mexico, three are located in Arteaga, Coahuila; one in Nuevo Laredo, Tamaulipas and three other plants in Leon, Guanajuato.
GST AutoLeather has obtained a commitment from its senior secured lenders for a US$ 40 million debtor-in-possession facility, the proceeds of which will be used to fund ongoing business operations. This facility will allow GST to continue business as usual during the reorganization process, while pursuing a court-supervised going concern sale, commonly referred to as a “363 Sale”.
“After working with our advisors to review a range of strategic alternatives, the proposed strategy represents the best solution to ensure continuity of supply to our customers, maximize value for all stakeholders and position the Company for long-term success,” Chief Executive Officer Dennis Hiller said. “I would especially like to thank our customers, suppliers, employees and Senior Lenders for supporting us through this time as we work to improve our capital structure and enhance value.”
The Company and its Senior Lenders are negotiating the terms of an acquisition of the Company by its Senior Lenders. This would serve as a backstop in the “363 Sale” and will pave the path for the company to exit chapter 11 and maintain the business as a going concern.
Headquartered in Southfield, Michigan, GST was founded in 1933, then known as Garden State Tanning, initially operated as a tanning company that processed leather for the upholstery and garment industries. The company entered the automotive industry in 1946.
As leather upholstery became the go-to for furniture, airplanes, and automobiles, the GST shifted its focus 100% to automotive leather manufacturing.
The company began expanding internationally throughout the 1990s, taking advantage of the significant consolidation in the automotive supplier industry. Specifically, GST opened a state-of-the-art cutting facility in Saltillo, Mexico.
The company’s expansion strategy continued throughout the 2000s, when it transitioned operations from the United States to Mexico and opened additional facilities in Shanghai and Nuevo Laredo.