Exide Files for Chapter 11 Bankruptcy

: Chris Lee Law Firm

  Filed under: News

exideExide Technologies Inc., one of the premier manufacturers of car and truck batteries, has filed for bankruptcy protection through Chapter 11. Filing bankruptcy for the second time in a single decade, Exide cited Wal-Mart’s decision to stop buying their batteries as a major contributor to their financial struggles. Exide claimed assets totaling $1.9 billion and debts exceeding $1.1 billion as they filed for Chapter 11 protection. The company has also taken a $500 million bankruptcy loan through J.P. Morgan Chase & Co. to help with restructuring efforts. The loan will also be used to help continue daily operations.

The Future for Exide After Bankruptcy

With 10,000 employees from over 80 countries, the bankruptcy filing is expected to affect only Exide’s operations within the US. However, because Chapter 11 allows corporations the opportunity to restructure their debts and themselves, Exide has no plans to shut down any additional plants.

Aside from losing Wal-Mart as a major customer, Exide has experienced many recent bumps in the road, which eventually led to the Chapter 11 petition. These include:

· Competition. Strong performance from Johnson Controls Inc., a major competitor, likely cost Exide over $160 million in revenue.
· California law. In April 2013, Exide was forced to shut down one of its major plants in Vernon, CA, due to concerns from the Department of Toxic Substances Control that the plant was violating state regulations.
· Lead. The price of scrap lead accounts for nearly half of the cost of all goods that Exide produces. As prices skyrocketed, so did Exide’s troubles.

While these are just a few of the reasons Exide filed for a Chapter 11 bankruptcy, the company is expected to fully recover as soon as their debts are restructured and organized. Having filed for bankruptcy once before, Exide is expected to display complete financial control and authority after restructuring through Chapter 11 bankruptcy.

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