Toronto, Ontario -- After being battered by new U.S. tariffs, a Japanese auto parts giant is declaring bankruptcy in the U.S.
Marelli Holdings, a global automotive parts supplier headquartered in Saitama, Japan, filed for Chapter 11 bankruptcy protection in an effort to restructure about US$4.9 billion in debt.
The company, which was founded in 2019, has faced significant challenges during its six years in operation, including supply chain bottlenecks and rising costs. In recent months, it had been badly hit by declining EV sales as well as by tariffs recently placed on auto parts entering the U.S.
The company, which manufactures a wide range of components for Nissan, Stellantis and Honda, including lighting systems, electronic control units and climate systems, employs 40,000 workers located in 170 countries.
Roughly 80 percent of Marelli’s lenders have signed a restructuring support agreement. They plan to convert their debt into equity through a Chapter 11 plan, taking control of the company unless a higher bid emerges within 45 days. As a result, the company secured US$1.1 billion in debtor-in-possession financing to ensure its operations can continue during court proceedings. Canadian companies that rely on Marelli for parts are not expected to see immediate disruption.
The restructuring aims to cut debt and hand control of the business to Marelli’s lenders unless a better offer is made within 45 days.
Despite the filing, Marelli says its business will carry on without interruption. It will continue paying wages and benefits, honour existing orders and work with suppliers. Major automakers like Nissan have expressed support and will also seek to prevent any supply chain disruptions.
