Visteon Begins Battle with Shareholders

After earlier this week Aurelius Capital Master and two related investors made a request to the Wilmington bankruptcy court, asking it to reject the proposed reorganization plan submitted by Visteon, the company fought back, asking the court to prevent competing {Ad}reorganization plans from being submitted.

Visteon's plan calls for cutting the company's debt by giving lenders 85 percent of the company. The rest is to be split with note-holders and other unsecured creditors. Following the emergence from bankruptcy, 10 percent of the stock would be reserved for the company's executives.

This plan is applicable if unsecured bondholders cannot finance a $1.25 billion rights offering, receiving in turn a larger equity share. Either way, Autonews reports, this means the end for the company's shareholders.

Visteon, the auto parts maker which was once a Ford division, entered bankruptcy in May last year, after operating without any profit for the past nine years. Now, as it is struggling to come to terms with all parties involved, it makes repeated attempts to be left with something after the bankruptcy.

For its executives alone, the current plan puts aside $237 million in stock. This after in July last year, Ford had to step in and oppose an employee incentive program which called for $80.3 million in bonuses to be handed to employees to "insure their good performance through the bankruptcy process."

In August 2009, Visteon submitted a proposal to cut health-care insurance for about 7,700 retirees and employees, asking at the same time approval to start paying $30.1 million in bonuses to top managers.