Marelli Corp, the Japanese auto parts supplier owned by KKR and a key provider to Nissan, has filed for Chapter 11 bankruptcy protection in the U.S., following protracted negotiations with its creditors. The move is part of a sweeping restructuring that includes a fresh $1.1 billion debtor-in-possession financing facility, supported by approximately 80% of the company’s lenders .
- Financing assured: Marelli secured a $1.1 billion financing package committed by its creditors, enabling it to maintain regular operations under Chapter 11.
- Debt wiped out: The plan calls for the cancellation of all secured debt and conversion of a significant portion of liabilities into equity in the reorganized company.
- Ownership transfer: Lenders providing the DIP financing, led by hedge fund Strategic Value Partners, are poised to assume control once the restructuring concludes, pending a 45-day overbid period.
- Restructuring scale: According to court documents, assets and liabilities are valued between $1 billion and $10 billion.
Marelli was formed in 2019 through the merger of Magneti Marelli and Calsonic Kansei, following KKR’s €5.8 billion acquisition. Since then, it’s faced persistent challenges:
- Post‑COVID supply chain disruptions and pandemic-related debt stress.
- Burdensome tariffs, particularly from the U.S., that hindered its import/export operations.
- Falling demand in the electric vehicle segment, leading to lower returns on retooled plants .
In 2022, KKR agreed to a significant debt restructuring, writing down about $2 billion and contributing an extra $650 million. Still, with mounting pressures from creditors, hedge funds, Japanese banks like Mizuho, and offers from prospective buyers like India’s Samvardhana Motherson, a restructuring became inevitable.
Marelli has emphasized throughout the bankruptcy process that its operations will remain unaffected. CEO David Slump expressed confidence that Chapter 11 would provide stability and enable debt-to-equity conversion without disrupting the supply chain.
Nissan has voiced support and committed to working with other stakeholders to ensure uninterrupted parts supply.
- Tender window: A 45-day overbid period allows other interested parties, including Motherson Group, to submit competing offers.
- Emerging from Chapter 11: Once DIP financing is in place and court approval secured, Marelli aims to restructure its balance sheet, with secured debt eliminated and senior creditors gaining full equity.
- Industry impact: As a major auto supplier to Nissan and Stellantis, Marelli’s stability is pivotal to global automotive supply chains. Observers view this as the first notable casualty of tariff-driven disruptions.
Marelli has strategically filed for Chapter 11 to stabilize financially, backed by lenders prepared to assume ownership post-restructuring. With Nissan’s operational support and competition from Motherson Group, Marelli intends to survive and emerge stronger from its restructuring.
