Global automotive parts supplier Marelli Automotive Lighting USA filed for Chapter 11 today (11 June) with approximately USD 4.9bn in funded debt, aiming to carry out a prearranged restructuring supported by 80% of its senior lenders and backed by USD 1.1bn in new financing.

According to Chief Executive Officer David Slump’s first day declaration, the company filed for Chapter 11 due to ongoing liquidity challenges, high fixed costs, and underperforming electric vehicle contracts.

The case is being overseen by Judge Brendan Shannon in the US Bankruptcy Court for the District of Delaware. A first day hearing is scheduled for Thursday (12 June).

Debtwire Dockets: Marelli Automotive Lighting USA LLC (Access Required)

The company

Marelli’s parent company is Marelli Holdings, located in Japan. Directly reporting to Marelli Holdings are several global business service entities: Marelli Business Service in China, Marelli Global Business Services America S. de RL de CV in Mexico, and Marelli Global Business Services Europe s.r.o. in Slovakia.

Marelli Corporation, also based in Japan, reports to Marelli Holdings. Marelli Corporation oversees various subsidiaries, including those in Asia and Europe. Under Marelli Corporation, Marelli North America operates with its own subsidiaries in Brazil, Mexico, and the US.

Additionally, Marelli Electric Powertrain Cologne (Germany) G.m.b.H. reports to Marelli Corporation and manages subsidiaries across Europe, Asia, and Brazil. Finally, Marelli Europe SPA also falls under Marelli Corporation and has subsidiaries in Europe, North and South America, and Asia.

Source: First day declaration

The debt

As of the petition date, Marelli had approximately USD 4.9bn in total funded debt. This includes a USD 350m emergency loan facility and a USD 4.55bn senior loan facility. The emergency loan facility, governed by Japanese law, is contractually senior to the senior loan facility and is secured by various collateral. It was provided by the Development Bank of Japan and Mizuho Bank.

The senior loan facility is composed of a USD 540m revolving credit facility and a USD 4.01bn term loan facility. Approximately half of the senior loan facility is held by Japanese commercial banks, including Mizuho as administrative agent, while the other half is held by an ad hoc group of non-Japanese lenders. Actions under the facility require consent from a supermajority – at least 66.67% of lenders by principal amount.

The descent

Marelli’s path to Chapter 11 began with the severe disruption caused by the COVID-19 pandemic, which, according to Slump, forced the company to suspend production at most of its global plants and reduce its workforce by about 18,600 employees. Slump said the pandemic caused a steep drop in global car production, which reduced demand for Marelli’s parts and put heavy pressure on its margins. Although the company secured a USD 1.2bn liquidity infusion in 2020, he noted that it wasn’t enough to overcome the prolonged effects of the crisis, especially with a debt burden of approximately USD 9.5bn at the time.

In 2022, Marelli tried to restructure through Japan’s alternative dispute resolution process, but Slump said the effort fell short because it couldn’t get unanimous support from its creditors. The company then turned to civil rehabilitation proceedings in Tokyo and was able to move forward with a revitalization plan backed by 95% of its lenders. Still, Slump said the business continued to struggle in the years that followed. High inflation, rising material costs, and falling customer orders in 2023 and 2024 made the situation worse. Marelli was also hit hard by the shift to electric vehicles – Slump said contracts tied to that transition didn’t perform as expected when consumer interest dropped off in 2024, leaving customers with extra inventory and no immediate need for more parts.

By mid-2024, Marelli was running into serious cash flow problems, even though it brought in USD 10bn in revenue that year. Slump said the company tried to raise new capital and was able to secure more than USD 750m in support from customers through deferred payments and order advances. Still, outside financing didn’t materialize – investors were wary, and Marelli’s complicated global structure didn’t help. Talks with senior lenders also went nowhere, since any major action required a supermajority under the loan agreement. As cash continued to dry up in early 2025, Marelli started laying the groundwork for a possible Chapter 11 filing. Slump said the breakthrough came when the company finalized a restructuring support agreement (RSA) with around 80% of its senior lenders, leading to the Chapter 11 case.

The Chapter 11 case

Marelli’s Chapter 11 filing is part of a prearranged plan to restructure its balance sheet and stabilize operations with the support of its key lenders. According to Slump, the RSA deal includes USD 1.1bn in new-money DIP financing from members of the ad hoc group of senior lenders.

The plan also calls for repaying the USD 350m emergency loan facility in full, providing an 11% cash payout to the Japanese lenders on their senior loan claims, and paying all general unsecured claims in full. A portion of the DIP financing will convert into 100% of the reorganized company’s equity.

The advisors