Edscha files for bankruptcy

posted by SooYeon(Pia),Shin

On Feb. 2, Edscha, which is a German engineering company, filed for insolvency. Edscha is known for making an automobile convertible roof systems, hinge systems, and driver controls for most major carmakers, including BMW and Rolls-Royce Phantom. One of the company’s productions is the folding hardtop for the BMW 3 Series. Edscha was established in 1870 and owned by U.S. private equity company Carlyle Group since the end of 2002. Edscha has 29 factories in worldwide and employs about 6,000 people. Also, the company has had sales of about 1 billion euros.

The main reason of the insolvency of Edscha is basically the downturn of worldwide economy and automobile industry. The company suffered with a collapse in the worldwide automobile market since last year. So, a big slump in car sales has made every carmaker and suppliers to cut jobs and lower their profit forecasts. For example, Honda Motor Co was forced to cut its profit forecast for the fourth time this year by the automotive industry; and, Toyota expects “a greater-than-expected loss. However, the debt incurred when Carlyle buyout “was not responsible” for the insolvency of the company. It is because Edscha recorded its revenue of $1.08 billion euros ($1.38 billion) at its fiscal year 2007-2008 to end June. Nonetheless, Edscha said it will continue to operate business and “has affected only the supplier’s European operations.”

http://www.autonews.com/article/20090202/COPY01/302029768/1193
http://www.washingtonpost.com/wp-dyn/content/article/2009/02/02/AR2009020203027.html
http://www.canadiandriver.com/2009/02/02/german-convertible-roof-maker-files-for-bankruptcy.htm
http://www.guardian.co.uk/business/feedarticle/8338907

Welcome to the Bankruptcy Economy

By Michael Collins

Companies saddled with debt and pension obligations are increasingly using bankruptcy to walk away from their promises. Here’s what this means for airline and auto workers -- and taxpayers.

While Delta Air Lines appears headed for a corporate nosedive, its pilots have opted to pull the financial ripcord.

Faced with a management that has decided to use the threat of bankruptcy as a negotiating weapon, senior pilots have been filing for early retirement by the hundreds and then taking their pension in a lump-sum payout. Every retiring pilot takes a haircut: A senior pilot at Delta gets a one-time payment of about $300,000, only half of what he or she would receive in monthly pension checks over the lifetime of the pension. But the Delta pilots know that pilots at US Airways Group stand to receive only about 25 cents on each dollar of their promised retirement benefits as a result of that company's repeated bankruptcy filings.

Click here to read more.