Cases & Deals

Dana Corporation successfully reorganizes in U.S. and U.K. in "Deal of the Year"

Client(s) Dana Corporation

Jones Day advised Dana Corporation and 40 of its U.S. subsidiaries in their reorganization under chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York.

On January 31, 2008, less than two years after the institution of their bankruptcy cases, Dana and its affiliated debtor companies became one of the first large manufacturing entities with fully funded exit financing to emerge from chapter 11 under the recently revised Bankruptcy Code. Having achieved nearly half a billion dollars in annual cost savings, rationalized its global business structure, resolved approximately $3 billion in unsecured claims, and secured $2 billion in exit financing, Dana emerged from bankruptcy protection well-positioned to compete vigorously in the global automotive supply market.

As primary debtors' counsel, Jones Day was a key contributor to Dana's remarkable achievement. Jones Day's restructuring professionals understood the necessity of conceiving, implementing, and executing a comprehensive strategy for the sprawling, global restructuring ahead - a strategy designed to be achieved in discrete segments, yet consistently focused on the reorganization of the whole enterprise and the ultimate endgame of confirmation and fully funded emergence from chapter 11. The foundation of this strategy was the identification of parties that had a vested interest in Dana's continued survival and success. Core constituencies, such as Dana's customers (which require a viable tier-one supplier of automotive drivetrains), its suppliers (many of which depended on the business they transacted with Dana for survival) and, especially, its largely unionized workforce, immediately presented themselves as potential negotiating counterparties and, ultimately, sources of savings for Dana. Jones Day and Dana defined what concessions would be necessary to emerge from chapter 11 as a healthy competitor in the automotive parts industry and then set about achieving that goal - developing a staged plan to approach, in turn, Dana's suppliers, its customers and, finally, its unions, emphasizing the shared sacrifice necessary to produce the long-term benefits desired by all parties. After obtaining such concessions and establishing a viable business profile, Dana would be able to approach its financial constituencies, as well as potential new investors, in order to craft and fully fund a plan of reorganization premised upon the already committed contributions of its customers, vendors, and workforce. Emphasizing collaboration with Dana's primary stakeholder constituencies and exhibiting a willingness to pursue and embrace innovative solutions to Dana's problems, Jones Day was able to help chart and navigate a strategic course for Dana's reorganization of its domestic operations and, concurrently, a realignment of its overseas operations, including a Company Voluntary Arrangement of Dana's U.K. subsidiaries and the development of a groundbreaking pan-European financing facility.

Given the troubles experienced by other tier-one automotive suppliers in chapter 11, Dana's simply emerging from chapter 11 likely would have been considered a success. Emerging from bankruptcy with $2 billion in committed financing, a successfully rationalized corporate structure, a deleveraged cost structure, and new union agreements in place - all achieved within the new and substantially abbreviated deadlines imposed by the revised Bankruptcy Code - is nothing short of remarkable. This transaction was named "Deal of the Year" by the Turnaround Management Association in 2008.