Cases & Deals

Global automotive manufacturer negotiates supply agreement with UK supplier

Clients Global automotive manufacturer

A global automotive manufacturer instructed Jones Day to assist in the negotiations with one of their suppliers in the UK who was facing financial difficulties. Various alternatives were considered, but it was ultimately concluded that the only option was for the supplier to enter into a pre-planned administration under which the administrators would implement an orderly winding down of the business.

In order to facilitate this orderly wind-down, it was agreed that the main customers of the supplier would agree between themselves and the proposed administrators how the administration would be funded, what the customers' manufacturing requirements would be during administration, and how and when the customers could remove their tooling from the supplier's site. As the customers all had different manufacturing requirements and preferred times for removing their tooling, the challenge was to negotiate a supply agreement in advance of the administration which would achieve a fair outcome for all parties, including ensuring that the administrators' funding needs were met.

Jones Day was very active in the negotiations both in the overall strategy and the supply agreement itself. Once the terms of the supply agreement were concluded, the supplier entered into administration and the supply agreement then came into force.