Jenner & Block

Firm Serves as Restructuring Counsel to Auto Parts Maker Jernberg Industries, Inc. in Chapter 11

Chicago’s financially-distressed Jernberg Industries, Inc., Jernberg Sales, Inc. and Iron Mountain Industries, LLC agreed on June 29 to sell all of their assets, in a transaction the sellers value at more than $60 million,  to Hephaestus Holdings, Inc. (“HHI”), an acquisition entity organized by and affiliated with KPS Special Situations Fund II, L.P. 

Contemporaneously with the signing of the Asset Purchase Agreement, each of the Debtor companies filed voluntary petitions for relief pursuant to Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the “Bankruptcy Court”). 

Among other things, the Debtor companies have requested that the Bankruptcy Court approve the sale to HHI and approve certain sale procedures which will govern an auction at which the Company will solicit qualified competitive bids.  The Debtors also have obtained interim approval from the Bankruptcy Court of a commitment from the Company’s existing senior lender to provide up to $7 million of debtor-in-possession financing, to be used for employee salaries, ongoing operating expenses and other working capital requirements necessary to fund the Company’s operations through the closing of the sale. 

The Agreement with HHI provides for KPS to provide not less than $20 million of equity capital to HHI for the purpose of retiring the Company’s debtor-in-possession financing, repaying a portion of the Company’s senior credit indebtedness, making a cash payment to the Company of $1.25 million at closing and paying transaction expenses.  HHI will assume certain of the Company’s other pre-bankruptcy indebtedness and certain post-bankruptcy liabilities.  If the sale is approved, HHI will be a well-financed and competitive entity.

Jenner & Block LLP serves as the Company’s restructuring counsel.  The Jenner & Block team is led by Mark K. Thomas and Jerry L. Switzer, Jr, and also includes Partners Edward J. Neveril, Brian I. Swett, and Michael S. Terrien and Associates David M. Kavanaugh, Andrew S. Nicoll and Andrew J. Olejnik.  The Company also has retained Carson Fischer, P.L.C. as counsel.  The Carson Fischer team is led by name partner Joseph Fischer.  The Company also has retained A. Jeffrey Zappone of CM&D Management Services, LLC as Chief Restructuring Officer.

The Company is one of the nation’s largest suppliers of high volume forged and machined components for the transportation industry.  The Company supplies parts to leading automotive manufacturers for many of the best selling vehicles in North America.  The Company operates four production facilities in the Chicago area. 

KPS Special Situations Funds are a family of private equity funds with over $600 million of committed capital focused on constructive investing in restructurings, turnarounds and other special situations. KPS has created new companies to purchase operating assets out of bankruptcy; established stand-alone entities to operate divested assets; and recapitalized highly leveraged public and private companies. KPS is an active and successful investor in the metal industries, with holdings including Wire Rope Corporation of America, AmeriCast Technologies, Inc. and Genesis Worldwide II, Inc. (HerrVoss).