Friday, January 2, 2009
Last year, Cadence Innovation LLC and General Motors entered into a contract under which Cadence would provide parts necessary for certain GM cars. AsThe Detroit Free Press reported last week, Cadence filed for bankruptcy in August 2008 and is now in liquidation. GM claims that, under the terms of an earlier financing deal, Cadence is required to turn over some tooling, without which GM would be required to shut down some of its assembly operations. If Cadence does not turn over the tooling, GM claims that it will suffer damages in the millions of dollars per day at each shut-down plant.
The Free Press article is a little unclear, perhaps because readers in and around Detroit are probably better-acquainted with Cadence's plight than is this reader, but it seems that the Bankruptcy Court earlier permitted Chrysler to remove some tooling from Cadence in return for a $4 million payment and a waiver of further claims. I assume that GM feels it is entitled to take its tooling without payment or waiver under the terms of the financing agreement referenced above. Meanwhile, it seems that Cadence employees are desperately seeking a buyer for the company so that at least some of them can be employed in 2009.