Liberating a Business from Its History:The Turnaround of Dana Corporation

Abstract

When auto-parts maker Dana Corp. was near collapse, restructuring professionals entered the scene and effected a comprehensive reorganization of Dana’s global business. They facilitated negotiations between various stakeholder groups and utilized the Chapter 11 bankruptcy process strategically, resulting in a restructuring that included groundbreaking deals to limit Dana’s liabilities for retiree welfare benefits and pension plans; the divestment of noncore businesses, both domestic and overseas; the institution of a pan-European receivables securitization facility; the out-of-court reorganization of its European operations, avoiding insolvency proceedings in multiple jurisdictions; the restructuring of a struggling finance subsidiary; and the renegotiation of unfavorable contracts with Dana’s significant OEM customers. Dana emerged from the process with a competitive cost structure, rationalized manufacturing footprint, and streamlined corporate organization, in stark contrast to the well-publicized difficulties of other auto industry participants.