Dana ( DCN) shares plunged 34% after the company became the latest auto-parts supplier to tumble into Chapter 11 bankruptcy protection. The Toledo, Ohio, company said the filings were made Friday in the U.S. Bankruptcy Court for the Southern District of New York. The move comes just a day after Dana missed a $21 million debt payment. "The Chapter 11 process provides the company an opportunity to fix our business comprehensively -- financially and operationally," CEO Michael Burns said. "This will be fundamental change, not just incremental improvement. The Chapter 11 process allows us to continue normal business operations, while we restructure our debt and other obligations and enhance performance." The move by Dana comes amid turmoil in the domestic auto industry, where Ford ( F) and GM ( GM) are trying to retrench under sliding sales and the overhang of massive labor costs. The weakness of Detroit's Big Three has already claimed big supplier Delphi, now undergoing a painful remaking under big-talking CEO Steve Miller, as well as the former David Stockman vehicle Collins & Aikman. Ford affiliate Visteon ( VC) is trying to cut costs as well. On Thursday, Dana shares dropped 23% after the company failed to make a March 1 payment on its 7% senior notes due March 1, 2029, and its 6.5% senior notes due March 1, 2009. The company said it had a 30-day grace period, a comment that gave fans hope that it was in the midst of a restructuring with lenders that would permit the company to avoid Chapter 11. Shareholders, as unsecured creditors, typically recover nothing in a Chapter 11 reorganization. On Friday, Burns said Dana intends to proceed with its previously announced divestiture and restructuring plans, which include the sale of several non-core businesses and the closure of several facilities and the shift of production to lower-cost locations. In addition, Dana will continue to take steps to reduce costs, increase efficiency and enhance productivity, he said.
Dana has filed so-called first-day motions to ensure that the company's business continues to function without disruption. The court filings are intended to ensure that the company can continue to pay its employees and suppliers and maintain uninterrupted delivery of products and services to its customers. Dana reported total assets of $7.9 billion and total liabilities of $4.7 billion, on a consolidated basis, as of Sept. 30. On Friday, Dana dropped 35 cents to 69 cents.