General Motors Corp. is suing a bankrupt automotive supplier for immediate access to specialized parts and equipment, contending that a delay would hamper the launch of its new Chevrolet Camaro, disrupt assembly operations and cause millions of dollars in damages it can ill afford.
In a filing with the U.S. Bankruptcy Court in Delaware on Christmas Eve, GM accused Cadence Innovation in Troy, Mich., of "holding hostage" the needed parts and tooling equipment and breaching the terms of an agreement it signed with the automaker in August.
Cadence, which GM once hailed as its 2006 supplier of the year, filed for Chapter 11 bankruptcy protection in August, which became a liquidation proceeding this month. The company makes door panels, air bag covers, consoles and other parts.
GM employs "just-in-time" manufacturing in which parts are placed into vehicles within hours of delivery, it said. The automaker has on hand parts that can support assembly operations only for several days to a week.
GM wants immediate access to Cadence's parts and equipment so it can have a new supplier in place to start making parts by Jan. 12 to avoid a major disruption to its assembly operations.
"Even one day's disruption in supply of certain component parts could cause a shutdown of GM assembly operations, disrupting not only GM's business but the operations of countless suppliers, dealers, customers and other stakeholders," the lawsuit said.
GM said such a shutdown would cost the company millions of dollars daily at each affected plant. The automaker accused Cadence of hampering its efforts to take possession of parts and equipment.
Cadence did not return a call for comment Friday.
GM shares rose 41 cents to $3.66.
Late Wednesday the Federal Reserve granted bank holding status to GM's financing arm, GMAC, which made the unit eligible for funds earmarked for the government's $700-billion bank rescue plan and saved it from possible bankruptcy.
The move came just days after the White House threw GM and Chrysler an emergency lifeline, pledging to provide as much as $17.4 billion in loans.