Cross Border Statutory Moulder Lien Priority Rules in Tier Two Automotive Insolvency Proceedings
Statutory moulder liens grant possessory tool priority over lenders, but insolvency stays require immediate local notice and adequate protection.
Post-Petition Cure Payment
Meaning
A financial distribution made by a debtor or assignee satisfies outstanding pre-petition arrears as a condition for assuming an executory contract. For a brand owner, a post-petition cure payment must be completed before a contract manufacturer can resume moulding parts under an existing supply agreement. This payment is necessary to bring the relationship current under bankruptcy law.
Contract Assumption
The debtor cannot assume and assign a moulding contract to a new buyer without curing all defaults. This includes paying for all completed part runs and tooling modifications that were left unpaid at the filing date. This rule protects the moulder from being forced to perform under a contract without receiving what they are owed.
This requirement ensures that past debts are cleared before new production begins.
Production Impact
For the tooling owner, this payment provides the cash flow needed to resume tool trials and quality audits. It restores the supplier’s obligation to maintain and run the cavity insert steel according to the original specifications. When the cure payment is delayed, the supplier may withhold part shipments.
This leverage ensures that the moulder’s interests are protected.
Economic Risk
If the debtor cannot make the required payment, the contract is rejected and the relationship terminates. The brand owner must then recover their tooling and establish a new contract elsewhere. This transition involves unexpected costs and production delays.