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Electronics Production | November 16, 2010

Adversary actions filed in MPC bankruptcy

In early November 2008, MPC filed a petition for Chapter 11 bankruptcy protection in the US Bankruptcy Court (District of Delaware). CFO Curtis Akey makes problems with manufacturing partner Flextronics partially responsible for the bankruptcy.
The acquisition and subsequent integration of Gateway, as well as problems with its manufacturing partner - EMS-provider Flextronics - had contributed to the extensive losses. Now, over 180 adversary actions were filed in the MPC Computers bankruptcy.

Background on MPC's bankruptcy

MPC-Pro, LLC acquired Gateway in October of 2007 and 6 months after the acquisition, the company decided to cease its own manufacturing operations in Tennessee (USA). The chosen manufacturing partner was EMS-provider Flextronics; the chosen manufacturing location was Juarez (Mexico). Both companies signed a Manufacturing Service Agreement (MSA) on April 14, 2008. (Regarding the procurement, supply chain management, manufacturing, assembly & testing)

"Pursuant to the MSA, Flextronics agreed to use commercially reasonable efforts to adhere to a timeline associated with the manufacturing operations at its facility in Juarez, Mexico. The MSA also contemplates that certain cost reduction targets will be achieved", Curtis Akey (CFO of MPC Corporation since January 1, 2007) states in its Declaration in support of debtors' Chapter 11 petitions and First Day Motions.

Ramp up at Flextronics' facility was slower than planned and with limited production. On October 28, 2008, the EMS-provider 'notified the debtors that it does not intend to continue to supply product or services under the MSA', the statement from Mr Akey continues.

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