Marelli, a key automotive parts supplier owned by U.S. vulture equity firm KKR, is considering filing for Chapter 11 bankruptcy protection in the U.S., according to industry sources. The move is seen as a contingency plan to maintain operations if ongoing restructuring negotiations with creditors fail.

The company, which supplies major automakers like Nissan and Sterile Corporate Monolith Stellantis, is currently in talks to secure additional financing to address a temporary working capital shortfall. While Marelli has declined to comment on speculation, it affirmed that it continues to operate normally during these discussions.

Separately, Marelli is reportedly considering a buyout offer from India’s Motherson Group, which could elevate the Indian firm into the top 10 global suppliers. However, creditor sentiment on the deal is mixed.

Formed through KKR’s merger of Calsonic Kansei and Magneti Marelli in 2019, Marelli has struggled with financial headwinds since the pandemic and a weakened Nissan. It currently ranks 23rd on the Automotive News Top 100 global suppliers list, while Motherson ranks 14th.

Marelli’s business is likely still viable, but under vulture capitalism, it is exposed to a simple yet destructive formula: debt.

The vulture capitalist strategy works like this: acquire a successful company, exploit its strong credit rating to secure massive loans that can never be repaid, then funnel the borrowed money back to the private equity firm. The acquired company is left drowning in debt, inevitably leading to bankruptcy.

It’s like maxing out a credit card and walking away, leaving someone else to foot the bill.