Visteon Corp. is taking the necessary legal steps to ensure it can continue paying its 2,585 production and non-production suppliers while in Chapter 11 bankruptcy.

Without court permission to pay its Tier 2 and 3 suppliers for components delivered before today’s filing, Visteon says many of those distressed parts producers will refuse to continue shipping parts.

“The consequences are dire,” in some instances forcing Visteon and its OEM customers “to stop operations or halt production lines altogether,” according to a document filed in U.S. Bankruptcy Court in Delaware.

Ford Motor Co.’s largest parts maker says it owes its critical suppliers $33.9 million, including $15.4 million in interim relief. In addition, Visteon says it has $123 million in pre-bankruptcy debt owed to production vendors.

Visteon says failure to pay its suppliers will jeopardize “an enviable record of reliability and on-time delivery of parts” to OEM customers.

Like many in the auto industry, Visteon says it relies on single sources for essential parts. Quickly switching to new sources of highly engineered components or materials that must meet stringent OEM specifications is not an option.

“It can take six months – and often up to 12 months in some instances – to select and certify a new supplier for such parts,” Visteon says in its filing, adding the supplier “cannot turn on a dime, re-source a part and shift their business to another supplier instantaneously.”

The necessary lead time to qualify a part effectively ties supply sources together “for significant blocks of time.”

If Visteon cannot deliver parts to OEM plants, those auto makers “could assert massive claims.” The supplier says the impact would be “potentially catastrophic.”

The viability of the entire automotive supply chain relies on quick payments for parts shipped, the filing says. Many of Visteon’s suppliers “are so financially distressed or are depending on (Visteon) business that a missed payment could cause those suppliers to fail, themselves.”

Visteon refers to its sole supplier of stepper motors, without revealing the company’s name. Visteon says it owes the company $1 million – not a massive amount.

But the synchronous electric motors are critical to Visteon instrument clusters, and the company only keeps a 2- or 3-day supply of the motors. Re-sourcing the product to a new supplier would cost about $900,000 and take about six months.

The inability to ship instrument clusters would cost Visteon about $30 million in lost revenue, the court document says.

Also in the filing, Visteon says its former parent has been generous in offering financial assistance for several years to the foundering supplier.

Ford took back 23 money-losing facilities from Visteon in 2005 and has been attempting to sell them as part of Automotive Components Holdings LLC. Ford also gave Visteon $300 million in cash and forgave certain post-retirement employee-benefit liabilities and other obligations in the deal.

Ford also purchased $3.1 billion worth of parts from Visteon in 2008 and $398 million in the first quarter of this year, according to the court filing.

The document says in the months prior to Chapter 11, “Visteon has worked closely with Ford and its other customers, as well as with other key stakeholders, to develop and implement a restructuring strategy to enable Visteon to emerge from the ongoing crisis in the consolidating supplier universe as one of the strongest Tier 1 suppliers in the industry.”

tmurphy@wardsauto.com