Troubled motor oil company files for Chapter 11 bankruptcy

According to The Street, Financial distress has led several major companies in the automotive industry to file for Chapter 11 bankruptcy this year.

Fisker Group’s Bankruptcy Filing

Electric vehicle maker Fisker Group stands out as the only automaker to file for bankruptcy, submitting its Chapter 11 protection request on June 18. The Manhattan Beach, California-based EV manufacturer attributed its financial troubles to various market challenges and macroeconomic headwinds.

Impact on Auto Parts Manufacturers

The auto parts sector has also faced significant challenges, particularly in Germany, where 20 EV auto parts manufacturers filed for bankruptcy in the first half of 2024.

In the United States, Wheel Pros, which operates as auto parts distributor and retailer Hoonigan, filed for a prepackaged Chapter 11 bankruptcy on September 9. This filing aims to eliminate $1.2 billion in debt and secure approximately $570 million in new capital through an exit facility.

Other Notable Bankruptcies

Wheel Pros’ bankruptcy followed PartsID’s Chapter 11 filing in December 2023, which operates in the e-commerce auto parts retail space.

More recently, Stanley Oil & Lubricants, a distressed petroleum products company, filed for Chapter 11 protection on September 17 in the U.S. Bankruptcy Court for the Eastern District of New York. This filing came after a U.S. District Court judge granted a preliminary injunction against Stanley from one of its suppliers in a trademark and copyright infringement lawsuit, freezing certain assets and halting business operations.

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Stanley Oil’s Legal Troubles

The Melville, New York-based company reported up to $50,000 in assets and between $1 million and $10 million in debts. The petition indicated that no funds would be available to pay unsecured creditors after administrative expenses are covered.

Stanley Oil’s bankruptcy was influenced by a preliminary injunction issued by U.S. District Judge Nina R. Morrison on September 11, which favored General Petroleum GmbH, a German manufacturer of automotive, industrial, and marine lubricants. The injunction prohibited Stanley Oil from manufacturing, importing, distributing, or selling any products using General Petroleum’s trademarks or confusingly similar marks, effectively freezing assets linked to the alleged sale of counterfeit goods.

History of Disputes

Stanley Oil began doing business with General Petroleum in August 2019, purchasing petroleum products in Sharjah, UAE, for distribution in the United States. This partnership led to a five-year dispute over trademarks and copyrights.

General Petroleum filed a lawsuit on March 28, 2024, against Stanley, alleging trademark infringement, copyright infringement, unfair competition, and other claims. Although productive settlement discussions took place, they ended around June 12 after Stanley changed its legal counsel, prompting General Petroleum to seek a preliminary injunction on June 14.

Judge Morrison ruled in favor of General Petroleum, asserting that the company demonstrated a strong likelihood of succeeding in its claims of trademark infringement, unfair competition, and related issues.

Implications of Bankruptcy Filing

Stanley Oil’s Chapter 11 filing triggers an automatic stay on any pending litigation while its case is processed. As of now, Stanley Oil’s bankruptcy attorney has not responded to requests for comment.

The company markets a range of products, including automotive, industrial, and marine lubricants; automotive grease; additives; brake fluid; coolant; and base oil under brands such as Stanley, Syntrol, Prime, and Hexagen.