Visteon gets bankruptcy court OK to pay wages

WILMINGTON, Delaware (Reuters) - U.S. auto parts maker Visteon Corp VSTN.PK received interim court approval on Friday to pay employees, parts suppliers and vendors, but it still lacks debtor-in-possession financing to keep it afloat during its restructuring.

Visteon filed for bankruptcy on Thursday, becoming the latest casualties of the global auto industry crisis and adding to the pressure on cash-strapped automakers.

The interim approval to use its cash to operate in bankruptcy and to pay critical suppliers so it continues to get necessary parts to remain in business came during a hearing in U.S. Bankruptcy Court in Delaware. Visteon will have a hearing on June 19 to seek final approval.

U.S. Bankruptcy Court Judge Christopher Sontchi said Visteon may spend up to $43.5 million for parts, warranty guarantees and payments to shippers or vendors.

Visteon, the former parts unit of Ford Motor Co (F.N), has an intertwined relationship with its vendors and customers. It relies on getting parts in a timely manner to make components for the large automakers. Meanwhile, its various vendors, many of which are small companies, rely on Visteon's business to stay in operation.

Visteon said its failure would have a ripple affect, putting financial strain on many of its suppliers and disrupting manufacturing operations at its large customers such as Ford.

"If Visteon failed, I believe it would provide significant disruption to Ford in the near-term," Visteon's Chief Financial Officer William Quigley said in court testimony on Friday.

At the same time, Visteon depends on Ford, its largest customer, for its survival.

"I don't think Visteon could survive" without Ford, Quigley said.