Spectra Premium returns to CCAA as auto parts maker launches sale process

Spectra Premium Mobility Solutions Canada Ltd. and Spectra Premium Mobility Solutions USA, LLC obtained CCAA protection from the Québec Superior Court on September 30, 2026.

Spectra designs, manufactures and distributes automotive products across North America. Its aftermarket division, which accounts for approximately 60% of revenue, sells replacement fuel delivery, cooling and undercar products for light and heavy-duty vehicles. Its OEM division, representing approximately 40% of revenue, manufactures gas tanks for automakers. The Canadian company performs the group's manufacturing, finance, human resources, engineering, IT and procurement functions and employed 299 people when the monitor reported, including 287 at its Boucherville, Québec plant. Of those employees, 213 are unionized. The US company employed another 51 people from a distribution centre in Greenfield, Indiana.

The filing marks the second insolvency proceeding involving the Spectra business in 6 years. Its predecessor companies entered CCAA proceedings in March 2020, leading to a court-supervised sale to Turnspire Capital Partners LLC that closed on November 12, 2021. The acquisition was funded with Turnspire equity and subordinated debt, a loan from Investissement Québec, and senior revolving and term facilities from Wells Fargo and Canadian Imperial Bank of Commerce.

The fresh start did not produce sustained profitability. Consolidated net sales declined from US$145.2 million in 2023 to US$126.4 million in 2024 and US$117.1 million in 2025, a decline of approximately 19% over 2 years. Spectra lost US$2.1 million in 2023, US$10.3 million in 2024 and US$21.2 million in 2025. Its working capital was negative by approximately US$2.6 million at the end of 2025, while members' equity had fallen from US$34.8 million at the end of 2023 to US$4.2 million.

Spectra attributed the deterioration to continued margin compression in the aftermarket business as customers shifted toward lower-priced imports, excess North American capacity in fuel pumps and cooling products, higher working capital requirements and a fixed cost base that did not fall with sales. US tariffs introduced from early 2025 also increased the landed cost of Chinese and certain Canadian products sold through Spectra USA. The OEM business faced its own decline as light-duty vehicles used fewer metal fuel tanks and existing OEM programs were phased out.

Liquidity pressure then began feeding back into operations. Revenue for the first six months of 2026 was approximately US$12.9 million, or 24%, below budget, largely because supplier payment constraints caused inventory shortages that prevented Spectra from filling customer orders. Management estimated the resulting EBITDA shortfall at approximately US$3 million. Although tariff recoveries and cost cuts helped Spectra reduce bank debt by approximately US$7 million during 2026, working capital declined by approximately US$10 million and the company had been in breach of financial covenants since mid-February.

Management responded with a series of restructuring measures before filing. Spectra closed distribution branches in Winnipeg and Burnaby in September 2025 and Sainte-Foy in December 2025. During the first half of 2026, it implemented initiatives carrying approximately $3.4 million of annualized savings, including manufacturing labour reductions and the elimination of 15 aftermarket positions. The company also recovered approximately US$3.5 million of tariffs and duties and implemented price increases worth approximately $1.4 million annually. Those measures were not enough to resolve its liquidity problems.

The company's senior credit facilities matured on April 30, 2026 without repayment. Spectra entered into an accommodation agreement with its lenders the following day and launched a sale process for its aftermarket business through Capstone Partners. Capstone contacted 43 potential strategic and financial purchasers, but only approximately 2 signed non-disclosure agreements and obtained data-room access. The process generated two non-binding letters of intent, neither of which was satisfactory to the lenders.

The lenders subsequently demanded repayment and entered into a forbearance agreement on August 27. That agreement gave Spectra until August 31 to obtain a non-binding stalking horse proposal and until September 14 to execute a binding stalking horse agreement for all or substantially all of the business. Spectra was unable to secure a stalking horse bid, while the lenders' forbearance was set to expire September 30.

As of September 11, approximately $27.3 million of principal was outstanding under Spectra's revolving facility and another $3.5 million under its term loan. Investissement Québec was owed approximately $7.1 million as of August 31 under a term loan that matured July 31, while approximately $10.6 million was outstanding under a subordinated secured note issued to SPMS Holdings LLC that matures November 12.

The CCAA process broadens the earlier aftermarket-only sale effort to the entire Spectra business. EY, assisted by EY-Parthenon Corporate Finance, is conducting a two-phase SISP covering all of the applicants' business, property, assets and undertakings. Wells Fargo Capital Finance Corporation Canada is providing a DIP loan of up to $20 million.

EY is the monitor, assisted by EY-Parthenon Corporate Finance with the sale process. Counsel includes Lavery, de Billy for Spectra, Fasken for the monitor and McMillan for Wells Fargo.