The Brea, Calif., company on March 1 announced that Judge Scott C. Clarkson of the U.S. Bankruptcy Court for the Central District of California in Santa Ana had confirmed its prearranged reorganization plan. The statement said the plan would take effect by March 31.

Clarkson had held a confirmation hearing on Feb. 28 but had yet to sign a confirmation order as of midday Monday, March 4.

"Today's confirmation is a significant milestone and is one of the last remaining steps in our realignment and restructuring process," M. Freddie Reiss, the company's chief restructuring officer, said in the March 1 statement.

Under the plan, American Suzuki, the sole distributor of Suzuki products in the U.S., will wind down its automotive business and rebuild around its motorcycle, all-terrain vehicle and marine outboard engine businesses.

A new vehicle created by parent Suzuki Motor Corp., Suzuki Motor of America Inc., will purchase the motorcycle, ATV and marine outboard engine businesses. The debtor will be liquidated.

The buyer will pay $95 million in cash and assume certain liabilities. Seth J. Horowitz, spokesman of debtor counsel Pachulski Stang Ziehl & Jones LLP, said the buyer will assume $40 million in liabilities, giving the deal a total value of $135 million.

The buyer also will provide the amount equal to the cost of inventory up to $4 million.

SMA was to be the stalking-horse bidder for a Feb. 22 auction of the assets, but documents show Suzuki did not receive any qualified competing bids by a Feb. 21 deadline. Competing bids had to exceed SMA's offer by $3 million. SMA would have received up to $500,000 for expense reimbursement had it lost the auction.

Along with the sale proceeds, American Suzuki will fund its plan with $3 million in cash from SMC. The debtor's parent is providing the funds in exchange for it being released from potential causes of action.

Under American Suzuki's plan, the latest version of which was filed on Feb. 26, the debtor will repay its $100 million debtor-in-possession loan from SMC in full either when it matures or on the plan's effective date. Administrative, priority tax (estimated at $3 million) and priority nontax claims will also be repaid in full in cash.

American Suzuki's prepetition secured debt with SMC will also be repaid in full from the debtor's available cash, but the claims will be subordinated to those of dealers and other creditors that settled with the debtor. SMC would receive any remaining cash after the other creditors were repaid in full.

The debtor owes its parent $152.3 million in secured debt plus an additional $9.4 million in unsecured debt.

Other secured creditors will be paid in full.

Dealers that settled with the debtor and continue to provide parts and services for its products, along with other general unsecured creditors that settled their claims with the debtor, will split the company's available cash.

Under the latest plan, dealers and unsecured creditors that do not settle would get a pro rata share of available funds equal to 20% of their claims. Under the previous plan, these claims were to be wiped out.

The company is transitioning the majority of its automotive dealers into parts and services operations.

According to court documents, 213 of the debtor's 219 automotive dealers will switch from the sale of new vehicles to the sale of automotive parts and services by converting existing dealerships into parts and service locations.

The debtor owes the settling automotive dealers $45 million, the plan said.

Warranty claims will continue to be honored.

SMC will receive no recovery for its equity.

Founded in 1986, American Suzuki is a wholesaler of SMC products through three primary divisions -- automotive; motorcycle and ATV; and outboard marine motors and related products.

American Suzuki, which has 295 employees, sells its inventory to a network of independently owned and unaffiliated dealerships throughout the continental U.S. The dealers then market and sell the Suzuki products to retail customers. It has more than 900 motorcycle and ATV dealerships and more than 780 outboard marine dealerships.

American Suzuki blamed its Nov. 5 bankruptcy filing on declining automotive sales and the serious challenges of the highly regulated and competitive automotive industry.

The debtor was hurt by unfavorable foreign exchange rates, disproportionately high and increasing costs of meeting state and federal automotive regulatory requirements, low sales volume, a limited number of models in its showroom lineup and existing and potential litigation costs, court documents said. American Suzuki's most recent share of the U.S. market was a paltry 0.2%.

Richard M. Pachulski, James I. Stang, Dean A. Ziehl, Linda F. Cantor and Debra I. Grassgreen at Pachulski Stang are debtor counsel.

FTI Consulting Inc. is the debtor's financial adviser. Imperial Capital LLC is its investment banker.