Azure Dynamics Corp., the British Columbia-based specialty vehicle builder now struggling through the Canadian equivalent of a managed bankruptcy, says it might not be able to honor warranties it reinstated last week.


Azure said yesterday that it's seeking to sell its assets and soliciting financial investments to help it continue restructuring, so doesn't know if it can support the vehicle warranties.

The warranties themselves were of limited scope, covering only work performed since March 27, the company had said. Warranty work done prior to then was tied up in the proceedings under the Companies' Creditors Arrangements Act, or CCAA.

Azure meanwhile said that it has accepted the resignations of two members of its board of directors, leaving three members to oversee the efforts to recover.

"Given the company's current circumstances, a reduction in the size of the board will reduce costs and support the current restructuring strategy," it said in a statement yesterday.

The company also filed for Chapter 15 bankruptcy protection in the United States on March 27. But it claims it is not bankrupt per se and is moving forward in the restructuring.

"We are pleased to report that on April 13, 2012, the (British Columbia Supreme) Court granted an order approving a (debtor-in-possession) financing facility which will provide AZD up to $4 million in funding during these proceedings to support the company's mission to 'drive a world of difference' and move forward.

Known for its electric-drive conversion of Ford's Transit Connect compact van, Azure also built gasoline-electric hybrid drives using Ford's E-450.

Some of those hybrids were bought by package delivery fleets for use in California, which favored the vehicles with an ultra-low emissions classification. Transit Connect Electrics were purchased by various government agencies and big companies seeking no-emissions small trucks.

But total sales were only in the hundreds, and Azure, which designed and assembled the systems with purchased components, lost tens of millions of dollars for two successive years. It therefore shuttered its operations in suburban Detroit and elsewhere on March 27. Its headquarters in suburban Vancouver, B.C., remains in limited operation.

Creditors include Ford Motor Co., which supplied rolling Transit Connect chassis and complete E-450 chassis for Azure's conversion work, and Johnson Controls, which made lithium-ion battery packs. Those companies are not commenting.

If the company's restructuring efforts under the CCCA and Chapter 15 are successful, it said it hopes to resume work on those and other vehicles.


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