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Published: Saturday, 3/25/2006

Dana sues supplier over advance payment

Dana Corp., the Toledo auto-parts maker that filed for bankruptcy this month, sued supplier James Tool Machine and Engineering Inc. for allegedly violating contract terms by requiring Dana to pay for parts in advance.

Under a 2003 contract, Dana must pay James Tool within 62 days upon receipt. When Dana filed for bankruptcy March 3, James Tool said it would withhold shipments unless paid in advance, Dana said in a complaint filed with the U.S. Bankruptcy Court in New York.

That would spur other suppliers to do the same and require Dana to borrow $500 million more to meet the demands and delay its exit from bankruptcy, Dana said. The firm asked Bankruptcy Judge Burton Lifland to order James Tool to honor the original contract terms.

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