Lear files for Chapter 11 bankruptcy protection

[July 07, 2009]  NEW YORK (AP) -- Struggling automotive parts supplier Lear Corp. said it has filed for Chapter 11 bankruptcy protection after receiving the support it needed from lenders and bondholders.

The company, which makes automotive seating systems and electronics, had been negotiating with its lenders and bondholders for additional support for its restructuring plan. It previously received a commitment for $500 million in loans to finance its bankruptcy from a group of lenders led by J.P. Morgan and Citigroup.

Lear said it filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York. Subsidiaries outside the U.S. and Canada are not part of the filings, the company said.

Lear has asked the bankruptcy court to allow it to continue to provide pay and benefits for its workers without interruption and to continue to allow it to provide payments for its U.S. and Canada pensions.

It plans to present its restructuring plan to the court within 60 days.

The Southfield, Mich.-based company's filing, which had been expected since last week, makes it the first major automotive parts maker to seek court protection since Visteon Corp., the former parts arm of Ford Motor Co., filed for Chapter 11 in May. Parts suppliers have been hammered by the recession as consumers continue to shun new car purchases and automakers slash production.

Lear's troubles stem partly from its heavy dependence on the slumping North American and European auto markets, with 36 percent of its sales coming from North America and 49 percent coming from Europe.

Lear, which posted $13.6 billion in sales for 2008, is a key supplier for both General Motors Corp. and Ford Motor Co. The pair represent the company's two largest customers and account for a combined 40 percent of its sales.

Lear is also one of Ford's key component and service suppliers, part of Ford's Aligned Business Framework, which increases the automaker's collaboration with the companies.

[Associated Press]

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