Auto parts maker Lear files for Chapter 11

NEW YORK -- Automotive parts supplier Lear filed for bankruptcy protection on Tuesday after receiving support it needed from lenders and bondholders to reorganize its struggling business.

The move had been expected from the maker of vehicle seats and electronics, which missed an interest payment on its bond debt last week and revealed its intention to seek Chapter 11 bankruptcy protection from its creditors. The Southfield, Mich.-based company made the filing in the U.S. Bankruptcy Court for the Southern District of New York.

It listed $1.27 billion in assets and $4.54 billion in liabilities. Subsidiaries outside the U.S. and Canada are not part of the filings, the company said.

"We are conducting business as usual and are very pleased to have received strong support from our lender and bondholder groups for our debt restructuring plan," CEO Bob Rossiter said in a statement.

Attorneys for Lear were slated to ask U.S. Judge Allan Gropper for approval of typical "first day motions" including permission to pay pre-bankruptcy wages, taxes and certain obligations to its customers.

Under Chapter 11 reorganization, a company can stay in operation under court protection while it sheds debts and unprofitable assets.

Lear is the first major automotive parts maker to seek court protection since Visteon, the former parts arm of Ford, filed in May. Auto parts suppliers have been hammered by the economic downturn as consumers continue to shun new car purchases and automakers slash production.

The Chapter 11 filings by General Motors and Chrysler and the idling of most of their factories has dealt a particularly hard blow to the auto supply base.

Lear has been particularly hard hit by the slump. It is heavily dependent on the struggling North American and European auto markets, with 36% of its sales coming from North America and 49% coming from Europe.

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