Auto Parts Maker Lear Corp. Files for Chapter 11

Automotive parts supplier Lear Corp. filed for bankruptcy protection on Tuesday after receiving support from lenders and bondholders to reorganize its struggling business.

FILE - In this July 31, 2007 file photo, a Lear Corporation sign is shown outside the company's...

FILE - In this July 31, 2007 file photo, a Lear Corporation sign is shown outside the company's headquarters in Southfield, Mich. Struggling automotive parts supplier Lear Corp. filed for Chapter 11 bankruptcy protection on Tuesday, July 7, 2009, after receiving the support it needed from lenders and bondholders. (AP Photo/Paul Sancya, file)

(AP)

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.

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

Attorneys for the company made their first appearance in bankruptcy court Tuesday afternoon.

Lear Attorney Marc Kieselstein said the company plans to file a plan of reorganization in the next 30 to 60 days and hopes to do so on the early end of that time frame. He said Lear and other auto parts makers have been battered by the weak economy, but the company has support for its reorganization from the majority of its debt-holders.

"What we have seen is a drop-off (in business) that has outpaced ... suppliers' ability to cut costs," Kieselstein said.

U.S. Judge Martin Glenn — acting in place of U.S. Judge Allan Gropper, who had been assigned Lear's case — approved typical "first day" motions, giving Lear permission to pay pre-bankruptcy wages, taxes and certain obligations to its customers.

Glenn also approved the company's use of cash collateral — or money used to continue funding the company's day-to-day operations — on an interim basis.