Struggling automotive parts supplier Lear Corp. filed for bankruptcy protection on Tuesday after receiving the support it needed from lenders and bondholders.
The move had been expected from Lear, which missed an interest payment on its bond debt last week and revealed its intention to seek court protection from its creditors. The Southfield, Michigan-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.
Lear is the first major automotive parts maker to seek court protection since Visteon Corp., the former parts arm of Ford Motor Co., filed for bankruptcy 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 bankruptcy reorganization filings by General Motors Corp. and Chrysler Group LLC 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 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.
On Tuesday, Lear said it is hoping for an "expedited" bankruptcy process. The parts maker said it has support from more than 50 percent of its bondholders and about 69 percent of its secured lenders for its reorganization plan, which it plans to submit to the bankruptcy court within 60 days.
Shares of Lear, which trade on over-the-counter markets since the New York Stock Exchange delisted the stock, have plunged over the last year after the automobile market began slumping and the company began racking up quarterly losses. Shares closed Monday at 29 cents and plunged 43 percent to 16 cents in Tuesday premarket trading. During a bankruptcy proceeding, common shareholders are typically wiped out.
It announced it was preparing to file for bankruptcy protection last week after a grace period expired on a $38 million interest payment that would service its 8.5 percent senior notes due 2013 and its 8.75 percent senior notes due 2016
It previously received a commitment for $500 million in "debtor-in-possession" loans to finance its bankruptcy from a group of lenders led by J.P. Morgan and Citigroup. It 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.