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Auto parts maker Lear files for Chapter 11 bankruptcy protection

NEW YORK — Automotive parts supplier Lear Corp. filed for bankruptcy protection Tuesday after receiving support 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. In its filing in New York, the Southfield, Mich., company listed $1.27 billion in assets and $4.54 billion in liabilities. Subsidiaries outside the United States and Canada are not part of the filings, the company said.

At Lear's facility at 5100 W Waters Ave. in Tampa, workers still assemble electronic components and systems for auto interiors.

But last year, Lear said it would start winding down the local plant, which once employed close to 600 workers. It laid off more than 400 people last year and is due to close in September. Most hourly jobs, which average $13.50 in Tampa, are being outsourced to a lower-cost Lear electronics plant built in Apodaca, Mexico, or to China.

Mel Stephens, Lear Corp. spokesman, said Tuesday that the Chapter 11 filing is a financial restructuring and not an operational restructuring, suggesting the planned closing of the Tampa facility is unchanged. But Stephens added that Lear is under no obligation to publicly address the status of individual plants, other than to keep its employees informed.

"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 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 debtholders.

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

The Chapter 11 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 GM and Ford. The pair represent the company's two largest customers and account for a combined 40 percent of its sales.

Times staff writer Robert Trigaux contributed to this report, which includes information from the Associated Press.

Auto parts maker Lear files for Chapter 11 bankruptcy protection 07/07/09 [Last modified: Tuesday, July 7, 2009 9:39pm]
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