The maker of auto seats and other electronics for vehicles announced they plan to file for chapter 11 protection ‘shortly’.
A filing would add evidence that even the sector’s largest suppliers are feeling the squeeze from auto plant shutdowns, the continued slump in demand for products and tight credit markets. Bankruptcies threaten to increase product-flow disruptions that could shut assembly plants and drain cash from auto makers who may be tapped to provide bankruptcy financing.
Lear received commitments from a syndicate of secured lenders, led by J.P. Morgan and Citigroup Inc., for $500 million in new debtor-in-possession financing. That financing will convert into exit financing with a three-year term upon Lear’s emergence from bankruptcy protection.
The company’s units outside the U.S. and Canada won’t be part of the bankruptcy filing. It said those operations are well-capitalized, well-positioned and have a strong backlog of new business.
Lear would be the eighth major supplier to seek Chapter 11 since 2005 and the third parts maker to file in the past month. Visteon Corp. and Metaldyne Corp. entered bankruptcy May 28
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