New York - Auto parts supplier Lear Corp. filed its reorganisation plan in the bankruptcy court, moving ahead with a deal to restructure about $3600 million of its debt burden and possibly exit bankruptcy protection this year.
Lear, which filed for Chapter 11 on 7 July, said at the time that it had a proposed deal supported by the majority of its creditors to cut its debt level.
In its proposed plan filed 14 July, Lear said its lenders will convert $1600 million plus interest into new term loans, and that about $2000 million of unsecured claims and notes will be converted into common stock and warrants in the reorganised company.
Lear's $500 million debtor-in-possession bankruptcy financing is convertible into exit financing that can fund its emergence from court protection.
If the bankruptcy court approves the proposal, it will be sent out to creditors for a vote. The company has proposed a hearing for confirmation of its reorganisation plan on 2 Nov. If it wins that approval, Lear would be able to exit bankruptcy just months after filing.
Lear makes seating, door panels, flooring and electrical components. It is among a string of car parts suppliers that have been forced to seek bankruptcy court protection this year, as US auto sales have plunged amid the longest recession since the Great Depression and automakers cut back on orders from suppliers.
In 2008, Lear said that General Motors, which exited bankruptcy three days after Lear filed, and Ford Motor Co. counted for about 37 percent of its sales.
Lear has about 72 000 employees worldwide, including 5500 in the US and Canada, according to court papers. The reorganised company will continue to sponsor its pension plans, the proposed reorganisation plan said.