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Lear Enters Bankruptcy, Secures Creditor Support

After last week they announced the debut of a voluntary reorganization under Chapter 11 protection (read bankruptcy), automotive seating systems, electrical distribution systems and electronic products supplier Lear announced it has gained the support of its bank lenders and bondholders to proceed with the process.

The company, together with certain of its U.S. and Canadian subsidiaries have filed "voluntary petitions in the United States Bankruptcy Court for the Southern District of New York seeking relief under the provisions of Chapter 11 of the United States Bankruptcy Code."

"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," Bob Rossiter, Lear CEO said upon announcing the filing.

The company plans to stay under bankruptcy protection for at most 60 days. The company has received commitments from a syndicate of secured lenders, led by J.P. Morgan and Citigroup, for $500 million in DIP financing. Under the agreement, Lear may be financed for bankruptcy exiting as well.

Lear says it seeks court approval to continue to provide pay and benefits to its employees. Pension obligations will continue to be met, the company said.

"Our goal is to emerge from this process quickly and with an appropriate capital structure to support our long-term business objectives as a leading global competitor with the financial flexibility to build on our strengths and take advantage of future growth opportunities," Rossiter added.

By proceeding with the filing, Lear has become the biggest automotive supplier to file for bankruptcy in 2009. It follows over 20 companies which have done so this year, including Visteon, Metaldyne and Proliance.
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About the author: Daniel Patrascu
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Daniel loves writing (or so he claims), and he uses this skill to offer readers a "behind the scenes" look at the automotive industry. He also enjoys talking about space exploration and robots, because in his view the only way forward for humanity is away from this planet, in metal bodies.
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