The company is said to prepare a pre-packaged Chapter 11 filing, Autonews reported. According to the source, Lear is already involved in renegotiating debts, even if the manufacturer has so far declined to comment.
Troubles for Lear began late last year, when it entered in violation of its loan covenants. Even if the lender bank granted Lear an extended covenant, that deadline expires on June 30 and it is unlikely the manufacturer will be able to honor them by then.
Back in May, Lear posted its financial results for the first quarter of 2009, showing a 44 percent drop in revenues from one year before. Net sales amounted to $2.2 billion in Q1, with 68 percent of that amount outside North America.
"Given the adverse economic conditions and dramatic slowdown in automotive demand at the end of last year, many of our major customers had extended plant shutdowns in the first quarter," Bob Rossiter, Lear CEO said at the time.
"As a result, production was down sharply in North America and Europe. In this difficult environment, we are minimizing our operating costs and accelerating our restructuring efforts."
Lear is one of the biggest suppliers of automotive seating systems, electrical distribution systems and electronic products. The company employs some 80,000 people and operates 210 plants in 36 countries.
Until now, some 20 suppliers for the automotive sector filed for bankruptcy, including Metaldyne and Visteon.
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