NEW YORK (Reuters) -- Auto parts supplier Lear Corp. filed its reorganization plan in U.S. bankruptcy court, moving ahead with a deal to restructure about $3.6 billion of its debt burden and possibly exit bankruptcy protection this year.
Lear, which filed for Chapter 11 on July 7, said at the time that it had a proposed deal supported by the majority of its creditors to cut its debt level.
Lear's subsidiaries in Europe and other regions outside the U.S. and Canada are not part of the Chapter 11 filings.
In its proposed plan filed on August 14, Lear said its lenders will convert $1.6 billion plus interest into new term loans, and that about $2 billion of unsecured claims and notes will be converted into common stock and warrants in the reorganized company.
Lears $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 reorganization plan on November 2. If it wins that approval, Lear would be able to exit bankruptcy just months after filing.
Peers in peril
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 U.S. 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 5,500 in the United States and Canada, according to court papers. The reorganized company will continue to sponsor its pension plans, the proposed reorganization plan said.
Lear does more business in Europe than the North America. Last year 49 percent of Lear's $13.6 billion in 2008 sales came from Europe compared with 36 percent in North America. Lear ranks No. 11 on the Automotive News Europe list of the top 100 global suppliers.
Douglas A. Bolduc contributed to this report