U.S. auto parts maker Lear Corp , which has been weighed down by heavy debts and a sharp decline in automobile demand, filed for Chapter 11 bankruptcy protection on Tuesday.
The move comes after Lear, which had been in talks with lenders, said on Monday it planned to convert $3.6 billion in debt into a combination of new debt, convertible stock and equity warrants under a planned reorganization in bankruptcy.
The group had warned in March it might have to file for bankruptcy as some of its automaker customers struggle with bankruptcy themselves.
Lear had breached its leverage covenants at the end of 2008 after borrowing all of the $1.2 billion in its main credit facility.
Lear, which makes seating and electrical equipment for vehicles, made its filing in the U.S. bankruptcy court for the Southern District of New York, listing total assets of about $1.27 billion and total liabilities of about $4.54 billion.
The company suffered due to steep production cuts by General Motors Corp and Ford Motor Co . Auto parts makers were also pressured after Chrysler shut down nearly all of its production as part of its bankruptcy reorganization.
(Reporting by Ajay Kamalakaran in Bangalore; Editing by David Holmes)