Lear is preparing to file for bankruptcy as soon as next week, The Wall Street Journal reported on Thursday, citing people familiar with the matter. The auto parts supplier’s lenders have agreed to waive defaults under its primary credit facility through June 30. The ventilator may still be working, but the decision on whether to pull the plug will soon be at hand.
Last week, the White House rejected a request from the auto parts industry for up to $10 billion in additional emergency funding. Yesterday, General Motors CEO Fritz Henderson made the case that a speedy exit from bankruptcy for the automaker was the way to avoid a “fatal” blow to suppliers.
Henderson said tentative plans to resume operations at some GM plants by July 13 could be endangered if the court does not approve the sale of the its best assets to a reorganized company funded by Uncle Sam.
Bankruptcy court is a busy place. Lear could be arriving just as the court hears arguments on GM’s asset sale, scheduled for next Tuesday, June 30. On the face of it, there isn’t a whole lot to discuss. There are no other bids out there to rival the government’s $60 billion financing for GM, though some of the automaker’s smaller unions have filed objections to the sale.
So far this year, at least 15 auto parts suppliers have filed for bankruptcy or had their assets seized by creditors, according to the Motor & Equipment Manufacturers Association. The casualty list includes Visteon, Metaldyne Corp and Noble International Ltd.