Seat-of-the-Pants: Lear files for Chapter 11 bankruptcy
by Dan Roth on Jul 7th 2009 at 11:30AM 
With sales numbers continually bad and plants just now awakening from long idle periods, suppliers are particularly vulnerable to financial trouble. Seat supplier Lear Corporation failed to pay a $38 million obligation on June 1st, and the grace period has just run out. With General Motors as its largest customer, and a significant amount of Blue-Oval business, as well, Lear's late 2008 gamble of borrowing $1.2 billion as a hedge against Detroit bankruptcy has proven difficult for the company to pay back. The supplier of seats and electronic components filed for Chapter 11 today in U.S. bankruptcy court for the Southern District of New York. The company hopes to operate business-as-usual while it restructures and plans to emerge from bankruptcy within 60 days.
Lear has been trying to find more diverse automakers to do business with besides the Detroit 3, but in the meantime, the seat and electronics manufacturer will reorganize and try to turn its fortunes around quickly. Investor Carl Icahn made a deal to buy out Lear shareholders a couple of years ago that might have prevented all this, but his deal was met with resistance over the price per share he was offering. Instead of the $37.25 per share Ichan was offering, current shares of Lear are likely to be worth a big old goose egg once Lear starts coughing up to it creditors. While some Lear seats may be very good at coddlng keisters, the company now has a lot of work to do to save its own ass.
[Source: Automotive News - sub. req'd | Photo by Bill Pugliano/Getty]
Reader Comments (Page 1 of 1)
jrhmobile 12:10PM (7/07/2009)
OK Dan, you've made the statement, now back it up.
How could Carl Icahn have prevented all this?
Reply
Mr.Oak 12:12PM (7/07/2009)
I guess they weren't building jets that people want.
Reply
hashiryu 12:34PM (7/07/2009)
Bombadier Makes the Learjet.
imirk 12:39PM (7/07/2009)
Ahhh! The curse of internet sarcasm strikes again!
DayShifter 12:49PM (7/07/2009)
Stop, you making my side hurt!! LOL!!
AndrewNoNumbers 7:59PM (7/07/2009)
That was my first thought too.