Shares of Lear Corp. (LEA), the world's second-largest maker of automotive seats, which has already plunged by about 97% in the past year, sprialled downwards Thursday as media reports of its imminent bankruptcy trickled in. Southfield, Michigan-based Lear is preparing to file for bankruptcy as soon as next week, said several media reports, citing people familiar with the matter.
More specifically, Bloomberg reported that Lear will file for Chapter 11 protection in New York as soon as June 29 and no later than July 1, citing a person familiar with the matter.
The Wall Street Journal on Thursday had reported, citing sources, that the auto parts maker was working on a pre-packaged bankruptcy prior to the June 30 deadline, when it must make the $38 million interest payment on two of its bonds. A prepackaged bankruptcy means a company has already lined up financing and cut other deals, possibly with creditors, before filing for Chapter 11.
Lear has, reportedly, lined up $500 million in debtor-in-possession financing with its lenders, including JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C). If the prepackaged-bankruptcy deal falls apart, the Journal noted that Lear could file for a traditional-style bankruptcy next week.
However, according to reports, it looks increasingly unlikely that the company will manage to negotiate a deal with its financiers outside of the bankruptcy court. Lear seemingly has until June 30 to make up a deal under a waiver it had received in May. The company has been in violation of its debt covenants since December 31, 2008, after it drew down all of the $1.2 billion available credit during the fourth quarter.
Auto parts manufacturers have been hit badly, as the automotive industry plodded through an unprecedented slowdown. The U.S. auto sales are at their lowest levels in at least 27 years under the pressure of tight credit and weak consumer confidence. Since one parts maker often supplies to a variety of car companies, drying up of consumer demand for automobiles leads to drying up of demand for their products, as well.
Such companies were further pushed into the red earlier this month when the U.S. government refused their appeal for a up to $10 billion aid to remain afloat, amid the deepening crisis resulting from the bankruptcies of automakers General Motors Corp. (GMGMQ.PK) and Chrysler LLC. Among industry peers, two suppliers have already filed for bankruptcy protection this year, Visteon Corp. (VSTN.PK) and Metaldyne Corp.
LEA closed Thursday's regular trading on NYSE at $0.54, down $0.34, or 38.64% on day, with a volume of 41.89 million shares. Shares plummeted a further $0.13 or 24.07% in the extended hours' trade, to close at $0.41. In the past 52 weeks, Lear has been trading between $0.27 and $18.31 a share.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.