Lear Prohibited From Tapping Canadian Plants for Cash

July 9 (Bloomberg) — Lear Corp., which filed for bankruptcy in the U.S. on July 7, was prohibited by a judge from tapping its Canadian plants for cash.

Lear, the world’s second-largest maker of automobile seats, owed its Canadian units about $82 million as of May 31, according to a report from the accounting firm RSM Richter, which was appointed information officer by the judge.

Lear’s Canadian operations “shall not make advances or transfers of funds to any of the applicants or any of their affiliates by way of loan or otherwise,” Ontario Superior Court Judge Sarah Pepall said in an order issued today that recognizes the U.S. bankruptcy proceedings. She made an exception for payments due in the ordinary course of business.

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Lear files Chapter 11 bankruptcy

Southfield-based auto supplier Lear Corp. filed for Chapter 11 bankruptcy protection today, after it said it had received backing from a majority of its bank lenders and bondholders.

Lear and its U.S. and Canadian subsidiaries filed for bankruptcy in New York, becoming the latest in a string of troubled auto suppliers to seek court-overseen restructuring. On July 1, Lear said it planned to take the step after missing a key $7.2 million debt payment.

Lear’s 26-page petition lists $1.27 billion in assets and $4.5 billion in debts. Its largest owner is Vanguard Windsor Funds with a nearly 8 percent stake. Lear’s largest creditors are its lenders who are owed about $1.3 billion. It also owes an unspecified amount in pension obligations and $5.1 million to Johnson Controls Inc.
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