Michigan-based Lear Corp, one of the leading manufacturers of automotive seats, electrical distribution systems and electronic products, has completed a financial reorganization after having filed for Chapter 11 bankruptcy relief in July, 2009.

In a statement, Lear’s Chairman, Chief Executive Officer and President Bob Rossiter said that we have moved through the financial restructuring process without missing a beat operationally. The bankruptcy lasted four months.

The reemergence from Chapter 11 came after reaching an agreement with lenders to convert $3.6 billion of debt to equity, according to Bloomberg.

Lear Corp fell into bankruptcy as the automotive industry as a whole struggled, including the bankruptcies of General Motors Corp. and Chrysler LLC. General Motors represented 23 percent of Lear’s sales, which totaled $13.6 billion overall.

According to the company, Lear Corp maintained business with its customers even in the course of the bankruptcy.

Restructuring Debts

When Lear Corp filed for Chapter 11, it already had in hand a debt restructuring agreement with most of its lenders, in what is called a prepackaged bankruptcy. This model of bankruptcy filing can expedite the process by gaining approval of restructuring plans with lenders ahead of time, allowing a company to maintain continuity of service and business practices.

Agreements determined who would serve on the board and established $550 million in loans.

Judge Allan Gropper, who presided over the case, also indicated that the plan had the support of creditors, and he reiterated the importance of expediency in allowing the company to move forward following the bankruptcy, despite the complaints of individual shareholders.

The Bloomberg article details the plan as such:

Under the plan, secured lenders will swap debt for equity in the reorganized company, getting about 26 percent of the new common stock, $500 million in preferred stock and a new $600 million term loan. The preferred shares can be converted into an additional 26 percent of common stock.

Secured creditors, under this plan, will recover an average of about 83 percent, while unsecured creditors will recover an average of about 42 percent.

Loans After Bankruptcy

Bloomberg is reporting that JP Morgan Chase will provide Lear Corp with $950 million in loans. The company has also claimed a backlog of sales through 2012 that will represent an increase of 25 percent from its previous level.

Rossiter, in his statement, continued with a resoundingly optimistic message about Lear Corp’s future. “We have continued to win new business globally, strengthened our industry-leading global capabilities and the spirit of the Lear team has never been more positive,” he said.

He went on to assert Lear Corp’s advancement with a disciplined financial profile and a continued commitment to investment in new products and technologies, and growth in emerging markets.