On Aug. 17, Lear Corp. filed a bankruptcy reorganization plan in the US bankruptcy court in Manhattan supported by its lenders to restructure debt of about $3.6 billion and exit bankruptcy by the end of this year.

The world’s second-largest maker of automobile seats plans to swap about $1.6 billion debt for equity in the reorganized company. Lenders would exchange the debt for 26% of common stock, $500 million in preferred stock in the reorganized company and a new $600-million term loan.

Lear has the gained support of 68% of its secured debt holders. General unsecured creditors, including holders of $1.3 billion in Lear notes and a $737 million claim owed to lenders, would get about 46% of the reorganized company’s common stock and warrants to purchase 15% additional share. Lear has gained support of half of these note holders.

The Southfield, Michigan based company will seek court approval for the proposal at a Nov. 2 hearing. If the company is successful in winning confirmation of the plan, it would emerge from bankruptcy soon.

Lear became the latest car-parts supplier after Visteon Corp. and Metaldyne Corp. to seek bankruptcy protection this year, as carmakers cut back orders following a protracted period of slumping auto sales amid the recession. Lear’s position became extremely vulnerable after its major customer General Motors filed for bankruptcy. In 2008, General Motors and Ford Motor Co. (F) accounted for about 37% of Lear’s sales.

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