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Federal-Mogul files for Chapter 11 restructuring

SOUTHFIELD, Mich. - Federal-Mogul Corp. on Monday said that it and its U.S. subsidiaries have voluntarily filed for financial restructuring under Chapter 11 of the U.S. Bankruptcy Code, in an effort to separate its asbestos liabilities from its true operating potential.

The auto parts maker said its business will continue to operate without interruption and that it sees no job losses or facility closures directly resulting from the filings.

Federal-Mogul's subsidiaries in the United Kingdom have also filed jointly for Chapter 11 and for administration under the UK Insolvency Act of 1986. No subsidiaries outside of the United States and the United Kingdom are included in the filings, the company said in a statement.

"We have determined that the Chapter 11 and Administration processes are the only way we can effectively structure payments for claimants without financially crippling the operations of Federal-Mogul," said Chief Executive Officer Frank Macher. "The operations of Federal-Mogul are fundamentally sound."

Federal-Mogul noted that it is one of more than 30 companies involved in asbestos-related litigation voluntarily to file for Chapter 11 since 1982.

Southfield, Michigan-based Federal-Mogul also said its board elected Macher as chairman, effective Monday. Macher replaces Robert Miller Jr., who had been serving as nonexecutive chairman and will remain on the company's board. Federal-Mogul said the filings were made on Monday in the U.S. Bankruptcy Court in Wilmington, Delaware and the High Court of Justice, Chancery Division, London and enable Federal-Mogul to develop a plan to resolve its asbestos liabilities. Federal-Mogul said it has obtained commitments of up to $675 million in a new loan through debtor-in-possession financing from a group of banks led by J.P. Morgan Chase & Co.

Following the U.S. Court's approval, Federal-Mogul can use the funds to meet the future needs and obligations associated with normal business operations.

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