Federal-Mogul Files For Chapter 11 Bankruptcy Protection.(Brief Article)

Federal-Mogul Corp. filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code, as a result of asbestos-related law suits.

The move by Federal-Mogul comes amid a sharp slowdown in auto sales and the automotive parts business that was made worse by the Sept. 11 attacks on New York and Washington. But the company said its business would continue to operate without interruption and that it sees no job losses or facility closures directly resulting from the voluntary filing, which it said was aimed at separating its asbestos liabilities from its true operating potential.

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. But outside the United States and the United Kingdom, no subsidiaries 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," the company's Chief Executive Officer Frank Macher said in a statement. "The operations of Federal-Mogul are fundamentally sound."

A company spokesman said Federal-Mogul, which is about the 30th largest auto parts company worldwide, listed assets totaling $10.2 billion as of June 30, and non-asbestos liabilities totaling more than $8.9 billion. The spokesman had no immediate comment on the asbestos-related claims pending against the company.

The Bank of New York is the trustee for many of Federal-Mogul's bond holders, who together hold more than $2 billion in non-secured debt. According to stock tracking firm Thomson Financial, Boston-based State Street Corp. is Federal-Mogul's single largest equity holder, with more than 18 percent of outstanding shares as of June 30. Investor Carl Ichan is also among major equity holders.

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