Lear Corp. (LEAR), a maker of automotive seats and electronics, will submit a bankruptcy reorganization plan within the next 60 days that includes financial backing from Carl Icahn and Kohlberg Kravis & Roberts.

The company's long-awaited Chapter 11 filing makes it the latest supplier to succumb to falling worldwide auto sales, but its fate is a particular concern given possible ripple effects in the global supply chain.

The company is among a handful of large seat suppliers, assembling 54,000 a day, with more than two-thirds of its sales outside the U.S.

Icahn and KKR are among a syndicate of secured lenders led by JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) providing $500 million in new financing to support Lear during its bankruptcy case, according to people familiar with the plan.

Lear's bankruptcy is also viewed as an important test of investor sentiment in the sector, and Icahn's involvement comes two years after an abortive effort to take the company private. Icahn's portion of the financing is roughly $60 million to $65 million, according to two people familiar with the situation.

KKR's role comes after private-equity groups largely stayed on the sidelines during the latest phase of auto industry restructuring.

Lear listed $4.5 billion of debt and $1.3 billion of assets as of May 30, according to documents filed with the U.S. Bankruptcy Court in the Southern District of New York.

The company's filing covers its U.S. and Canada divisions along with some of their subsidiaries. The majority of the company's overseas operations aren't included.

Marc Kieselstein, a Lear lawyer, said at a court hearing Tuesday that Lear plans to file its plan to restructure and exit bankruptcy within 30 to 60 days. The company's plan has support from owners of about 50% of its bond debt and lenders with 68% of its bank debt, he said, which should help it avoid a prolonged stay in bankruptcy.

Lear was in court to ask a judge for permission to take a number of steps to continue operating during the bankruptcy case. Lear won court approval to pay employees in the U.S. and spend the cash collateral of its lenders until it can access the $500 million bankruptcy loan.

Lear is scheduled to return to court Wednesday for permission to pay its suppliers. It will seek court approval July 30 to borrow the $500 million bankruptcy loan.

Icahn's move to provide some of the financing comes after he offered to buy out the company for $37.25 a share in 2007. But investors, who said Lear was worth double that amount, rejected the offer, and Icahn later sold off his holdings.

The bankruptcy loan, known as debtor-in-possession financing, will convert into exit financing with a three-year term upon Lear's emergence from bankruptcy protection. The DIP loan was quoted at 101.5 cents to 102.5 cents in the secondary market Tuesday. The loan was offered to investors at a discount to par value at 95 cents.

The restructuring, which would leave Lear with $1.1 billion in debt and $500 million of convertible shares, calls for trade creditors to be paid in full, except in limited situations. The company estimated that it has 40,000 creditors on a consolidated basis.

"We have made our own way with our creditors and given the level of support and our strength, we hope to move through the process quickly," Lear spokesman Mel Stephens said Tuesday. He declined to provide a timetable for exit.

Despite rounds of cost cutting, Lear has been unable to stay ahead of plunging revenue. The company said Monday it expects revenue to drop 33% to $9.07 billion this year from 2008, and then climb to $11.38 billion in 2010.

Kieselstein said Lear scrambled to stay out of bankruptcy by slashing costs, but the drop-off in auto sales was too dramatic.

"The numbers are pretty grim," he said. "What we have seen is a drop-off that has outpaced Tier 1 suppliers' ability to cut costs."

The company employs 72,000 workers worldwide, and it generated $13.6 billion in sales in 2008. A total of $6.6 billion in sales came from Europe and $3.5 billion from the U.S. and Canada. Automotive seats account for 79% of the company's revenue.

Since 2005, eight major suppliers have filed for bankruptcy including such big names as Delphi Corp. and Collins & Aikman Corp. The number increases to more than a dozen when expanded to smaller or privately owned suppliers.

American Axle & Manufacturing Holdings Inc. (AXL), meanwhile, received an amendment and waiver on a credit agreement. The company now has until July 30 to meet loan terms. American Axle is poised to be the next auto supplier to seek bankruptcy protection. It relies on General Motors Corp. (GMGMQ), which is also in bankruptcy, for almost 75% of its revenue.

(David McLaughlin contributed to this report.)

- By Jeff Bennett, Kate Haywood and Kevin Kingsbury, Dow Jones Newswires; 248-204-5542; jeff.bennett@dowjones.com