Auto-Parts Makers Fear Bankruptcy: Report

Some of the nation's largest auto-parts makers are planning for potential bankruptcy filings, or are scrambling to avoid them, amid uncertainty regarding the U.S. government's willingness to provide further funding to automakers, the Wall Street Journal reports.

Visteon(VC Quote), one of Ford's(F Quote) biggest parts suppliers, has hired legal and financial advisers to prepare for possible bankruptcy proceedings, the Journal reports, citing people familiar with the matter. The hirings don't mean a bankruptcy filing is imminent, these people said.

A Visteon spokesman didn't respond to the Journal's requests for comment.

Parts makers with stronger finances, like Lear(LEA Quote), are working with restructuring specialists and stepping up lobbying in an effort to cushion the blow of a possible industry meltdown. Lear is the second-largest supplier to General Motors(GM Quote).

The Journal reports the number of auto-parts makers has dwindled for years, but some now fear the industry, which accounts for hundreds of billions of dollars of revenue and hundreds of thousands of jobs, may be headed for mass liquidations as auto production shrinks amid the global economic slump.

Increasingly, the Journal reports, lenders are refusing to extend credit to parts makers who do lots of business with GM, Ford or Chrysler, and the auto makers themselves can't afford to rescue their most vital suppliers, spawning fears the parts makers could collapse.

GM and Chrysler were forced to go to the government for loans last month to hold off bankruptcy, and Ford says it may need government money if sales don't recover in 2009.