Jul. 14--Collapsing sales and production in the auto industry forced J.L. French Automotive Castings Inc. into bankruptcy for the second time in three years.

The Sheboygan manufacturer of oil pans and transmission cases for cars and trucks filed for protection from creditors Monday in a Chapter 11 bankruptcy filing in U.S. Bankruptcy Court in Delaware.

The company said, however, that it has plans in place for a rapid restructuring that will shed much of its debt and transfer ownership of the company to the company's debtors.

Because the reorganization has been negotiated in advance of the bankruptcy filing, the company said it expects to emerge from bankruptcy within three months.

French's main customers are Ford Motor Co. and General Motors Corp.

The restructuring comes amid a wave of bankruptcies by suppliers to the automotive industry as vehicle sales and production have plummeted this year. A total of 16 suppliers have gone bankrupt this year.

In a filing with the U.S. Bankruptcy Court in Delaware, French said its board of directors approved a resolution authorizing the bankruptcy filing on Friday.

On its bankruptcy petition, the company said both its assets and liabilities were between $100 million to $500 million.

Among the company's top 40 creditors are several other suppliers, including Strohwig Industries Inc. of Richfield. Strohwig is owed $1.02 million and ranks as French's second-largest creditor after Morgan Stanley Capital Services Inc., which is owed $15 million.

All told, the top 10 creditors are owed $19.18 million. French's 40 largest creditors are owed $22.27 million.

J.L. French has about 900 employees, including 630 in Sheboygan.

The bankruptcy doesn't affect the company's international businesses, including its subsidiary in Spain and its joint venture in China.

"Our company has a strong business model with distinct technological and quality advantages that position us well with our customer base," said Thomas Musgrave, J.L. French chairman and chief executive, in a statement. "However, sales have dropped commensurate with the dramatic decline in the North American automotive production to the extent that we cannot service the existing debt structure."

J.L. French Automotive Castings, a Sheboygan company that makes transmission casings for Ford Motor Co. and General Motors, filed for Chapter 11 bankruptcy protection Monday, listing debt of as much as $500 million.

This is the second time in three years that J.L. French has sought bankruptcy protection. The company, founded in 1968, filed for protection in February 2006 after defaulting on about $30 million in bonds.

In a news release, J.L. French said it plans to reduce its secured debt, from approximately $280 million to $65 million, through a debt-for-equity swap with lenders.

Under terms of the proposed deal, first-lien holders would get 95 percent of the common stock of the new equity in the company, while second-lien holders would get 5 percent.

French shed about $500 million in debt when it was in bankruptcy in 2006. "By significantly reducing our debt, we will remove the balance sheet barriers that have historically prevented us from securing awards of certain new business contracts, and will provide the company with additional operating liquidity," said Musgrave, noting that the supplier's major customers support the reorganization plan.

The filing was announced as analysts speculated that American Axle & Manufacturing Holdings Inc. is at risk of filing for bankruptcy.

Consultants at the automotive consulting group IRN estimate that there have been more than 60 supplier bankruptcies over the past five years. But the pace of restructurings has stepped up amid pessimism about the pace of recovery in the auto industry. That includes several suppliers that have scaled back their operations in Wisconsin, among them Tower Automotive Inc., Delphi Corp. and Lear Corp., which filed for bankruptcy protection last week.

Bloomberg News contributed to this report.

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