Plastech seeks bankruptcy court approval for sale

DETROIT, May 20 (Reuters) - Bankrupt auto parts supplier Plastech Engineered Products Inc is seeking court approval to sell its businesses and said it is in talks to sell its interiors unit to Johnson Controls Inc (JCI.N: Quote, Profile, Research, Stock Buzz), its largest direct customer.

Plastech has asked the U.S. Bankruptcy Court in Detroit to approve bidding rules and a proposed June 16 auction for its four main businesses and other assets, according to a motion filed late on Friday.

Privately held Plastech filed for Chapter 11 bankruptcy protection in February in a move that prompted a legal dispute with Chrysler LLC and briefly idled five of the automaker's assembly plants.

Other major customers for Plastech, which supplies components such as door panels, floor consoles and engine covers, include the other two Detroit-based automakers, General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) and Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz), as well as Toyota Motor Corp. (7203.T: Quote, Profile, Research, Stock Buzz)

The Dearborn, Michigan-based supplier filed for bankruptcy with $488 million in debt in a bid to stop Chrysler from seizing tools used to manufacture parts for the automaker.

Judge Phillip Shefferly later ruled against Chrysler, denying the automaker's request to seize tools and move business away from Plastech.

Plastech said it would accept bids until June 13 and may pick a lead bidder before to establish a floor for the auction. The lead bidder would be entitled to a break-up fee of no more than 2.5 percent of the purchase price.

The supplier has been soliciting several offers for one or more of its business units but has not accepted any offers yet, it said.

Plastech said although it had preferred to reorganize the company on a stand-alone basis, its creditors have favored a sale of the interior business to Johnson Controls and other businesses to third parties.