UPDATE 1-Cadence files for bankruptcy protection

NEW YORK, Aug 26 (Reuters) - Auto parts supplier Cadence Innovation filed for Chapter 11 bankruptcy protection on Tuesday citing rising material costs and decreasing demand for larger vehicles.

Prices for steel and plastic have skyrocketed along with the price of oil as U.S. auto sales declined.

"The reality is that this groundswell of external factors and environmental change exceeds the flexibility of our business model," Jerry Mosingo, President and Chief Executive Officer of Cadence Innovation, said in a statement.

Cadence has six plants and various support facilities in Michigan and Indiana. Its European operations, which include three plants in Czech Republic and one in Hungary, are excluded from the bankruptcy.

Cadence spokesman Russell Chick said the company would continue operations while it looked to sell itself.

The company, based in Troy, Michigan, makes door trim, instrument panels and airbag covers. In its filing with the Delaware Federal Bankruptcy Court, it listed assets of between $10 million and $50 million, and liabilities of $100 million and $500 million

Cadence was formed in 2005 by a group of investors who bought some assets of Venture Industries, which had filed for bankruptcy protection.

Chrysler LLC [CBS.UL] and Exxon Mobil Chemical are among the largest creditors listed in the filing.

Cadence said in the filing that it may sell some operations that make products for Chrysler and General Motors Corp GM.N.

But, the filing said, GM and Chrysler had agreed to not move their business to other parts suppliers while Cadence was looking for a buyer. (Reporting by Chelsea Emery in New York, additional reporting by Soyoung Kim in Detroit)