Tracor Files for Protection From Creditors

Tracor Inc. has filed for bankruptcy protection with a plan to split its business into three independent companies and reduce their combined debts by more than $500 million.

The technology company, whose Tracor Aviation subsidiary is based in Goleta, Calif., filed for Chapter 11 after months of negotiations with creditors.

Most of the creditors agreed in principle to the reorganization and the bankruptcy filing. Under the plan, ownership of most of Tracor would shift to its bondholders and bankers.

Under the proposed reorganization, Tracor would be realigned into Tracor Aviation, its Illinois-based Littelfuse operation and Tracor Defense Holdings, based in Austin.

The aviation subsidiary was not part of the bankruptcy filing, and Tracor is negotiating with several parties about the possibility of selling the assets of that business. Proceeds would be used to reduce the company’s debt.

Tracor will continue to use its cash and proceeds for normal operations, and it won approval Friday from Bankruptcy Judge Larry Kelly to pay suppliers and subcontractors.

The company has been struggling under $700 million in debt since its 1987 leveraged buyout by Westmark Systems Inc.