Collins & Aikman Corporation has signed a letter of intent (LOI) with Cadence Innovation for the sale of a “significant portion” of its North American plastics business assets and operations.

The two firms are now working on an asset purchase agreement and won’t make any more details of the deal available until it has been approved by a bankruptcy court as C&A is operating under US Chapter 11 protection.

“This transaction will preserve a significant number of jobs, generate important recoveries for our creditors and represents a significant step toward confirmation of our chapter 11 plan,” said Collins & Aikman’s chief restructuring officer John Boken,.

The portion of the plastics business covered in the LOI includes nine facilities in the United States, Canada and Mexico, employs approximately 3,500 people and produces products for all major North American automakers.

C&A plans to sell many of its remaining businesses and is currently seeking and reviewing bids.