WEST ALLIS, WIS., JUNE 29 -- Allis-Chalmers Corp., once one of the nation's leading farm equipment and heavy machinery producers, today filed for Chapter 11 bankruptcy protection.

The company filed its petition in the federal bankruptcy court for the southern district of New York. Business units of Allis-Chalmers outside the United States are not affected, the company said.

Allis-Chalmers stock closed today at $2.12 1/2, down 75 cents.today.

Wendell Bueche, Allis-Chalmers's chairman and chief executive, said that the company has been cutting back its operations and has improved its operating position, but that its obligations outweigh available funds.

"In recent years, Allis-Chalmers has been restructuring and reducing the size and scope of its businesses in order to meet the competitive demands of the drastically changed world marketplace," Bueche said.

"As a consequence, the operating results of our ongoing operations have improved considerably in the last two years, and we expect that momentum to continue. In spite of the improvements, however, the company's U.S. obligations exceed funding capability, largely because of the drastic downsizing."

Bueche said the Chapter 11 filing will allow the company to remain in business. "This protection enables us to keep on operating our business in the ordinary course while affording us time to work out our obligations and complete our operational restructure strategy," Bueche said.

The company has sought for two years to work out a multimillion-dollar debt restructuring plan with major lenders and a reshaping of the corporation, which employed 10,000 in West Aliis alone in the heyday of the farm equipment business. It now employs 400.

The company has put up for sale all but one of its operating divisions -- American Air Filter of Louisville, Ky. There have been reports that the company, with 9,000 employes worldwide, might move its headquarters from West Allis to Louisville.

Allis-Chalmers presented the final plan March 4 to its shareholders, lenders, union representatives and others. It said then rapid agreement on the plan's key terms was essential.

However, the company said today that an agreement could not be worked out in the time available and that it believed the only practical alternative was to obtain court protection.

The company said funds generated by domestic operations are inadequate to meet its U.S. obligations and that revenue from foreign operations also was inadequate to meet those obligations.

The obligations include maintaining a costly health care program for retirees and debt service carried over from the much larger, more capital-intensive Allis-Chalmers of earlier years. "The obligations are grossly disproportionate to the current size of the company operations," Bueche said.

The company said it had a negative U.S. cash flow of $24 million in 1986 and a negative cash flow of $2 million in the first quarter of 1987. Because of that financial position, the company said, new financing was not available.

In the past several years, the company had moved from farm equipment and heavy machinery construction to more sophisticated businesses and services. The last tractor rolled off its assembly lines in West Allis in December 1985