Chapter 11 bankruptcy protection and proposed a $2.1 billion sale of its business to KPS Capital Partners, LP.” data-reactid=”19″>Switzerland-based auto-parts manufacturer Garrett Motion Inc (NYSE: GTX) has voluntarily filed for Chapter 11 bankruptcy protection and proposed a $2.1 billion sale of its business to KPS Capital Partners, LP.
HON) — Garrett Motion has voluntarily filed for bankruptcy protection to protect capital and long-term business sustainability.
The coronavirus pandemic has hit the company’s sales as U.S. car manufacturers have slowed production and burned through cash.
Garrett also took over significant liabilities during the spinoff in the form of payments to victims of asbestos exposure arising from Honeywell’s Bendix division. Last year, Garrett had sued Honeywell, seeking to negotiate asbestos indemnity.
“Although the fundamentals of our business are strong and we have continued to try to develop our business strategy, the financial strains of the heavy debt load and liabilities we inherited in the spin-off from Honeywell – all exacerbated by COVID-19 – have created a significant long-term burden on our business,” Garrett President and CEO Olivier Rabiller said.
Garrett has tapped private-equity KPS Capital Partners as a stalking-horse bid to acquire the company’s assets for $2.1 billion following its chapter 11 filing.
Wall Street Journal.” data-reactid=”30″>A Honeywell spokeswoman on Sunday said that Garrett has filed for bankruptcy for the “single, improper purpose of avoiding the legitimate and reasonable financial commitments” to Honeywell, reports the Wall Street Journal.
“Garrett always has been capable of fulfilling those obligations with the assets it received in the spin-off,” said Honeywell.
Lenders holding 61% of senior secured debt support the restructuring agreement to boost the balance sheet. Garrett seeks a $250 million debtor-in-possession financing facility from KPS and a syndicate of top banks, pending approval from the bankruptcy court.
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