Garrett Motion Files For Bankruptcy Owing To Pandemic, Dispute With Honeywell

Garrett Motion, the Switzerland-based motor-vehicle-parts maker, said late last week it had filed for Chapter 11 bankruptcy protection because of a pandemic-triggered sales fall and had offered to sell its business to KPS Capital Partners for $2.1 billion.

Garrett Motion has ballooning debt as a result of a settlement dispute with former parent company Honeywell International Inc.

Under the "stalking horse" deal, which a court must authorize, any other proposals for the company must be bigger than the one initiated by KPS Capital Partners.

Private-equity group KPS is expected to be the leading suitor for Garrett, The Wall Street Journal said.

The international health crisis has troubled Garrett and other parts companies in the U.S. as car manufacturers reduced output, retrenched employees and suffered mounting operating costs.

The U.S. company said it was hoping for judges to approve a $250 million financing to revive its finances as it continues operations during restructuring.

Garrett took over liabilities in its spinoff in the form of payments to victims of asbestos exposure that arose from Honeywell's Bendix unit. Garrett filed charges against Honeywell in 2019 to settle the compensation.

A representative for Honeywell said Garrett applied for Chapter 11 protection to steer clear from "legitimate and reasonable financial commitments" the company took on when it ended its ties with Honeywell, the Journal reported.

Garrett Motion has listed its assets and liabilities at between $1 billion and $10 billion, documents from the U.S Bankruptcy Court in the Southern District of New York showed. The company said it expected to come out of the proceeding and finalize the disposition process by early next year.