February 6, 2023

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Supplier Garrett Motion files for Chapter 11 backruptcy with purchase offer

Car supplier Garrett Motion Inc. claimed Sunday it submitted for Chapter 11 individual bankruptcy security as it struggled with heavy financial debt amid the COVID-19 pandemic and a dispute with previous mum or dad Honeywell Intercontinental Inc. over asbestos liabilities.

Garrett Motion claimed it entered into a “stalking horse” acquire arrangement with personal fairness company KPS Cash Associates for $2.1 billion.

The stalking horse arrangement would imply that any other bids that appear in need to be bigger than the offer created by KPS. The arrangement is topic to courtroom approval.

Garrett Motion, which can make automotive turbochargers, claimed it really is trying to find court’s approval for a $250 million debtor-in-possession financing facility. In the course of the reorganization method, Garrett Motion expects to run devoid of interruption.

The organization stated equally property and liabilities in the selection of $1 billion and $10 billion, according to a filing with the U.S Individual bankruptcy Court docket for the Southern District of New York.

Garrett Motion’s premier consumer is Ford Motor Co., which accounted for 12 percent of 2019 revenue, according to its yearly report.

Automakers and suppliers have been strike by the coronavirus outbreak, which led to shuttered auto factories and disrupted supply chains.

“…the economical strains of the heavy financial debt load and liabilities we inherited in the spin-off from Honeywell — all exacerbated by COVID-19 — have developed a major lengthy-expression load on our enterprise,” CEO Olivier Rabiller claimed in a assertion.

The organization has accused Honeywell of devising the spinoff of Garrett Motion, its transportation techniques enterprise, in late 2018 to offload Honeywell’s liabilities similar to asbestos-publicity statements.

Garrett Motion claimed expects to arise from the Chapter 11 and entire the sale method in early 2021.

Morgan Stanley and Perella Weinberg Associates served as economical advisers to Garrett Motion.

Sullivan & Cromwell LLP and Quinn Emanuel Urquhart & Sullivan LLP have been legal advisers. AlixPartners served as Garret Motion’s restructuring adviser.

Garrett Motion, of Rolle, Switzerland, ranks No. sixty seven on the Automotive Information checklist of top rated one hundred world wide suppliers with 2019 revenue to automakers of $3.25 billion.

Automotive Information contributed to this report.