Garrett Motion, a New York-listed auto parts manufacturer based in Switzerland, filed for a prepackaged Chapter 11 bankruptcy that would include a $2.1 billion sale to KPS Capital Partners.
Behind the scenes: This deal is driven as much by ongoing litigation with former parent company Honeywell as it is by the pandemic-driven slowdown in auto manufacturing.
- As part of its 2018 split, Garrett had agreed to reimburse Honeywell for certain asbestos exposure victim costs, but it's since sued to invalidate that agreement.
- Honeywell, not surprisingly, takes a dim view of Garrett's bankruptcy filing.
More details, per the WSJ: "Top lenders are supplying Garrett with $250 million in loans to carry it through bankruptcy, the company said. Other potential bidders will get the chance to top the offer from KPS, which is providing some of the bankruptcy loan."
