Auto-parts manufacturer Garrett Motion Inc. filed for bankruptcy over a pandemic-driven sales drop and a dispute with Honeywell International Inc., proposing a $2.1 billion sale of the business to private-equity firm KPS Capital Partners LP.
Switzerland-based Garrett said it would tap KPS as the lead bidder, or stalking horse, to acquire the company’s assets following its chapter 11 filing on Sunday in the U.S. Bankruptcy Court in Manhattan. The Wall Street Journal reported Friday that KPS had emerged as the leading contender to buy Garrett out of bankruptcy.
The company turned to chapter 11 amid a dispute with former parent Honeywell over the costs of defending and settling personal-injury claims from workers and others exposed to asbestos-containing products.
The coronavirus pandemic also has pressured Garrett along with other auto suppliers throughout the U.S. as car makers have slowed down production, laid off workers and burned through cash.
“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 Chief Executive Olivier Rabiller said.