U.S. auto-parts manufacturer Garrett Motion filed for Chapter 11 bankruptcy over the weekend. The announcement comes as ex-parent Honeywell International decided it could do without turbochargers and spun the company off in 2018. Garrett claims it lost a bunch of money during coronavirus lockdowns, like so many others, and was dumped by Honeywell only to be saddled with financial liabilities related to asbestos-exposure claims.
But Garrett has also said it’s entering into a purchase agreement with the private equity firm KPS Capital Partners LP for roughly $2.1 billion, providing more than a shred of hope things will turn out okay. While other firms can take a whack at buying the turbo supplier, they must be willing to cover its corporate debt by exceeding the existing bid and will likewise be subject to court approval. Garrett thinks it can still come out on top and wrap the sale by the start of 2021 without interrupting production any more than the pandemic already has.
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