S&C Advises Garrett Motion on Announced Reorganization Plan

January 22, 2021

Garrett Motion Inc. announced on January 11 that it has selected and accepted a proposal from a consortium of its stockholders led by Centerbridge Partners and funds managed by Oaktree Capital to reorganize the company through a series of transactions that includes a settlement with its former parent company Honeywell Inc.
 
The transactions would reduce funded debt from approximately $1.9 billion to an estimated $1.1 billion at emergence, raise an additional $1.25 billion through a rights offering of new Series A preferred stock, and allow stockholders (other than those that are part of the proposing consortium) the option of retaining their existing shares of common stock and participating in the rights offering or receiving cash for their shares. In addition, all creditors of the company other than Honeywell would be paid in full in cash.

As part of the settlement with Honeywell, all asbestos and tax indemnification obligations to Honeywell incurred in the company's 2018 spin-off will be resolved and Honeywell would receive a $375 million cash payment at emergence and new Series B preferred stock payable in installments from 2022-2030.
 
The company selected this proposal over multiple bids received in a court-approved auction process that began with a stalking horse bid by KPS Capital Partners. The company targets an emergence from Chapter 11 by April 30, 2021, subject to receiving court approval of the transactions and the company's proposed plan of reorganization.
 
The S&C Restructuring and Bankruptcy Litigation lawyers advising Garrett Motion include partners Andrew Dietderich, Brian Glueckstein, Scott Miller and Evan Simpson, special counsel Alexa Kranzley and associates Benjamin Beller and James Simpson.