Auto-parts manufacturer Garrett Motion Inc. is preparing for a possible bankruptcy filing as tensions rise with former parent Honeywell International Inc. over asbestos injury payments and as sales have slumped during the COVID-19 pandemic, WSJ Pro Bankruptcy reported. The company is in discussions with creditors and considering filing for bankruptcy within weeks, though talks are fluid and no decision has been reached. The company in August said that it hired legal and financial advisers to explore options to address a $1.4 billion debt load and required payouts to victims of asbestos exposure stemming from Honeywell’s products. Garrett Motion also warned that efforts to reduce debt could hurt the value of its shares or lead to a cancellation of its stock. The company’s financial woes stem in part from its 2018 spinoff from Honeywell, which laid out how the two companies would cover injury claims to workers and others injured by asbestos in Honeywell products. In December, Garrett Motion sued Honeywell in New York state court, seeking to unwind an agreement to reimburse Honeywell for the bulk of the former parent’s settlement payments. In the lawsuit, Garrett Motion said the indemnification agreement is oppressive and one-sided, turning the company into Honeywell’s “asbestos piggybank.” Honeywell has said the lawsuit has no merit and the indemnification agreement is enforceable, according to public filings.
