Junior creditors of auto parts maker Garrett Motion are opposing equity holders' request that the company cover certain legal fees of two potential investors, saying the money would likely come out of the creditors' own payouts, Reuters reported. In court papers filed on Wednesday, Garrett Motion's unsecured creditors' committee, represented by White & Case, urged U.S. Bankruptcy Judge Michael Wiles in Manhattan to reject the equity group's request. Garrett Motion, represented by Sullivan & Cromwell, filed for bankruptcy in September amid legal disputes over $1.3 billion in asbestos liabilities with its former parent, Honeywell International, and $1.9 billion in funded debt. The company has lined up a $2.6 billion bid from KPS Capital to acquire its assets. The KPS bid is subject to better offers, however, and an auction process remains ongoing. Garrett Motion previously stalled an effort by Centerbridge Partners and Oaktree Capital Management to submit their own restructuring proposal, which included a rights offering of preferred stock, instead of a sale. Wiles ruled in November that it was too early in the case for a competing proposal but that he would not bar consideration of such offers down the road. But with the outcome of the auction still unknown, the company could opt for an alternative restructuring strategy. The official committee of equity holders, represented by Kasowitz Benson Torres, says it has two potential investors. The unnamed investors are interested in exploring a plan that would include the issuance of new debt and preferred stock, allow current shareholders to retain their interests in Garrett Motion and refinance the company's existing debt, according to the motion. But, the equity group says, the two potential investors won't move forward with a binding commitment letter unless the company agrees to reimburse them for up to $2.5 million in legal fees and expenses.
