Garrett Motion Upping The Stakes In Its Asbestos Battle With Honeywell

 

For Honeywell (HON) shareholders, there was almost no downside to the spin-off of Garrett Motion (GTX), as it eliminated a highly cyclical business and allowed the company to offload asbestos liabilities tied to the Bendix brake business. It wasn’t such a great thing for Garrett, though, as the company is now straining under the combined pressure of the COVID-19 downturn, the need to make future investments in technology, an already-high debt load, and those asbestos liabilities.

Now Garrett has informed investors that it is “exploring alternatives” for its balance sheet, and that very well may mean a bankruptcy filing. While investing in bankruptcy-risk stories carries an exceptionally high level of risk, Garrett may have some aces up its sleeve when it comes to dealing with Honeywell and gaining some relief on the indemnity agreement that was imposed upon the company. For Honeywell, this may be a time to negotiate, as a negotiated settlement may be easier to work with than an imposed judgment if events go in that direction.

 

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Garrett Motion Upping The Stakes In Its Asbestos Battle With Honeywell