Known for making some of the best turbochargers for cars, Garrett Motion has just filed for bankruptcy. A few days ago, Garrett announced that it has voluntarily filed for Chapter 11 protection in order to secure its long-term business sustainability amid the global pandemic.

Since becoming independent from former parent company Honeywell International, the company has continued to make strides by developing highly-advanced turbos. Some of these include the E-Turbo which uses electrified technology for generating boost, as well as making automotive software.

Turbo specialist Garrett files for bankruptcy, to be acquired for $2.1B image

Despite all of those and having strong fundamentals, the company has incurred heavy debt and liabilities ever since they were spun off from Honeywell International. Combined with the strains caused by COVID-19, it has created a long-term burden for Garrett.

To save the company, Garrett entered into an agreement that will see them being acquired by KPS Capital Partners (subject to court approval) for a staggering $2.1 billion. KPS is a leading global private equity firm that has a demonstrated track record of successfully investing in both the automotive and transportation industries. Subsequently, Garrett also launched a debut restructuring process and is seeking court approval for a $250 million debtor-in-possession financing facility to bolster its liquidity position.

Turbo specialist Garrett files for bankruptcy, to be acquired for $2.1B image

“This proposed transaction will provide a capital structure and institutional support to ensure our long-term viability and set the foundation for the next phase of Garrett’s growth. Our goal is to emerge from this process in early 2021 with a strengthened financial position, new and supportive ownership, and renewed energy and resources to continue to provide exceptional service to our customers, be a strong and reliable partner to our suppliers and other stakeholders and act as a stable and desirable employer,” said Oliver Rabiller, president and CEO of Garrett Motion.

The company expects that during the restructuring process, they will be able to continue operating without interruption, while also continue providing customers with the high-quality products and services they expect. Moreover, Garrett is also expecting that they will be able to continue working with valued suppliers.