Business Context and Reporting Period
This Form 8-K was filed by Garrett Motion Inc. on January 15, 2021. The Company and certain subsidiaries have been operating under Chapter 11 bankruptcy protection since September 20, 2020, in the United States Bankruptcy Court for the Southern District of New York.
Key Financial Metrics
This filing does not report standard operating metrics such as revenue, profit, cash flow, or margins. The primary financial disclosure relates to a termination payment obligation.
- Termination Payment: $63 million owed to KPS Capital Partners, LP.
- Additional Costs: Reimbursement of reasonable, documented, out-of-pocket costs and expenses incurred by KPS.
Material Changes
On January 15, 2021, KPS Capital Partners, LP (KPS) terminated the "Stalking Horse Purchase Agreement" originally entered into on September 20, 2020. This termination was triggered by the Company's entry into a new Plan Support Agreement on January 11, 2021, with Centerbridge Partners, L.P., Oaktree Capital Management, L.P., and other investors. Consequently, KPS is no longer the designated buyer under the original stalking horse terms.
Outlook, Risks, and Contingencies
Management Commentary and Risks: The Company warns that trading in its securities during the Chapter 11 proceedings is highly speculative. Current trading prices may bear little or no relationship to the actual recovery value for security holders. The filing includes standard forward-looking statement disclaimers regarding risks and uncertainties that could cause actual results to differ from projections.
Contingencies: The Company is now obligated to pay the $63 million termination fee and associated costs to KPS as a condition of the agreement's termination.
Investor Verification Checklist
- Verify the terms of the new Plan Support Agreement with Centerbridge Partners and Oaktree Capital Management.
- Confirm the impact of the $63 million termination payment on the Company's available cash and reorganization plan.
- Review the latest status of the Chapter 11 cases (In re Garrett Motion Inc., 20-12212) for updates on the reorganization plan.
- Assess the speculative nature of current security trading prices versus potential recovery values in bankruptcy.