Iconic turbocharger manufacturer Garrett files for bankruptcy
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As engines get smaller, turbochargers have become the norm among performance and passenger vehicles to pull extra power out of these lower displacement engines across the auto industry.
Because of this saturation, it comes as quite a surprise to hear that one of the world's most prolific turbocharger brands Garrett has recently filed for bankruptcy, citing plunging sales and financial burdens as the reasons.
A turbocharger uses engine exhaust energy to breathe more air into the combustion chamber for more efficient engine operation. Learn more about how a turbocharger works: https://t.co/hYn95owxb2#GarrettMotion #GTX #turbo #turbocharger— Garrett - Advancing Motion #GTX #GarrettMotion (@GarrettMotion) September 20, 2020
According to the release, when Garret became independent from its parent company Honeywell in late 2018, it lost a 30-year indemnification agreement that left the brand liable for settling asbestos exposure claims.
This put an incredible amount of financial pressure on the brand, and is something that it has battled with over the last two years.
"Although the fundamentals of our business are strong and we have continued to try to develop our business strategy, the financial strains of the heavy debt load and liabilities we inherited in the spinoff from Honeywell—all exacerbated by COVID-19—have created a significant long-term burden on our business," said Olivier Rabiller, Garrett's president and CEO.
These claims were disputed by a Honeywell executive, that claimed Garrett was using bankruptcy as a means to rid itself of legal responsibility surrounding the controversial case.
"Garrett always has been capable of fulfilling those obligations with the assets it received in the spinoff," the Honeywell spokesperson said, alleging that the filing is for the "single, improper purpose of avoiding the legitimate and reasonable financial commitments."
It's worth noting that chapter 11 bankruptcy doesn't mean that the company is finished. Instead, it gives the brand the ability to re-structure itself beneath the new owners, so the turbochargers will live on.