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[Just filed. Developing story.] May 14, 2023 – Kidde-Fenwal, Inc. (“KFI” or the “Debtor”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case No. 23-10638 (Judge TBD). The Ashland, Massachussetts based Debtor*, "an industrial fire detection and suppression company that operates two commercial business lines, Kidde Fire Systems and Fenwal Controls," is represented by Derek C. Abbott of Morris, Nichols, Arsht & Tunnell LLP. Further Board authorized appointments include: (i) Sullivan & Cromwell LLP as general bankruptcy counsel, (ii) Schulte Roth & Zabel LLP as counsel to a Special Committee, (iii) AlixPartners LL as financial advisors, (iv) Guggenheim Partners, LLC as investment bankers and (v) Stretto as claims agent.
*The Debtor is owned by Carrier Global Corporation ("Carrier") which now "determined that KFI is not a strategic fit."
Petition Date Highlights
- Ashland, Mass.- based industrial fire detection and suppression company files for bankruptcy with over $1.0bn of potential litigation-related liabilities
- Legacy litigation related to aqueous film-forming foam ("AFFF") now compels filing with owner Carrier determining that Debtor is "no longer a strategic fit"
- Debtor will continue to explore going concern sale with proceeds going towards AFFF-related claims
- Debtor has $100.0mn of cash on hand and will not require DIP financing
The Debtors’ lead petition notes between 10,000 and 25,000 creditors; estimated assets between $100.0mn and $500.0mn; and estimated liabilities between $1.0bn and $10.0bn. The Debtor's list of top 20 usecured creditors is entirely composed of litigation claims all of which are characterized as contingent, unliquidated an disputed.
In a press release announcing the filing, the Debtor provides: “KFI intends to use the bankruptcy process to explore strategic alternatives, including a sale of the Company as a going concern….KFI operates two industrial business lines with over $200 million in sales in 2022. The Kidde consumer and commercial businesses are not a part of the filing, and their operations are unaffected….KFI currently has a strong liquidity position, with over $100 million in cash on hand, and is not seeking debtor-in-possession financing. During the Chapter 11 process, it intends to operate the business in the ordinary course, consistent with past practices.
In March of 2023, the Board of KFI was reconstituted with a majority of independent directors to initiate a strategic review process in light of the substantial claims against the Company related to aqueous film-forming foam ('AFFF'). KFI manufactured and sold AFFF under the brand name National Foam from 2007 to 2013. Although KFI no longer manufactures or sells AFFF, it has been named in over 4,000 lawsuits arising out of these activities prior to its sale of the National Foam business in 2013.
As part of the strategic review, the KFI Board retained Guggenheim Securities to advise on a potential sale of its business. After considering the available alternatives, the Board determined that commencing a sale process in Chapter 11 is in the best interest of KFI and its stakeholders. KFI expects net proceeds from any sale will be made available to pay any AFFF liabilities judicially determined to be due and payable.
KFI also announced that the current owner of the Company, Carrier Global Corporation ('Carrier," has determined that KFI is not a strategic fit for Carrier. At KFI's request, Carrier has agreed to provide corporate services to KFI during the Chapter 11 case on arm's-length terms and to offer certain transition services to any buyer in a Chapter 11 sale. "
Stephen Hannan, Chairman of the Board of Directors of KFI, commented: “
"This is the right thing to do for all of our stakeholders, including potential AFFF creditors….KFI's businesses are leaders in their respective markets but require a fresh start to attract capital to continue to grow and innovate. Chapter 11 allows the value of the Company's business to be preserved and sold at the best possible price, maximizing everyone's potential recoveries."
About the Debtor
According to the Debtor: “Kidde-Fenwal, Inc. (KFI) is an industrial fire detection and suppression company that operates two commercial business lines, Kidde Fire Systems and Fenwal Controls. Kidde Fire Systems is a world leader in the development and manufacture of fire detection and suppression systems, serving a wide range of industries including manufacturing, data centers, commercial cooking, marine and more. With a long history of providing standard and custom engineered solutions for many industries, Fenwal Controls offers a broad range of agency-approved gas ignition and temperature controls. KFI was founded in 1987 and is headquartered in Ashland, Mass.“
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