Plan of Reorganization

12 Months Ended

Dec. 31, 2022

Note 2. Plan of Reorganization

On September 20, 2020 (the "Petition Date"), the Company and certain of its subsidiaries each filed a voluntary petition for relief under Chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). A Revised Amended Plan of Reorganization ("Plan") was confirmed by the Bankruptcy Court on April 26, 2021, and the Company emerged from bankruptcy (“Emergence”) on April 30, 2021 (the "Effective Date").

The Company applied ASC 852, Reorganizations, in preparing its Consolidated Financial Statements during its Chapter 11 bankruptcy proceedings, which required the financial statements for periods subsequent to filing for Chapter 11 to distinguish transactions and events that were directly associated with the Company's reorganization from the ongoing operations of the business. Revenues, expenses, realized gains and losses, and provisions for losses directly resulting from the reorganization and restructuring were reported separately as Reorganization items, net in the Consolidated Statements of Operations. Upon Emergence, the Company did not meet the requirements under ASC 852 for fresh start accounting and in accordance with ASC 852, a new reporting entity was not created for accounting purposes.

On the Effective Date, pursuant to the Plan:

•All shares of the common stock of the Company outstanding prior to the Effective Date (the “Old Common Stock”) were cancelled;

•The Company paid $69 million to holders of Old Common Stock who had made the cash-out election under the Plan (the “Cash-Out Election”) in consideration of the cancellation of the common stock held by such holders;

•The Company issued 65,035,801 shares of its new common stock ("Common Stock") to the holders of Old Common Stock who had not made the Cash-Out Election under the Plan;

•The Company issued 247,768,962 shares of Series A Preferred Stock to the parties to the Plan Support Agreement, the Equity Backstop Commitment Agreement (as both defined in the Plan) and participants in the rights offering by the Company for aggregate consideration of $1,301 million;

•The Company issued 834,800,000 shares of Series B Preferred Stock to Honeywell International Inc. (“Honeywell”) in satisfaction and discharge of certain claims of Honeywell;

•The Company also paid $375 million to Honeywell in addition to the issuance of the Series B Preferred Stock in satisfaction and discharge of certain claims of Honeywell;

•The Company paid in full $101 million of interest and principal outstanding on, and terminated, the Senior Secured Super-Priority Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”);

•The Company repaid, and terminated, its pre-petition credit agreement including:

•Outstanding principal balance, accrued pre-petition and default interest on its five-year term A loan facility of $307 million;

•Outstanding principal balance, accrued pre-petition and default interest of (i) $374 million with respect to the EUR tranche and (ii) $422 million with respect to the USD tranche, on its seven-year term B loan facility;

•Outstanding principal balance and accrued interest of $374 million on its revolving credit facility; and

•Accrued pre-petition hedge obligations of $20 million.

•The Company repaid the outstanding principal balance on its senior subordinated notes of €350 million, or $423 million. The Company also paid accrued pre-petition interest of $10 million, post-petition interest of $13 million, and $15 million in connection with a complaint in the Bankruptcy Court against the indenture trustee of the 5.125% senior notes due 2026 (the "Make-Whole Litigation").

•The Company entered into certain secured debt facilities, see Note 16, Long-term Debt and Credit Agreements for discussion.

The Company further paid $75 million in connection with the reimbursement of Centerbridge Partners, L.P. (together with its affiliated funds, “Centerbridge”) and Oaktree Capital Management, L.P. (together with its affiliated funds, “Oaktree”), who are significant shareholders, and Honeywell for professional fees and expenses related to their support of our emergence from Chapter 11 bankruptcy, as well as reimbursement to Centerbridge and Oaktree for their participation in the Equity Backstop Commitment Agreement.

Reorganization items, net represent amounts incurred after the Petition Date as a direct result of the Chapter 11 Cases and are comprised of the following for the years ended December 31, 2022 and 2021:


	Year Ended December 31,
	2022				2021
	(Dollars in millions)
Gain on settlement of Honeywell claims(1)	$	—			$	(502)
Advisor fees	1				174
Bid termination and expense reimbursement	—				79
Director's and officers insurance	—		$	—	39
Expenses related to senior notes(2)	—		$	—	28
Write off of pre-petition debt issuance cost	—		$	—	25
Employee stock cash out	—		$	—	13
DIP financing fees	—		$	—	1
Other	2		$	—	18
Total reorganization items, net	$	3	$	2	$	(125)

(1)The gain on settlement of Honeywell claims of $502 million is comprised of the pre-emergence Honeywell claims of $1,459 million, less a $375 million payment made to Honeywell pursuant to the Plan, less the Series B Preferred Stock issued to Honeywell, which was recorded at $577 million, less a currency translation adjustment of $5 million.

(2)Includes $15 million in connection with Make-Whole Litigation and $13 million related to post-petition interest.