Kidde-Fenwal files Chapter 11 bankruptcy in wake of lawsuits

By Sarah Lizee

Olympia, Wash., May 15 – Kidde-Fenwal, Inc. filed Chapter 11 bankruptcy on Sunday in the U.S. Bankruptcy Court for the District of Delaware, according to a press release.

The company said it intends to use the bankruptcy process to explore strategic alternatives, including a sale of the company as a going concern.

Kidde-Fenwal 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.

The company said it 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.

In March, the company’s board 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).

Although the company 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 board retained Guggenheim Securities to advise on a potential sale of the business.

After considering the available alternatives, the board determined that starting a sale process in Chapter 11 is in the best interest of the company and its stakeholders.

Kidde-Fenwal said it expects net proceeds from any sale will be made available to pay any AFFF liabilities judicially determined to be due and payable.

To assist the company’s current management team, James A. Mesterharm and Carrianne Basler, both managing directors and partners at AlixPartners, have joined the company as chief transformation officer and deputy chief transformation officer, respectively.

Kidde-Fenwal also announced that the current owner of the company, Carrier Global Corp., has determined that Kidde-Fenwal is not a strategic fit for Carrier. At Kidde-Fenwal’s request, Carrier has agreed to provide corporate services to Kidde-Fenwal during the Chapter 11 case on arm's-length terms and to offer certain transition services to any buyer in a Chapter 11 sale.

In its petition, the company listed 10,001 to 25,000 creditors, $100 million to $500 million in assets and $1 billion to $10 billion in liabilities.

Its largest unsecured claims are all litigation claims of law firms.

AP Services, an affiliate of AlixPartners, is acting as financial and restructuring adviser, and Sullivan & Cromwell LLP and Morris, Nichols, Arsht & Tunnell LLP are acting as legal counsel.

The company’s independent directors are represented by Schulte, Roth & Zabel LLP.

The industrial fire detection and suppression company is based in Ashland, Mass. The Chapter 11 case number is 23-10638.

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