The turbocharger maker that was spun off from Honeywell last year has sued the conglomerate over asbestos liabilities it says could drive it into “severe financial distress.”

Garrett Motion had agreed to reimburse Honeywell for 90% of liabilities arising from exposure to asbestos in Bendix automotive brake linings, with payments being limited to a maximum of $175 million a year.

Thousands of individuals have filed Bendix-related claims. At the time of the spinoff, the liabilities were estimated at more than $1.3 billion.

But in court papers filed on Monday, Garrett alleged the indemnification agreement, which expires in 2048, is “unlawful, so one-sided as to be manifestly unconscionable, and thus unenforceable” and that Honeywell has materially breached the agreement.

“Garrett asserts that requiring it to make these payments to Honeywell is unacceptable as the historical asbestos liability is Honeywell’s and not Garrett’s,” the company said in a news release.

Honeywell assumed asbestos liabilities after merging with Bendix’s former owner, Allied Signal, in 1999. It spun off Garrett in October 2018 as part of an effort to focus on its more consistent aerospace, non-residential construction, and industrial software markets.

According to Garrett, however, Honeywell has forced Garrett to pay the asbestos bill “under the threat of improperly triggering a cascade of defaults on Garrett’s debts [arising from the spinoff] and driving Garrett into severe financial distress.”

According to Honeywell, however, the spinoff of Garrett into a standalone company fully complied with applicable law.

“Contrary to Garrett’s assertion, the Bendix asbestos liabilities covered by the agreement in question originated in Honeywell’s former transportation systems business,” Honeywell said. “That business sold Bendix automotive brake pads among other products and eventually became the Garrett spinoff. The agreement was structured and sized to enable Garrett to generate sufficient cash flow to make the required payments, subject to a cap and other protections, and operate in the marketplace as a standalone company. We remain confident that Garrett’s obligations to Honeywell are reasonable and the agreement is fully enforceable. We believe Garrett’s claims are meritless and will respond to them directly as appropriate in upcoming court filings.”

Garrett also accuses Honeywell of materially breaching the indemnification agreement by failing to establish the merits of settlements it has reached with claimants.

Honeywell announced in August that the U.S. Securities and Exchange Commission had closed an investigation into its accounting for Bendix-related liabilities and had not recommended any enforcement action.

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