Fri Sep 26, 5:37 PM ET

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NEW YORK/CHICAGO (Reuters) - Detroit's Big Three automakers have filed suit to stop Honeywell International Inc. (NYSE:HON - news) from selling its brake products unit to bankrupt Federal-Mogul Corp. (OTC BB:FDMLQ.OB - news), accusing Honeywell of trying to avoid its asbestos-related obligations.

Honeywell in January agreed to sell its Bendix brake unit, which faces about 47,000 asbestos cases, to Federal-Mogul, an auto parts supplier currently reorganizing after filing for Chapter 11 protection in October 2001 under the weight of mounting asbestos lawsuits.

Federal-Mogul's proposed reorganization plan includes the establishment of a trust to pay existing and future asbestos claims, allowing the company to emerge from bankruptcy free of asbestos liabilities.

Under the proposed Bendix deal, Federal-Mogul would acquire certain assets of the unit, and Honeywell, in exchange, would receive protection from asbestos liabilities.

In the lawsuit filed on Wednesday, Ford Motor Co. (NYSE:F - news), General Motors Corp. (NYSE:GM - news) and DaimlerChrysler AG (DCXGn.DE) described the proposed Bendix sale as a "fraudulent transfer."

"Bankruptcy protection cannot be bought and sold. Federal-Mogul's and Honeywell's unprecedented attempt to do so would violate federal and state law, be unfair to thousands of asbestos claimants and inappropriately shift litigation costs to the automakers," David Sykes, attorney with Duane Morris, which is representing the carmakers, said in a statement.

The Big Three face asbestos-related litigation costs totaling between $320 million and $1.2 billion, investment bank UBS Warburg estimated in a 2002 report.

A Honeywell spokesman said the company was reviewing the lawsuit and declined to comment on it.

A spokesman for Federal-Mogul, which is hoping to emerge from bankruptcy protection in 2004, also declined comment, saying the suit was under review.

Bendix makes brakes and brakes systems, and asbestos was once a key component in these products. The proposed sale of Bendix remains subject to anti-trust clearance and agreement with attorneys representing asbestos plaintiffs.

According to Federal-Mogul's reorganization plan, filed in Delaware federal court in March, asbestos claimants would convert all claims, running into billions of dollars, into equity in the emerging company.

In their lawsuit, the U.S. automakers said Federal-Mogul sought to use its immunity status to take on Honeywell's liabilities.

Hundreds of U.S. companies have been hit with lawsuits from claimants exposed to asbestos, a fire-resistant material that scientists have linked to a form of lung cancer and other fatal diseases.

*** POSTED SEPTEMBER 29, 2003 ***