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From Products Liability Law Daily, January 14, 2015

EnPro to establish $357.5 million fund to settle future asbestos claims

By John W. Scanlan, J.D.

EnPro Industries, Inc. will create a $357.5 million fund to settle claims against its bankrupt subsidiary Garlock Sealing Technologies (GST) and its subsidiaries, The Anchor Packing Company and Garrison Litigation Management Group, Ltd., the company said in a press release announcing an agreement with a court-appointed legal representative of future asbestos claimants (EnPro Industries, Inc. News Release, January 13, 2015).

Background. GST produced and sold asbestos gaskets, sheet gasket material, and packing for pipes and valves. Beginning in the 1980s, people who had developed various asbestos-related diseases began to file suit against GST. The company settled many cases until its insurance was exhausted and it filed for Chapter 11 bankruptcy, along with subsidiaries Anchor Packing and Garrison Litigation. There were more than 4,000 mesothelioma claimants involved in the cases, as well as an unknown number of future potential claimants who will develop mesothelioma. GST proposed to the bankruptcy court a plan of reorganization that would include $270 million to resolve present and future asbestos claims, but an Asbestos Claimants Committee (ACC), which was appointed to represent the interests of the claimants, and a Future Claimants Representative (FCR), which was appointed to represent future asbestos disease claimants, formulated a $1 to $1.3 billion estimate using a “settlement approach” by extrapolating from GST’s history of resolving mesothelioma claims in the tort system.

After a trial, the court found in a decision issued one year ago that a $25 million estimate of GST’s aggregate liability to actual pending claimants was reasonable and reliable and that a $100 million estimate of GST’s liability to future mesothelioma claimants, reduced to present value, was also reasonable and reliable. These amounts did not include liability for non-mesothelioma claims or for claims against GST subsidiary Anchor Packing.

Settlement terms. The agreement contains a revised plan of reorganization to be submitted for the bankruptcy court’s approval—which the FCR agreed to support—that would provide for a $250 million payment to be made at the effective date of the plan, with another $77.5 million to be contributed over the following seven years. Future claimants who meet qualifying disease and exposure criteria and who elect settlement of their claims will be entitled to payments from the fund. The plan provides for an initial $30 million at the effective date to be used to cover litigation costs for claimants that choose to litigate instead of settle. EnPro estimated the after-tax present value of the revised plan to be $205 million.

MainStory: TopStory AsbestosNews SettlementAgreementsNews

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