6/18/2014

Garlock files plan to resolve asbestos claims

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By Mike McNulty

CHARLOTTE, N.C.—Garlock Sealing Technologies L.L.C. has filed an amended reorganization plan in U.S. Bankruptcy Court to resolve all asbestos claims against the company and allow it to emerge from bankruptcy protection.

A subsidiary of EnPro Industries Inc., the gasket and seal manufacturer's plan provides $275 million for final and permanent resolution of its unsettled current and future asbestos claims.

An EnPro spokesman said the plan was filed May 29 in the U.S. Bankruptcy Court for the Western District of North Carolina. It incorporates a court ruling, made by Judge George Hodges Jan. 10, that $125 million is sufficient to satisfy the company's aggregate liability for present and future mesothelioma claims.

Claimants' lawyers were seeking between $1 billion and $1.4 billion at the time.

Hodges criticized some of the claimants' lawyers when he made that ruling, maintaining they withheld evidence about the plaintiffs' exposure to other asbestos products during court hearings, controlling evidence to drive up GST's settlements over a 10-year stretch.

The amended reorganization plan GST filed in late May will provide fair compensation to claimants and permanent resolution to all asbestos claims against the company, according to Steve Macadam, president and CEO of Charlotte-headquartered EnPro.

“By providing funding greater than GST's legal liability, the plan will facilitate the resolution of the vast majority of claims of settlement rather than litigation, saving litigation costs and ensuring that claimants are paid in full,” he said. “It is solidly based in the U.S. Bankruptcy Code and supported by precedents in other non-asbestos bankruptcy cases.”

It's too early to tell how long it will take for the court to review and make a determination on GST's reorganization plan, the spokesman said, because the process varies.

If the court confirms the plan, he said, GST, which filed for bankruptcy in 2010, will be able to emerge from Chapter 11.

He noted that throughout the Chapter 11 process, the company's operations have not been disrupted in any way.

A breakdown of the plan calls for creation of a $245 million Settlement Facility that would settle claims for cash payments on criteria outlined in the plan and a $30 million Litigation Facility that defends suits by claimants who choose to litigate, the firm said.

Its $245 Settlement Facility will be funded by $215 million from GST and $30 million from Coltec Industries Inc., GST's parent company and a wholly owned subsidiary of EnPro. Charlotte-based Coltec's contribution is earmarked to settle derivative claims seeking to hold Coltec and its affiliates, including EnPro, liable for asbestos diseases allegedly caused by GST's products.

GST is asking the court to confirm the plan, discharge asbestos claims against the company, approve the settlement with Coltec and issue an injunction prohibiting claimants from bringing claims against Coltec and its affiliates.

In addition to paying those who decide to settle claims, the Settlement Facility will contribute funds needed to defend claims subject to litigation up to the settlement amount a claimant would qualify under the facility's resolution procedures, GST said. The Litigation Facility would pay all costs in excess of that amount.

Asbestos claimants maintaining they reached settlements with GST before the company filed for Chapter 11 on June 4, 2010, are required to file proof of their claims, the firm said. Those that prove they have legally binding settlements will be paid in full, GST said, and it will be in addition to payments to the Settlement and Litigation facilities.

“While we continue to believe a consensual plan would offer the most expedient path to resolution,” Macadam said, “we are confident GST's plan can be approved by the bankruptcy court as submitted and provide final and permanent resolution of all asbestos claims against GST.”