CHARLOTTE, N.C.—EnPro Industries Inc. is moving toward resolution of a decades-long process of handling asbestos claims after support of a reorganization plan by a bankruptcy court.
The U.S. Bankruptcy Court for the Western District of North Carolina recommended that the district court approve a joint plan of reorganization that would create a trust to handle asbestos claims and allow Garlock Sealing Technologies L.L.C. and Coltec Industries Inc. to be reconsolidated with EnPro.
The U.S. District Court for the Western District of North Carolina, which acts independently from the bankruptcy court, scheduled a hearing June 12 to consider the recommendation. The court completes a de novo review, which means the district court can choose to disregard the bankruptcy court's recommendation, and will issue its own determination. If approved, the reorganization plan would go into effect after a 40-day waiting period for appeals, according to Rick Magee, consultant and former senior vice president and general counsel for EnPro.
The plan establishes a trust to handle current and future asbestos claims through Chapter 11 bankruptcy, section 524(g) for Garlock, Coltec and other subsidiaries, totaling $480 million, according to documents from EnPro. That funding includes $400 million paid into the trust immediately, with $20 million worth of stock and $60 million more to be paid within a year of the establishment of the trust. The trust will be managed independently by Lewis Sifford of Dallas, who has experience with other asbestos-claims trusts, Magee said.
Once the trust is established, Sifford will handle the claim process for current and future claims, including paying those claims when appropriate. EnPro will provide information as necessary, but otherwise is not involved in the claims process at that point, Magee said.
All deconsolidated entities that were separated as part of the bankruptcy procedure will be reconsolidated with EnPro's financials going forward.
The bankruptcy process is the culmination of asbestos-related cases naming Garlock going back to 1975, making claims mainly against Garlock's compressed asbestos sheet gaskets and asbestos packaging. Garlock was named in the suits with as many as 20 to 50 other industrial manufacturing defendants that also created products containing asbestos.
By 1977, Garlock had placed Occupational Safety and Health Administration warnings on all its asbestos products, even though the amount of asbestos exposure involved in its gaskets fell below OSHA limits at the time, according to court documents. In the 1980s, Garlock began developing asbestos substitutes for products, completely ceasing manufacture of asbestos products in 2001.