CHARLOTTE, N.C.—The U.S. District Court for the Western District of North Carolina confirmed EnPro Industries Inc.'s joint plan of reorganization to resolve current and future asbestos claims. The court's June 12 order approves the plan for several EnPro subsidiaries including Garlock Sealing Technologies L.L.C.
The district court's decision follows the recommendation for confirmation of the joint plan by the U.S. Bankruptcy Court for the Western District of North Carolina. All remaining objections to the joint plan had been resolved prior to the hearing before the district court, and no new objections were raised at the district court's hearing, according to a statement.
The joint plan will go into effect after a 40-day waiting period, on July 29, implementing a comprehensive settlement reached in March 2016 with claimants. The plan establishes a $480 million trust to handle current and future asbestos claims, managed independently from EnPro. The 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 District Court's confirmation of the Joint Plan is the critical step to the final resolution of this asbestos burden, which we have been striving toward for years," said Steve Macadam, EnPro's president and CEO. "Given the absence of any objections at the District Court's hearing, we view it as unlikely that there will be any appeal of the District Court's order, and we look forward to soon consummating the Joint Plan and reconsolidating these subsidiaries with EnPro for financial reporting purposes."
Garlock and other subsidies have been deconsolidated from EnPro for financial reporting purposes and accounted for on a cost basis in financial statements during the bankruptcy process. Once the joint plan has been completed, the assets and liabilities of those entities will be reconsolidated into the EnPro balance sheet at their estimated fair value, and a pre-tax gain would be recognized for the excess of the estimated fair value of the businesses over the net book value of EnPro's investment. Also, EnPro's consolidated financial statements will include the sales, income, expenses and cash flows of those businesses.
Garlock filed for bankruptcy in 2010, after having been named in about 835,000 asbestos cases since 1975. The current joint reorganization plan is the product of negotiation with claimants, and was approved by about 95.9 percent of claimants in Dec. 2016.