Understanding, Managing, and Living with the

Health Effects of Asbestos

Case Proves Bankruptcy Does Not Trump Asbestosis Compensation

June 28, 2014

Palmyra, NY With the extended incubation period of asbestosis, together with the prevalence of asbestos as a major component of the industrial and manufacturing industry before society finally identified its carcinogenic properties, many an asbestosis lawsuit has been filed in spite of a defendant declaring bankruptcy under the weight of litigation.

But all is not lost, as the inner workings of one asbestosis compensation file reveals (In re: Garlock Sealing Technologies LLC, Case No 3:10-bk-31607, in the US Bankruptcy Court for the Western District of North Carolina). In fact, in spite of the bankruptcy filing of the defendant, the parent company of the bankrupt enterprise is reported to have provided funding above and beyond its legal liability, or so it claims in its own interpretation of the matter, in order to settle most of the asbestosis compensation claims without going to trial.

According to court records, Garlock Sealing Technologies LLC (GST) had already paid out in excess of $1.8 billion to settle various lawsuits, judgments and legal expenses when it withered under the crush of claims and filed for bankruptcy in 2010. Prior to invoking Chapter 11 protection, GST had manufactured gasket-sealing products, which it claimed contained asbestos fibers that were nonfriable and encapsulated within its products.

However, that didn’t stop some 900,000 claims of asbestosis disease over the course of 35 years - and those are just the claims that were resolved, according to court records. In 2010, GST threw up its hands in bankruptcy.

But all is not lost for claimants suffering from disease with an asbestosis lawyer in tow. In May, GST filed an amended reorganization plan in North Carolina federal court that included a $245 million fund provided by GST parent company EnPro Industries Inc. and another subsidiary. The fund is designed, according to EnPro, to settle all current and future asbestosis disease claims against GST.

The fund breaks down this way: $215 million in cash will come from the reorganized GST, with $30 million coming from Coltec Industries, a sister subsidiary of EnPro. As part of the plan, the company must substantiate its claim that $245 million is sufficient to answer the call for all current and future asbestosis compensation claims.

“GST’s amended plan of reorganization provides fair compensation to claimants and permanent resolution to all asbestos claims against GST,” said EnPro President and CEO Steve Macadam in a statement. “By providing funding greater than GST’s legal liability, the plan will facilitate the resolution of the vast majority of claims by settlement rather than litigation, saving litigation costs and ensuring that claimants are paid in full.”

Macadam stated further that the plan is based on the Bankruptcy Code and precedent in non-asbestos-related bankruptcy cases.

It will remain to be seen if the company can satisfy plaintiff and judicial communities that $245 million is, indeed, sufficient. At the end of the day however, any plaintiff dealing with alleged asbestosis exposure and suffering from asbestosis lung disease can take heart in knowing that just because a company goes bankrupt, doesn’t always mean that hope is lost.

Sometimes legal liability trumps bankruptcy - especially if the bankrupt entity is affiliated with a larger organization with deep pockets.