Garlock Sealing Technologies Organizes Pay-Out of Future Asbestos Claims

Garlock Sealing Technologies Organizes Pay-Out of Future Asbestos Claims

On January 13, 2015, EnPro Industries, Inc. (EnPro) and its subsidiary Garlock Sealing Technologies (GST) reached an agreement with the court appointed legal representative of future asbestos claimants, Joe Grier, in conjunction with GST’s asbestos claims resolution process. If approved by the Bankruptcy Court, the agreement will provide certainty and finality to the expenditures necessary to resolve current and future asbestos claims against GST. The plan proposed by EnPro Industries, Inc. provides payments to claimants who had meaningful contact with GST’s asbestos containing products and developed a compensable disease based on that contact. Joe Grier agreed to support, recommend and vote in favor of the plan.

 The estimated current after-tax net present value of the plan is $205 million, with a maximum after tax net present value of $236 million. An additional $12 million is expected to be paid to non-asbestos creditors and claimants who have a contractual right to payment of asbestos claims settled but unpaid at the time of GST’s bankruptcy in 2010. EnPro is expecting heavy opposition from the committee who represents current asbestos claimants and their law firms. The company believes it could take up to two years before reaching a resolution.

GSP expects the total cost of resolving asbestos claims under the plan to be $357.5 million. The funds will be available to asbestos claimants who elect to accept the offered settlements, pay for related administrative fees, and meet qualifying disease and exposure criteria. The plan initially provides $30 million to cover litigation costs for those claimants who elect to forego settlement and litigate their cases in federal court. There is also a contingency plan in place to cover additional litigation funding for up to 40 years if necessary. EnPro believes if the plan works as they expect, and claimants act in their best economic interests, the contingency plan will not be necessary.

Payments under the plan will be made primarily from GST cash balances and remaining insurance. EnPro is operating under the idea that these payments are deductible against U.S. taxes and will seek relief to that affect.  EnPro’s President and CEO stated EnPro is confident the plan will not only lead to the certainty and finality GST is seeking by proceeding with this process, but will also compensate the majority of those expected to file asbestos claims against GST.