Federal-Mogul Bankruptcy and Asbestos Trust
Many of Federal-Mogul’s asbestos litigation claims arose after it acquired companies that manufactured asbestos products.
Two major acquisitions occurred in 1998 when Federal-Mogul purchased Fel-Pro and Turner & Newall. Fel-Pro manufactured gaskets and seals that contained asbestos ingredients. Turner & Newell, Europe’s largest manufacturer of asbestos-containing construction materials, also produced brake pads, bearings and other automotive parts.
Financial turmoil of the asbestos claims accompanying Federal-Mogul’s acquisitions led the company to file Chapter 11 bankruptcy in 2001.
Although the company nearly tripled in size during the 1990s, Federal-Mogul didn’t emerge from bankruptcy until 2007. That year, the company created the Federal Mogul Asbestos Personal Injury Trust to handle current and future asbestos-related claims.
The trust is split into sub funds, one handling claims related to Turner & Newell and a second covering all other claims.
On Oct. 1, 2018, Tenneco completed an acquisition of Federal-Mogul for $800 million in cash and roughly $30 million in Tenneco shares and assumption of debt.
Asbestos Lawsuits Against Federal-Mogul
Federal-Mogul attempted to avoid bankruptcy by shedding its workforce and closing manufacturing facilities, but no strategy could save the company from the sheer number of asbestos-related lawsuits stemming from the Turner & Newall acquisition.
By the time Federal-Mogul filed for bankruptcy, it had more than 156 subsidiaries and affiliates. A number were involved in asbestos litigation suits, totaling nearly 350,000 individual claims.
When Federal-Mogul acquired Turner & Newall, it set aside approximately $2.1 billion as a reserve to pay for asbestos-related claims, but the amount proved insufficient.
Although Federal-Mogul cites Turner & Newall as the driving force that sent the company into bankruptcy, Flexitallic Gasket Company, another subsidiary, is the defendant most often named in recent asbestos claims.
In a 2001 case involving 22 former Texaco workers, a jury awarded the plaintiffs $35.2 million as compensation for their workplace exposures to asbestos. While employed at the Texaco refinery from the 1940s to the 1970s, these workers handled asbestos-containing Flexitallic gaskets and later developed asbestosis.
The former owners of Federal-Mogul subsidiary Flexitallic (U.S. Gypsum Co. and Gasket Holdings), were responsible for paying the $35.2 million. Each former employee received $1.6 million.
Federal Mogul Asbestos Products & Occupations at Risk
Federal-Mogul Corporation’s core manufacturing businesses did not generally involve asbestos. However, the company exposed itself to asbestos liability after acquiring companies that manufactured asbestos-contaminated building materials.
Products that contained asbestos included:
- Automotive friction products such as brake pads
As a result, anyone who worked with asbestos products made by Federal-Mogul, Turner & Newall, Flexitallic Gasket Company and others may be at risk for developing mesothelioma or another asbestos-related disease.
Employees who manufactured products for asbestos companies that Federal-Mogul acquired may have also faced asbestos exposure hazards. Workers often handled asbestos materials and used machines that contained asbestos parts.
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