Federal-Mogul is one of the oldest suppliers in the auto industry, dating back to 1899. The corporate conglomerate faced legal troubles after acquiring two companies that manufactured asbestos products, forcing Federal-Mogul to file for bankruptcy in 2001 and set up an asbestos trust fund.
Amount in Trust: $635 million
Year Trust was Created: 2007
Written by Daniel King Edited By Walter Pacheco Scientifically Reviewed By Dr. Jerald L. Cook
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How to Cite Asbestos.com’s Article
King, D. (2022, December 20). Federal-Mogul Corporation. Asbestos.com. Retrieved March 23, 2023, from https://www.asbestos.com/companies/federal-mogul-corporation/
King, Daniel. "Federal-Mogul Corporation." Asbestos.com, 20 Dec 2022, https://www.asbestos.com/companies/federal-mogul-corporation/.
King, Daniel. "Federal-Mogul Corporation." Asbestos.com. Last modified December 20, 2022. https://www.asbestos.com/companies/federal-mogul-corporation/.
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. The payment percentage, which is how much the trust pays out for the scheduled value of a claim to ensure funds remain in the trust, is 8.5%.
In September 2021, the trustees announce policy changes in response to the COVID-19 pandemic. One of the policy changes no longer requires notarization of release documents and instead allows the signature of one witness.
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.
High-risk occupations include construction workers, mechanics, shipyard workers, refinery workers and refractory plant workers.
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.