New York-based asbestos manufacturer Garlock Sealing Technologies promises to pay approximately 100,000 asbestos-related injury claims against the company.
Garlock last week submitted to a North Carolina bankruptcy judge its plan to exit Chapter 11. The plan will create a trust fund payment for current and future asbestos claimants.
Through the plan, Garlock will allocate $60 million for future claims in addition to promise of a furthered $140 million, which will be secured by 51 percent of the company’s stock.
Such a move should streamline the process for all asbestos claims aimed at the company and may minimize the company’s financial exposure and liability for each claim.
Garlock manufactured asbestos-containing products including seals, gaskets, pump packing, hydraulic components, and valve packing, in addition to other items. Their products are used in countless industries ranging from mining to pharmaceutical areas.
Asbestos exposure from such products has been proven to cause cancers like mesothelioma, which claims the lives of 2,000 to 3,000 people per year.
Litigation Proves Expensive
The company has been on the receiving end of litigation claims for years, including some notable awards in the past decade. In 2006, Garlock was involved in a $10 million jury award to the family of a former shipyard worker who died from cancer. In 2007, the company was involved in a claim that resulted in a recovery of $9.25 million to the victim’s family of another shipyard worker.
In the proposed exit plan, claimants will then be able to decide to have their claims determined through a settlement or through litigation.
The submitted plan comes days after the company conducted a layoff of 14 employees. In 2009, the company laid off 10 percent of its workforce to battle slowed growth. Garlock is the largest employer in Palmyra, New York, where the company is based.