CHARLOTTE, N.C.--(BUSINESS WIRE)--Garlock Sealing Technologies LLC (GST), a subsidiary of EnPro Industries, Inc. (NYSE: NPO), today will file an amended plan of reorganization that provides $275 million for resolution of all unsettled current asbestos claims as well as future asbestos claims against GST. The plan will be filed in the U.S. Bankruptcy Court for the Western District of North Carolina and incorporate the Bankruptcy Court’s determination that $125 million is sufficient to satisfy GST’s aggregate liability for present and future mesothelioma claims. The plan document will be posted in the Investor Relations section of the company’s website, www.enproindustries.com, after the plan is filed.
The plan calls for (1) a $245 million Settlement Facility that would receive and settle claims for cash payments based on objective criteria outlined in the plan and (2) a $30 million Litigation Facility that would defend suits by claimants who choose to litigate. Under the plan, in addition to paying claimants choosing to settle, the Settlement Facility would contribute amounts necessary to defend and resolve each claim subject to litigation up to the settlement amount for which a litigating claimant would qualify under the Settlement Facility’s resolution procedures. The Litigation Facility would pay all costs in excess of such amount. In addition, the plan requires asbestos claimants alleging they reached legally binding settlements with GST before GST’s Chapter 11 filing on June 4, 2010 to file proofs of claim. Any such claimants proving they have binding settlements will be paid in full by GST; these payments will be in addition to GST’s payments to the Settlement and Litigation Facilities.
“GST’s amended plan of reorganization provides fair compensation to claimants and permanent resolution to all asbestos claims against GST,” said Steve Macadam, president and chief executive officer of EnPro. “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. It is solidly based in the U.S. Bankruptcy Code and supported by precedents in other non-asbestos bankruptcy cases.”
The $245 million Settlement Facility will be funded by a $215 million lump-sum cash contribution from GST and a $30 million lump-sum cash contribution by Coltec Industries, Inc., GST’s parent company and a wholly-owned subsidiary of EnPro Industries. Coltec’s $30 million contribution will permanently settle derivative claims seeking to hold Coltec and its affiliates, including EnPro, liable for asbestos diseases allegedly caused by GST’s products. At confirmation of the plan, GST will ask the court to confirm the plan, discharge asbestos claims against GST, approve the settlement with Coltec, and issue an injunction prohibiting claimants from bringing derivative claims against Coltec and its affiliates. The contributions to the Settlement Facility will be made when the plan is confirmed.
During the confirmation process, GST will offer expert and other evidence that the amounts provided for the Settlement Facility and Litigation Facility are sufficient to resolve all mesothelioma claims, other types of asbestos-related cancer and non-cancer claims, and to pay all costs associated with administration of the facilities. The Settlement Facility will be managed by an independent trustee applying objective medical and product exposure criteria. The plan assures that all future claims will receive equivalent treatment to similar current claims and provides sufficient funding to cover all current and future claimants.
Claimants who choose not to resolve their claims through the Settlement Facility will be entitled to litigate their claims against the $30 million Litigation Facility. The Litigation Facility will be funded and managed by GST’s affiliate, Garrison Litigation Management Group, Ltd. Claimants who seek litigation will be entitled to have their cases heard before a jury in federal court under federal rules of evidence and civil procedure. Litigation will be centralized in the U.S. District Court for the Western District of North Carolina. Importantly, claimants choosing litigation must abide by a case management order that will require the disclosure of information about their claims, and thereby reduce litigation costs for the Litigation Facility and protect the Litigation Facility from the abusive litigation practices that the Bankruptcy Court found inflated GST’s settlements and verdicts prior to the bankruptcy case. Claimants will be required to disclose all of their asbestos product exposures and submit to audit procedures that prevent them from making inconsistent exposure allegations against bankruptcy trusts.
In the confirmation process, GST will offer evidence, including opinions from experts, that the amount proposed for the Litigation Facility is more than sufficient to pay judgments and litigation costs for all claims that are likely to be litigated. GST will also demonstrate that the vast majority of projected claimants will choose settlement over litigation.
“While we continue to believe a consensual plan would offer the most expedient path to resolution,” Macadam said, “we are confident GST’s plan can be approved by the Bankruptcy Court as submitted and provide final and permanent resolution of all asbestos claims against GST.”
Conference Call and Webcast Information
EnPro will host a conference call on Friday, May 30, at 9:00 a.m. Eastern Time to discuss the plan with investors. Investors may access the call by dialing (800) 851-4704 and the access code 52058732. The call will also be webcast on the company’s website, www.enproindustries.com.
Forward Looking Statements
Statements in this press release that express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements under the Private Securities Litigation Reform Act of 1995. They involve a number of risks and uncertainties that may cause actual events and results to differ materially from such forward-looking statements. These risks and uncertainties include, but are not limited to: the risk that GST may be unable to obtain necessary Bankruptcy Court approval of the plan, the actions and decisions of creditors and other third parties that have an interest in the bankruptcy proceedings, the terms and conditions of any reorganization plan that is ultimately approved by the Bankruptcy Court, delays in the confirmation or effective date of a plan of reorganization due to factors beyond GST’s control, and risks and uncertainties affecting GST and Coltec’s ability to fund anticipated contributions under the plan as a result of adverse changes in their results of operations, financial condition and capital resources, including as a result of economic factors beyond their control. Our filings with the Securities and Exchange Commission, including the Form 10-K for the year ended December 31, 2013, describe other risks and uncertainties. Except as may be required by law, we do not undertake to update any forward-looking statement made in this press release to reflect any change in management's expectations or any change in the assumptions or circumstances on which such statements are based.
About EnPro Industries
EnPro Industries, Inc. is a leader in sealing products, metal polymer and filament wound bearings, components and service for reciprocating compressors, diesel and dual-fuel engines and other engineered products for use in critical applications by industries worldwide. For more information about EnPro, visit the company’s website at http://www.enproindustries.com.