A new asbestos trust worth an estimated $610 million is forming in the wake of a glass bottling company’s bankruptcy proceedings.
Ohio-based O-I Glass announced a plan April 26 to establish a bankruptcy trust to address all asbestos exposure complaints filed against its subsidiary, Paddock Enterprises. Under the terms of the deal — which still requires court approval — the as-yet unnamed trust would be funded for $610 million on the same day that Paddock received confirmation for its planned Chapter 11 bankruptcy reorganization, according to the release.
Asbestos trusts are intended to ensure that individuals harmed by a company’s negligence after being exposed to asbestos can still be compensated even if the company files for bankruptcy.
Kaylo’s Curse
All of O-I Glass’ asbestos-related liability was transferred to Paddock prior to the subsidiary filing for bankruptcy in January 2020, according to an earlier release. Owens-Illinois, the former parent company of O-I Glass, produced an asbestos-contaminated insulator known as Kaylo in the 1940s and 1950s.
The firm exited that business in 1958 and has faced more than 400,000 exposure-related liability claims, incurring more than $5 billion in gross expenditures for asbestos products along the way.
According to the release, O-I’s plan to form an asbestos trust under section 524(g) of the federal bankruptcy code was backed by a committee of all existing asbestos personal injury claimants, a representative for all future personal injury filers, and a court-supported mediator.
Next Steps
As part of the process, “all asbestos-related claims payments [for Paddock] will be suspended” pending completion of Paddock’s bankruptcy proceedings, the release states. That would “channel all current and future asbestos personal injury claims against Paddock” into the trust and create an injunction shielding Paddock, O-I Glass, and their related businesses from further Kaylo-related asbestos suits.
“We believe this is the best path to not only equitably address Paddock’s legacy liabilities but also move expeditiously toward emergence,” O-I Glass CEO Andres Lopez stated in the release.
There are an estimated 65 active mesothelioma trust funds with an estimated $30 billion available to claimants, trusts that have paid out roughly $20 billion since the late 1980s. More than $15 billion of that was paid during a seven-year period: 2006-2012. Not anyone can just file a claim for compensation. Whether a person is paid and how much is based on: a confirmed diagnosis of an asbestos-related disease; that trust’s payment schedule; and the trust’s current payment percentage.
