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.
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.
“We believe this is the best path to not only equitably address Paddock’s legacy liabilities but also move expeditiously toward emergence.” — CEO Andres Lopez
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.
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.