Circor International, Inc. (NYSE: CIR) today announced a major development in its effort to stem mounting asbestos litigation costs and resolve asbestos liability claims at its Leslie Controls, Inc. subsidiary.
Leslie today filed a pre-negotiated plan of reorganization as a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court for the District of Delaware. Supported by a committee of attorneys representing current asbestos claimants and a proposed independent representative of future claimants, the plan is intended to permanently resolve Leslie’s asbestos liability through the creation of a trust pursuant to Section 524(g) of the U.S. Bankruptcy Code. All current and future asbestos claims against Leslie would be channeled to the trust for review and payment, thus providing both Leslie and CIRCOR with permanent court protection from such claims.
“Because we strongly believe that exposure to Leslie’s products has not caused any asbestos-related illness, our strategy has been to vigorously defend these claims,” said CIRCOR Chairman and Chief Executive Officer Bill Higgins. “However, the cost of this defense has exceeded the profits generated by Leslie’s operations, and we have been considering for some time a range of strategic alternatives that would enable us to permanently eliminate this expense and risk. Resolving Leslie’s asbestos liability through a pre-negotiated plan of reorganization accomplishes that aim, while preserving the value of a strong and viable business.”
Asbestos is a known cancer causing agent and has been linked to asbestosis and mesothelioma.
“We believe that a 524(g) trust that equitably resolves all pending and future claims and provides CIRCOR with permanent protection from derivative claims is in the best interest of all our stakeholders, including CIRCOR’s shareholders and Leslie’s customers, suppliers and employees,” Higgins continued. “Unencumbered by financial and legal exposure to asbestos liability, Leslie will be positioned to grow and contribute to CIRCOR’s profitability and cash flow going forward.”
Leslie intends to conduct business as usual during the Chapter 11 process, which could be completed in as little as 120 days., Today’s filing stays all pending and future asbestos litigation against Leslie. As a result, Leslie expects that its cash from operations will be sufficient to satisfy all of its operating obligations during this period. In addition, debtor-in-possession financing has been arranged for Leslie if needed.
Key terms of the pre-negotiated plan are as follows:
Funding for the 524(g) trust will consist of a $75 million contribution by Leslie andCIRCOR together with a contribution of proceeds from Leslie’s remaining asbestos insurance assets;
A provision that permanently protects CIRCOR and its affiliates from future derivative claims associated with Leslie’s asbestos liability; and
Leslie will remain a subsidiary of CIRCOR during and after Chapter 11.
Asbestos is a known cancer causing agent and has been linked to asbestosis and mesothelioma.
“We believe that a 524(g) trust that equitably resolves all pending and future claims and provides CIRCOR with permanent protection from derivative claims is in the best interest of all our stakeholders, including CIRCOR’s shareholders and Leslie’s customers, suppliers and employees,” Higgins continued. “Unencumbered by financial and legal exposure to asbestos liability, Leslie will be positioned to grow and contribute to CIRCOR’s profitability and cash flow going forward.”
Leslie intends to conduct business as usual during the Chapter 11 process, which could be completed in as little as 120 days., Today’s filing stays all pending and future asbestos litigation against Leslie. As a result, Leslie expects that its cash from operations will be sufficient to satisfy all of its operating obligations during this period. In addition, debtor-in-possession financing has been arranged for Leslie if needed.
Key terms of the pre-negotiated plan are as follows:
Funding for the 524(g) trust will consist of a $75 million contribution by Leslie andCIRCOR together with a contribution of proceeds from Leslie’s remaining asbestos insurance assets;
A provision that permanently protects CIRCOR and its affiliates from future derivative claims associated with Leslie’s asbestos liability; and
Leslie will remain a subsidiary of CIRCOR during and after Chapter 11.
Click here to read more about asbestos related disease and claims for benefits. For over 3 decades the Law Offices of Jon L. Gelman1.973.696.7900 jon@gelmans.com have been representing injured workers and their families who have suffered asbestos related illnesses.
