Judge Denies Claimants’ Bid to Reopen Garlock Asbestos Settlement

Garlock Sealing Technologies LLC, the EnPro Industries Inc. unit that filed Chapter 11 in June 2010 to address asbestos claims, won a long-fought battle with personal-injury claimants when their request to reopen the record of a trial estimating the company’s aggregate asbestos liability was denied.

U.S. Bankruptcy Judge George R. Hodges in Charlotte, North Carolina, already held a lengthy trial to estimate the amount of valid claims, finding in January that $125 million was a “reasonable and reliable estimate” of the total liability to pending and future mesothelioma claimants.

Asbestos claimants who contended the liability was about 10 times larger than that filed a motion in June to reopen the record of the estimation proceeding to permit the presentation of supplemental evidence after additional discovery, according to court papers.

In an order entered Dec. 9, the court denied the motion, citing reasons given at a hearing a week earlier. According to a Dec. 5 statement from EnPro, the judge found that there was no misconduct and that the purported new evidence was either not new or was immaterial.

In its June request, the official committee of asbestos personal-injury claimants had said the court was subjected to a “misleading account of Garlock’s litigation and settlement history, distorted by Garlock’s sharp practice.” It argued that the impact was material, leaving a “deep stain” on the record the court relied on.

According to the committee, further discovery was needed to reveal the full scope of information that Garlock should have produced because such information could have a substantial impact on a proper aggregate estimate of mesothelioma claims.

In court papers filed at the end of last month, the committee said its motion to reopen has shown that Garlock’s ability to present its story persuasively at the estimation hearing depended on its own failure to produce material information in discovery.

The January opinion allowed Garlock to file a Chapter 11 plan paying creditors in full, including those with asbestos claims. Full payment allows EnPro to retain ownership. For discussion of Garlock’s revised plan based on the January claim estimation, click here for the June 2 Bloomberg bankruptcy report.

A hearing to consider approval of the disclosure statement explaining the plan has been continued to Jan. 21, according to a court filing yesterday.

Non-bankrupt EnPro, a maker of products including diesel and natural-gas engines, reported assets of $1.58 billion and liabilities of $913 million on the Sept. 30 balance sheet.

The case is In re Garlock Sealing Technologies LLC, 10- bk-31607, U.S. Bankruptcy Court, Western District of North Carolina (Charlotte).