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July 25, 2013
Palmyra, North Carolina - A trial that will determine how much Garlock Sealing Technologies of North Carolina will need to pay to settle an abundance of asbestos-related personal injury claims has begun, also signaling the possible end to the embattled company’s bankruptcy. The trial will be closely observed by many companies who face a similar predicament.
According to an article in the Democrat and Chronicle, Garlock Sealing declared Chapter 11 bankruptcy just over three years ago, citing the fact that they were “overwhelmed by the financial and institutional costs of defending and resolving tens of thousands of asbestos claims in state and federal courts across the country” though actually not in business distress.
The company’s Chief Financial Officer, Donald G. Pomeroy II, noted at the time that the declaration of bankruptcy represented a way “of resolving their alleged asbestos liability in a single forum that offers an efficient and fair means of determining and satisfying (Garlock’s) responsibility for the mass of asbestos personal injury claims pending against them and expected to be filed in the future.”
Garlock has argued that exposure to its seals and gaskets, once manufactured with asbestos, were not responsible for causing diseases related to the inhalation of the mineral, long known to be a carcinogen. However, the company says it’s willing to put $270 million in a trust for asbestos victims though it believes the settlements will be closer to $125 million. Attor neys for Garlock’s victims believe those numbers are grossly underestimated, adding that the number should be closer to $1.3 billion.
Court documents show that the company has been paying an estimated $70,000 per settlement over the past four years. “It was cheaper for Garlock to pay ... settlements than to spend the money necessary to demonstrate it had no liability,” the company explained.
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