Garlock asbestos committee opposes plan, wants constituents to reject

By Caroline Salls

Pittsburgh, Aug. 15 – Garlock Sealing Technologies LLC’s official committee of asbestos personal injury claimants took issue with the company’s proposed first amended plan of reorganization, calling the plan “unfair to asbestos creditors,” according to a Thursday filing with the U.S. Bankruptcy Court for the Western District of North Carolina.

Specifically, the committee said the plan does not pay asbestos creditors in full, but parent Coltec Industries, Inc. retains a significant equity interest.

In addition, the committee said the proposed plan grants non-consensual, third-party releases and extraordinary injunctive protection to Coltec and other non-debtor affiliates, “in exchange for no real consideration and without complying with the requirements of § 524(g) of the Bankruptcy Code.”

The committee said the proposed plan would be unconfirmable because it would channel both current and future asbestos claims to a capped fund, without adhering to the protections spelled out in the Bankruptcy Code.

The claimant group asked the court to require Garlock to include a statement with the disclosure statement for the plan including the committee’s recommendation to the asbestos creditors to reject the plan.

Garlock is a subsidiary of Charlotte, N.C.-based EnPro Industries, which makes sealing products, bearings, compressors and engines. The company filed for bankruptcy on June 5, 2010 under Chapter 11 case number 10-31607.

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