EnPro: Garlock plan to be recommended for approval by district court

By Caroline Salls

Pittsburgh, May 16 – EnPro Industries, Inc. said the U.S. Bankruptcy Court for the Western District of North Carolina will recommend confirmation of subsidiary Garlock Sealing Technologies LLC’s plan of reorganization to the U.S. District Court for the Western District of North Carolina.

The district court will consider confirmation of the plan on June 12. If approved by the district court, the plan may not take effect until at least 40 days after the date of the confirmation order.

EnPro said the plan will resolve Garlock’s current and future asbestos claims.

As previously reported, the plan implements the terms of a comprehensive settlement reached in March 2016.

According to the release, some technical amendments were made to the plan before the confirmation hearing to resolve objections filed by three insurers, the purchaser of assets of the Quincy Compressor business formerly operated by the Coltec debtor and by the bankruptcy administrator.

Of the five objections, EnPro said four were withdrawn, and the court recommended that the remaining objection be overruled.

None of the amendments affected the amounts or timing of contributions to be made to the asbestos resolution trust to be established by the plan, the release said.

Settlement recommendations

EnPro said the bankruptcy court also announced that it will recommend district court approval of several settlements with insurance carriers that issued policies covering losses associated with product liability claims against Coltec and some of its subsidiaries.

These include a settlement related to $62 million of remaining available products hazard limits and insurance receivables, with two carriers agreeing to pay their full remaining policy limits of $18.8 million over a three-year period.

An agreement with another group of carriers calls for the payment of $24 million. EnPro said it expects that the full amount of remaining policy limits and insurance receivables, totaling $19.2 million, in the Garlock coverage block will be received either through settlements or in reimbursement of the company’s plan funding as payments are made by the asbestos trust.

In addition, the bankruptcy court will recommend that the district court approve settlements with two insurance carriers that issued primary general liability policies before Jan. 1, 1976, allowing the recovery of a portion of $110 million of planned contributions to the asbestos trust. The two carriers will make one-time cash payments of $19 million.

“Today’s bankruptcy court decision is a very significant milestone in our effort to permanently resolve our legacy asbestos burden and the settlement of these insurance matters will help defray the costs of resolving that burden,” EnPro president and chief executive officer Steve Macadam said in the release.

“Assuming the district court approves the joint plan and absent any appeals, we expect that the joint plan would be consummated in the third quarter of this year, resulting in the financial reconsolidation of these subsidiaries with EnPro.”

Plan terms

Under the plan, administrative expense claims will be paid in the ordinary course.

Priority tax claims and priority claims will be paid in full in cash.

Non-tax secured claims will remain unaltered or will be paid in full. Secured tax claims will be paid in full in cash.

Workers’ Compensation claims, Coltec general unsecured claims and intercompany claims will be reinstated.

Holders of Garlock general unsecured claims will be paid in full in cash plus post-bankruptcy interest at the federal judgment rate.

Holders of Anchor Packing Co. claims will receive nothing because Anchor has no significant property and will be liquidated and dissolved.

Garlock/Garrison Litigation Management Group, Ltd. equity interests will be retained. Other debtor equity interests will remain unaltered.

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

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