Leslie Controls Inc.--a unit of Circor, a company that supplies and manufactures valves, regulators, steam water heaters, actuators and controls--is in the midst of negotiating Chapter 11 bankruptcy in Delaware due to 1,307 personal-injury related asbestos claims that have been brought against the company.
"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 risk," Circor Chairman and Chief Executive Bill Higgins told the Wall Street Journal.
The majority of claims arise from those exposed to asbestos on Navy Ships between 1940 and 1980, during which Leslie was their supplier. At the time, many manufacturers and builders used asbestos in their products because of its sound absorption and resistance to heat, electrical and chemical damage. In 1989, the EPA partially banned asbestos after it was proved to cause lung cancer.
The Chapter 11 bankruptcy plan calls for the creation of a trust for payment to holders of asbestos claims. The trust aims to permanently handle all current and new litigation claims against both Leslie and Circor. It will consist of a $75 million contribution by Leslie and Circor, as well as proceeds from Leslie's remaining asbestos insurance assets. "Many key members of the plaintiffs bar support the plan," Circor said in a statement.
During the bankruptcy process, which may conclude in as few as 120 days, Leslie plans to continue business. Under U.S. law, litigation against Leslie will freeze while the bankruptcy case is pending.