- From LexisNexis® Mealey’s™ Daily Legal News.
Yarway Corp., a former Pennsylvania company that manufactured pipe clamps, steam traps, valves and controls, filed for Chapter 11 protection April 22 in Delaware federal bankruptcy court due to thousands of asbestos personal injury claims combined with the depletion of insurance assets to pay the claims (In re: Yarway Corporation, No. 13-11025, D. Del. Bkcy.).
According to Yarway’s Chapter 11 petition and the declaration of company Vice President Kevin Coen filed in the U.S. Bankruptcy Court for the District of Delaware, the debtor has 5,000 to 10,000 creditors and faces $ 100 million to $ 500 million in estimated liabilities.
Yarway, of Boca Raton, Fla., was founded in Pennsylvania in 1908 as Simplex Engineering Co. It was a privately owned company until 1986 when it was sold to Keystone International Inc.
In 1997, Tyco International Ltd. purchased Keystone, and Yarway became an indirect subsidiary of Tyco. Yarway ceased its manufacturing operations in 2003 when it sold its plant in Blue Bell, Pa., and other manufacturing facilities. In 2013, Yarway acquired a 49 percent interest in STI Properties Ltd., which is a member of a joint venture that owns and operates a five-story commercial office building in the Cleveland area.
Beginning in 1991, Yarway has been named a defendant in thousands of asbestos personal injury lawsuits. The company says that its asbestos-related liabilities derive from its alleged use of asbestos-containing gaskets and packing manufactured by other companies in Yarway’s production of steam valves and traps from the 1920s to the 1970s and its alleged manufacture of expansion joint packing that was made up of a compound of Teflon and asbestos. “Yarway’s alleged manufacture, distribution, and/or sale of asbestos containing materials ceased entirely by 1988,” the company says.
More Than $ 128 Million
Once Yarway ended its manufacturing business, it remained in existence to defend against and process asbestos claims. The company maintained its own insurance assets, some of which were the subject of state court litigation in California from 2005 until the last of its policies known to provide coverage for asbestos claims was settled in 2012, Yarway says.
Yarway says that in the last five years, 10,021 asbestos claims were asserted against the company, including 1,014 in Yarway’s fiscal year beginning Oct. 1, 2012. In the same five years, Yarway has paid $ 128,969,708 in settlement costs for asbestos claims, including more than $ 18 million in the current fiscal year, the company says.
Yarway says that it filed for Chapter 11 protection because its insurance coverage for asbestos claims is drained while the claims continue to be filed.
“Yarway’s goal is to negotiate, obtain approval of, and consummate a plan of reorganization that establishes an appropriately funded trust to provide for the fair and equitable payment of legitimate current and future Yarway Asbestos Claims, accompanied by appropriate injunctive relief permanently protecting Yarway and certain other protected parties from any further asbestos claims arising from products manufactured, sold, and/or distributed by Yarway,” the company says.
20 Law Firms
Yarway says that before filing its Chapter 11 petition, it engaged in discussions with an ad hoc committee of law firms representing asbestos personal injury claimants and a representative for future claimants hired by the company. However, the talks did not result in an agreement on the terms of a reorganization plan or structure of an asbestos trust, Yarway says.
Yarway’s petition includes a list of 20 law firms representing the largest number of plaintiffs asserting asbestos claims against the debtor. The company also filed a more than 200-page master creditor list, a request to appoint James L. Patton Jr. as future claimants’ representative and a request to continue using a Bank of New York Mellon bank account that contains approximately $ 14.28 million.
Bankruptcy Judge Brendan Linehan Shannon has been assigned to the case.
Yarway is represented by Norman L. Pernick, J. Kate Stickles and Therese A. Scheuer of Cole, Schotz, Meisel, Forman & Leonard in Wilmington and Larry J. Nyhan, Kenneth P. Kansa, Dennis M. Twomey and Allison Ross Stromberg of Sidley Austin in Chicago.