It is not entirely uncommon for companies that exposed Ohio workers or consumers to asbestos to ultimately need to file for bankruptcy. The reason behind that common move is fairly straight forward, as asbestos exposure can cause catastrophic injuries that often lead to claims against a company. Garlock Sealing Technologies is no exception, although it appears that despite the company's bankruptcy, it still intends to care for those who were seriously harmed by asbestos.
Originally, an estimate from a bankruptcy judge placed Garlock's total liability for asbestos-related injuries at roughly $125 million. This is the amount that the company needed to plan to have in place for not only current claims against it but also for future claims as well. Instead, Garlock negotiated a significantly higher settlement of $358 million. That is more than double the original estimate, although Garlock will have 40 years to set that amount aside.
In addition to this amount, Garlock also decided to set aside an additional $130 million. This fund will be used for asbestos victims who refuse the company's offered settlement and instead want to pursue their claims in court. Depending on the severity of some of the victim's injuries and the costs associated with treatments, this may not be an unreasonable course of action.
Although companies who file for bankruptcy because of debt stemming from asbestos exposure claims do routinely create accounts containing funding set aside for victims, they do not typically commit to an amount that is much larger than their estimated liability. Although no amount of compensation could ever undo the devastating harm caused by asbestos, a company acknowledging that wrong was done and committing to properly compensating victims can be refreshing. For victims in Ohio, being awarded compensation may allow them a small sense of peace and justice.
Source: Forbes, "Garlock Deal With Future Asbestos Claimants Sets Up Battle With Present Ones", Daniel Fisher, Jan. 14, 2015