Yarway agrees to contribute $325 million to asbestos trust under plan

By Caroline Salls

Pittsburgh, Oct. 14 – Yarway Corp. reached an agreement in principle with parent Tyco International Ltd., the official committee of asbestos claimants appointed in Yarway’s Chapter 11 case and a future claims representative to fund a section 524(g) trust for the resolution and payment of current and future Yarway asbestos claims, according to an 8-K filed by Tyco with the Securities and Exchange Commission.

The agreement in principle, which will be implemented through a Chapter 11 plan for Yarway, will resolve the potential liability of company protected parties for pending and future derivative personal injury claims related to exposure to asbestos-containing products that were allegedly manufactured, distributed and/or sold by Yarway.

Under the Chapter 11 plan, an asbestos settlement trust will be established.

Yarway will contribute a total of $325 million in cash to the trust, which includes $100 million related to the settlement of intercompany amounts allegedly due to Yarway.

In exchange for the trust contribution, Tyco said each of the company-protected parties will receive the benefit of a release from Yarway and an injunction under section 524(g) of the Bankruptcy Code permanently enjoining the assertion of Yarway asbestos claims against those parties.

The agreement in principle is subject to the negotiation and filing of a Chapter 11 plan, acceptance of the plan by at least 75% of Yarway’s current asbestos claimants voting on the plan, confirmation of the plan by the U.S. Bankruptcy Court for the District of Delaware and approval of the injunction by the U.S. District Court for the District of Delaware.

The plan is expected to take effect in the second half of fiscal 2015. The agreement in principle will expire if the plan confirmation order and district court affirmation have not been entered by April 30, 2015 or if the plan has not taken effect by Sept. 15, 2016.

Tyco said claims filed against Yarway derive from Yarway’s purported use of asbestos-containing gaskets and packing in the sale or distribution of steam valves and traps and from its alleged manufacture of asbestos-containing expansion joint packing.

Yarway, a Boca Raton, Fla.-based industrial valve maker, filed for bankruptcy on April 23, 2013. Its Chapter 11 case number is 13-11025.

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