District court clears Sepco's asbestos trust plan
The U.S. District Court for the Northern District of Ohio affirmed Sepco's second amended Chapter 11 plan and the bankruptcy court's findings in full, including the section 524(g) asbestos personal injury channeling injunction, and authorized the plan proponents to immediately implement the plan and establish the Asbestos Personal Injury Trust source filing. The order follows Sepco's January 14, 2016 Chapter 11 filing, which put a largely legacy asbestos-liability case into court after the family-owned company, incorporated in 1933, had ceased active operations in 1995 and faced roughly 4,816 open asbestos personal injury claims plus about 32,238 technically pending but potentially inactive claims source filing.
The confirmed structure converts Sepco into a trust-funded asbestos resolution vehicle. Hartford agreed to pay $17.5 million and the Allianz settling insurers, including Fireman's Fund, agreed to pay $2.25 million, with the qualified settlement fund balance moving into the trust on the effective date source filing. The trust also receives all stock of Reorganized Sepco and net revenues from a real estate business built around a 33.33% interest in Moores Commercial Unit, LLC, while allowed priority, secured, and general unsecured non-asbestos claims are paid in full and existing equity is cancelled. Class 4 asbestos claimants and Class 5 intercompany creditors both voted 100% to accept the plan, with 39,803 asbestos votes counted source filing.