Legislation & Litigation
reading time: 3 minutes
Release date: 11/28/2022
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To cite the Asbestos.com article
Povtak, T. (2022, November 28). Honeywell is funding the Asbestos Trust with $1.3 billion asbestos.com. Retrieved November 28, 2022 from https://www.asbestos.com/news/2022/11/28/honeywell-funding-asbestos-trust/
Povtak, Tim. “Honeywell Funds Asbestos Trust With $1.3 Billion.” asbestos.comNovember 28, 2022, https://www.asbestos.com/news/2022/11/28/honeywell-funding-asbestos-trust/.
Povtak, Tim. “Honeywell Funds Asbestos Trust With $1.3 Billion.” asbestos.com. Last modified November 28, 2022. https://www.asbestos.com/news/2022/11/28/honeywell-funding-asbestos-trust/.
To eliminate future funding commitments, Honeywell International Inc. has agreed to make a one-time lump sum payment of $1.325 billion to the Asbestos Trust fund established in 2013.
If the US Bankruptcy Court for the Western District of Pennsylvania agrees, the acquisition agreement would likely end any additional asbestos-related liabilities for Honeywell.
The payment is a significant investment in the future financial stability of the Charlotte, North Carolina-based industrial giant.
Honeywell’s costly asbestos trust fund liability stems from North American Refractories Company, which owned it from 1979-1986.
NARCO was once one of America’s largest manufacturers of asbestos refractories. It manufactured heat-resistant products for Honeywell, used to line high-temperature equipment.
Although asbestos was once widely used for its strength and heat resistance, its toxicity led to serious health problems – including mesothelioma cancer – for those who worked with the products. It has resulted in decades of costly legal ramifications.
Honeywell payout resolves litigation
An asbestos lawsuit bankrupted NARCO in 2002, leaving Honeywell liable for future damages. The North American Refractories Asbestos Personal Injury Settlement Trust was formed in 2013. He has paid an estimated $523 million to those regularly funded by Honeywell to be harmed by NARCO asbestos products.
The damage caused by NARCO asbestos products far exceeded what was used by Honeywell. For example, in the 1970s, NARCO manufactured car brake pads that were also contaminated with asbestos.
Workers in shipyards, power plants, rubber mills, paper mills and train stations have also been harmed by NARCO products.
In 2021, Honeywell sued the trust, claiming it had made undeserved payments to too many claimants. The trust filed its own lawsuit against Honeywell, alleging the company was attempting to evade its original obligation, which was estimated at $150 million annually.
This one-time payment is intended to resolve the legal issues between the Trust and Honeywell and end future obligations for the company. The current $695 million NARCO reserve — once projected to cover asbestos-related claims through 2059 — would be removed from Honeywell’s balance sheet.
“Honeywell hopes that the bankruptcy court will approve the acquisition so that we can permanently wipe the liability off our books,” the company said in a statement first released by Bloomberg News.
According to the recent Securities and Exchange Commission filing, Honeywell will retain the right to collect proceeds from its insurance policies related to NARCO. The Trust reported $21 million in legal fees alone for 2021.
“Should the buyout agreement be approved by the bankruptcy court, the buyout closing would resolve all outstanding litigation currently pending between Honeywell and the trust,” the regulatory filing reads.
Asbestos trusts pay billions to plaintiffs
The NARCO Trust is just one of 60 asbestos-related trusts totaling $30 billion in existence today. Other companies with asbestos trusts include Owens Corning Corporation, United States Gypsum, WR Grace and Company, Armstrong World Industries, Western MacArthur, and Johns-Manville Corporation.
They have paid out an estimated $20 billion to claimants since the 1980s. They were founded by bankrupt companies that were often overwhelmed by the thousands of lawsuits triggered by asbestos contamination.
Escrow claims payouts often range from $7,000 to $1.2 million, with the median estimated at $180,000. Applicants often seek money from more than one trust in a court proceeding.
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