SOUTHFIELD, MI — Federal-Mogul Corp. and its Official Committee of Unsecured Creditors this week submitted a joint letter to the U.S. Senate strongly opposing the creation of a national asbestos trust fund. The company and committee claim the proposal would have an “extremely inequitable and adverse impact” on Federal-Mogul and its future viability.
In a press release issued this week, Federal-Mogul said both the company and its creditors support efforts to reform the asbestos litigation crisis through passage of a medical criteria bill and also support enactment of meaningful tort reform measures, but they “cannot support a national trust that imposes a grossly disproportionate payment obligation on Federal-Mogul while providing a bailout to a small number of companies that are responsible for the lion’s share of the most serious asbestos claims in the tort system.”
If approved, the trust fund would require mandatory annual payments for a period of nearly 30 years from companies involved in asbestos litigation. According to the release issued by Federal-Mogul, the trust fund would strip companies of their insurance coverage for asbestos claims — coverage on which premiums have been paid and that would be forfeited, perhaps unconstitutionally.
The company said this legislation would make Federal-Mogul the largest proposed contributor to the national asbestos trust, requiring it to pay a far greater amount to the trust fund than it would under its reorganization plan, while simultaneously eliminating the company’s ability to access its insurance assets to compensate foreign asbestos claimants.
In their letter, Federal-Mogul and its creditors committee outlined the legislation would have on the company if passed, and urged Senators to consider alternative legislation establishing medical criteria as a more equitable solution to the asbestos litigation crisis.
This letter follows a Jan. 3 business coalition letter to Senate Judiciary Committee Chairman Arlen Specter (R-PA) signed by Exxon Mobil, DuPont, Federal-Mogul and the Creditors Committee, and other U.S. businesses opposing the national trust.
For more information about Federal-Mogul, go to: http://www.federal-mogul.com.
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