Cooper Industries, Ltd. announced that they will be contributing $130 million and 1.4 million shares of their stock to a trust specifically set up for insurance claims dealing with asbestos poisoning. The company owned Federal Mogul, a car parts company that used asbestos in certain car parts until the damaging effect of the poison was observed.
In a move to prevent bankruptcy and litigation, Cooper Industries, Ltd. started to form a trust in which stock and cash contributions will be allotted for insurance and lawsuit finances. Cooper Ltd. sold the parts company to Federal Mogul, a car parts company which used asbestos in their brake pads and linings. Smaller companies were bought and absorbed by Federal Mogul, implementing the asbestos parts in the production lines of those companies. In the face of multiple lawsuits over the asbestos-filled parts at the acquired companies, Federal Mogul filed bankruptcy in 2001.
The motion states that Federal Mogul, Cooper Industries Ltd. and Abex, a brake making company affiliated with Federal Mogul, will contribute to the trust cash and stock every business quarter. More than 38,000 outstanding claims are still pending against Abex, making Abex a large contributing factor to the 365,000 claims against Federal Mogul. Once the company emerges from their filed bankruptcy, Cooper Ltd. will step in and contribute the first $130 million to the trust. It expects to contribute more than $20 million a year for 25 years in order to facilitate future claims.
A New York based company, M&F Worldwide Corp., will be contributing to the trust as well. M&F is a producer of sweeteners and tobacco additives, but is tied to the lawsuits through their Pneumo Abex LLC unit, which sold the brake company to Cooper Ltd. The first contribution is expected to amount to more than $10 million.
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