Dogged by asbestos claims, United Gilsonite Laboratories (UGL) has filed a voluntary petition for Chapter 11 bankruptcy reorganization in a Pennsylvania U.S. district court. The paint and coatings manufacturer is seeking court approval to establish a trust fund to settle outstanding claims and an injunction preventing asbestos-related awards except though the trust.
UGL used asbestos in joint compound but discontinued the practice more than 30 years ago, according to the company.
“In recent years we’ve been burdened with significant asbestos claims that threaten to undermine our strong company,” said Thomas White, president of UGL, in a prepared statement. “This filing is a proactive step to ensure the continued success of UGL for the long-term and we are pleased that there is a clear path to effectively resolve these historic liabilities fully and finally.”
If the court approves the establishment of a trust, UGL and its insurers would create a pool of revenue, and asbestos claimants would petition a committee for payments.
“We will put money in the court-approved trust for asbestos victims in order to win immunity from future lawsuits,” Michele Margotta Neary, UGL’s public relations director, explained to HCN. “Once that trust is funded, UGL will immerge in the free and clear. This will be the only money available to asbestos victims. It is a sound financial decision because at this point, we were fighting claims with no end in sight and with uncertainty of the dollar amount.”
Based in Scranton, Pa., UGL manufactures more than 80 products, including Drylok, a waterproofing and leak-prevention compound, and Zar wood finish.