Trane Files for Bankruptcy as Asbestos Claims Grow
MAAC StaffNovember 5, 2020
Trane Technologies PLC recently created two new business units: Aldrich Pump LLC and Murray Boiler LLC. Both units filed for Chapter 11 bankruptcy on June 18, 2020.
The bankruptcy allows them to create an asbestos trust fund. The trust can then pay current and future claimants. It would also help manage the asbestos claims Trane faces each year.
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Why Would Trane File for Bankruptcy Protection?
Trane’s business units filed for bankruptcy to change the process of paying asbestos-related personal injury claims.
Currently, the company pays claims through settlements and court verdicts. Bankruptcy enables the company to fund a trust. The trust can speed up the claims-filing process and lower payout amounts.
According to reports from a Trane spokesperson, the companies currently resolve 900 lawsuits related to asbestos products. The lawsuits arise from claimants who allege the asbestos products caused them to develop mesothelioma and other asbestos illnesses.
Trane and its business units currently pay almost $100 million in settlement and defense costs each year. A trust fund would ensure payment of current and future claimants. It would also streamline the filing process for victims.
Why Are These New Companies Responsible for the Lawsuits?
Trane formed the new business units during a corporate restructuring in May. Aldrich and Murray then absorbed asbestos liabilities previously held by Trane and Ingersoll Rand.
Ingersoll Rand, Trane, Aldrich and Murray are all intertwined. Ingersoll Rand is the main industrial company. Trane (Trane Technologies PLC) falls under it. Aldrich Pump LLC and Murray Boiler LLC are business units under Trane.
How Does Filing for Bankruptcy Impact Trane?
Bankruptcy can allow Trane to avoid asbestos lawsuits. Instead, a trust fund created during the bankruptcy process would handle all current and future claimants.
The two bankrupt business units will create a trust fund before reemerging from bankruptcy. At this time, there will be a set payment percentage and schedule. The trust’s payment percentage could change based on funding. This is to ensure all successful claimants are compensated by the defendant.
What’s Next in Trane’s Bankruptcy Proceedings?
Aldrich Pump LLC and Murray Boiler LLC filed for bankruptcy on June 18, 2020, in North Carolina. Both companies claimed debts of more than $1 million at the time of filing.
Since the filing, the coronavirus pandemic has slowed Trane’s bankruptcy process.
As of the end of October 2020, disposition hearings continue. Additional information about trust approval should be forthcoming.