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.
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.
Trane’s History of Asbestos Use
Trane and Ingersoll Rand have been named as defendants in asbestos-related lawsuits due to their use of asbestos in HVAC products. The two companies manufactured or sold:
- Other HVAC equipment
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.
Asbestos Trust Fund Basics
- Companies can form asbestos trust funds as part of the reorganization process associated with Chapter 11 bankruptcy.
- Asbestos companies present an estimation of the initial funding for the trust in court.
- A judge approves or denies the bankruptcy and trust fund proposal.
- If approved, a payment structure is created detailing a payment percentage and payment schedule.
- A board of trustees is appointed to manage the asbestos trust.
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.
Other Asbestos Companies Listed as “Interested Parties” in Trane Bankruptcy Documents
- Bestwall LLC
- Honeywell International Inc
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.