Honeywell agreed to pay $1.3 billion in a lump sum to settle obligations on their asbestos trust. According to Reuters, payment will substantially limit Honeywell’s obligations to the trust.
The asbestos trust stems from the bankrupt North American Refractories Company (NARCO), which Honeywell controlled from 1979 to 1986. Asbestos claims led NARCO to file for bankruptcy in 2002.
What are asbestos trusts?
Asbestos or mesothelioma trust funds are compensatory creations that help victims of negligent asbestos companies. Companies that face liability for mesothelioma claims often file for Chapter 11 bankruptcy. The bankruptcy court orders the company to set aside funds for their victims. NARCO’s products harmed workers in power plants, factories, railyards and shipyards. They also manufactured brake pads that caused mesothelioma.
Why did Honeywell settle?
When NARCO filed for bankruptcy, Honeywell took over funding obligations. Honeywell funded an estimated $523 million, paid out by The NARCO Asbestos Personal Injury Settlement Trust. However, Honeywell sued in 2021 under the pretense that not many claimants did not deserve their payouts. The trust countersued, leading to the eventual $1.3 billion lump sum agreement.
After paying the sum, Honeywell may remove the NARCO asbestos trust from their liabilities. The total amounts to $695 million on their balance sheet. Honeywell still has access to payments from their asbestos insurance policies.
This settlement comes as a bittersweet resolution for the victims of NARCO’s asbestos products. Honeywell will continue to turn a profit and remove the liability of asbestos claims from the balance sheet. However, the trust will award victims of asbestos products with their deserved settlement much faster than most lawsuits.