On Monday, April 22, 2013, Yarway Corporation filed a chapter 11 petition for bankruptcy in the United States Bankruptcy Court for the District of Delaware. According to papers filed by Yarway with the Bankruptcy Court, the company’s origins go back to 1908 when it started manufacturing pipe clamps, steam traps and valves. See Yarway’s Affidavit in Support of First Day Pleadings (the “Decl.”), at *1. The company was privately owned until 1986, when it was sold to Keystone International, Inc.. Keystone was purchased by Tyco International Ltd. in 1997. Decl. at *2
According to its Declaration, Yarway “allegedly manufactured, distributed and/or sold asbestos-containing products, which ceased entirely by 1988.” Decl. at *2. The company stopped its manufacturing operations entirely in 2003 when it sold its manufacturing facility to an unrelated third party. Id. Even after the company sold off its manufacturing assets, it remained in existence in order to “defend, process and satisfy asbestos-related claims asserted against it.” Id. It’s these asbestos related claims which are the basis for Yarway filing for bankruptcy.
Reasons for Bankruptcy
Yarway contends that its bankruptcy filing is the result of the continued flow of asbestos-related claims due to human exposure to the company’s asbestos-containing products. The company places the asbestos claims in two primary categories: (1) claims stemming from exposure to Yarway’s gaskets and packing that was manufactured between the 1920s to the 1970; and (2) claims relating to the manufacture of joint packing consisting of Teflon and asbestos from the 1940s to the 1970s. Decl. at *3.
Yarway is faced with a huge amount of asbestos-related litigation. The company contends that it was first named as a defendant in a lawsuit in 1991. In the last five years over 10,000 new asbestos-related claims have been asserted against the company. Since the beginning of Yarway’s fiscal year (October 1, 2012), Yarway has received over 1,000 new asbestos claims. Decl. at *3. In the past five years, Yarway has paid over $128 million in settlement costs for asbestos claims. That number reached $18 million for this fiscal year alone. Id.
Objectives in Bankruptcy
Yarway contends that in 2012 it settled the last of its insurance policies known to provide coverage for asbestos-related claims. The company believes it has no additional insurance coverage for future claims. Decl. at *3-4. By filing for bankruptcy, Yarway hopes to “negotiate, obtain approval of, and consummate a plan for reorganization that establishes an appropriately funded trust to provide for the fair and equitable payment of legitimate current and future Yarway asbestos claims …” Decl. at *4.
The Yarway bankruptcy is before Judge Brendan L. Shannon, under case no. 13-11025(BLS). Yarway is represented by the law firms Sidley Austin LLP and Cole Schotz Meisel Forman & Leonard.