A bankruptcy court judge has approved McDermott International Inc.’s plan to settle asbestos claims for somewhere between $375 million and $955 million, according to reports. The final amount depends on whether Congress creates a national trust fund for asbestos claims, according to the Associated Press.
The settlement agreement was part of the reorganization plan for Babcock & Wilcox Co., a McDermott subsidiary that was the target of the claims and that filed for Chapter 11 protection in 2000. U.S. District Judge Sarah Vance signed off on the reorganization earlier this week.
After it filed for bankruptcy protection, the subsidiary was deconsolidated from McDermott’s reported financial statements. In 2002, the AP added, McDermott wrote off its remaining investment in B&W for $224.7 million. Once the reorganization plan becomes effective, the company will be reconsolidated in McDermott’s financials.
“This is an important day for McDermott, our shareholders, B&W’s customers, and the asbestos-related claimants,” said Bruce W. Wilkinson, chairman and chief executive officer of McDermott, in a statement.
The AP pointed out that Congress is considering the creation of a $140 billion trust fund to compensate people sickened by exposure to asbestos. Senate Majority Leader Bill Frist (R-Tenn.) has said that the bill is the Senate’s first priority this year, the wire service added.
The trust would be funded by asbestos defendant companies, including McDermott, W.R. Grace and Co., and Owens Corning, as well as their insurers, according to Reuters.
McDermott spokesman Jay Roueche told the AP that under B&W’s settlement, insurance companies would pay $1.1 billion while McDermott would shell out $350 million to a separate trust fund handling the B&W case, regardless of what happens to the bill.
If the bill is not passed by November 30, Roueche reportedly added, McDermott will be on the hook for another $350 million as well as a $250 million note; if it has passed, the additional payments will only amount to another $25 million.