Federal-Mogul Corporation

Federal-Mogul Bankruptcy and Asbestos Trust

Many of Federal-Mogul’s asbestos litigation claims arose after it acquired companies that manufactured asbestos products.

Two major acquisitions occurred in 1998 when Federal-Mogul purchased Fel-Pro and Turner & Newall. Fel-Pro manufactured gaskets and seals that contained asbestos ingredients. Turner & Newell, Europe’s largest manufacturer of asbestos-containing construction materials, also produced brake pads, bearings and other automotive parts.

Financial turmoil of the asbestos claims accompanying Federal-Mogul’s acquisitions led the company to file Chapter 11 bankruptcy in 2001.

Although the company nearly tripled in size during the 1990s, Federal-Mogul didn’t emerge from bankruptcy until 2007. That year, the company created the Federal Mogul Asbestos Personal Injury Trust to handle current and future asbestos-related claims.

The trust is split into sub-funds, one handling claims related to Turner & Newell and a second covering all other claims. The payment percentage, which is how much the trust pays out for the scheduled value of a claim to ensure funds remain in the trust, is 8.5%.

In September 2021, the trustees announce policy changes in response to the COVID-19 pandemic. One of the policy changes no longer requires notarization of release documents and instead allows the signature of one witness.

On Oct. 1, 2018, Tenneco completed an acquisition of Federal-Mogul for $800 million in cash and roughly $30 million in Tenneco shares and assumption of debt.

Asbestos Lawsuits Against Federal-Mogul

Federal-Mogul attempted to avoid bankruptcy by shedding its workforce and closing manufacturing facilities, but no strategy could save the company from the sheer number of asbestos-related lawsuits stemming from the Turner & Newall acquisition.

By the time Federal-Mogul filed for bankruptcy, it had more than 156 subsidiaries and affiliates. A number were involved in asbestos litigation suits, totaling nearly 350,000 individual claims.

When Federal-Mogul acquired Turner & Newall, it set aside approximately $2.1 billion as a reserve to pay for asbestos-related claims, but the amount proved insufficient.

Although Federal-Mogul cites Turner & Newall as the driving force that sent the company into bankruptcy, Flexitallic Gasket Company, another subsidiary, is the defendant most often named in recent asbestos claims.

In a 2001 case involving 22 former Texaco workers, a jury awarded the plaintiffs $35.2 million as compensation for their workplace exposures to asbestos. While employed at the Texaco refinery from the 1940s to the 1970s, these workers handled asbestos-containing Flexitallic gaskets and later developed asbestosis.

The former owners of Federal-Mogul subsidiary Flexitallic (U.S. Gypsum Co. and Gasket Holdings), were responsible for paying the $35.2 million. Each former employee received $1.6 million.

Federal Mogul Asbestos Products & Occupations at Risk

Federal-Mogul Corporation’s core manufacturing businesses did not generally involve asbestos. However, the company exposed itself to asbestos liability after acquiring companies that manufactured asbestos-contaminated building materials.

As a result, anyone who worked with asbestos products made by Federal-Mogul, Turner & Newall, Flexitallic Gasket Company and others may be at risk for developing mesothelioma or another asbestos-related disease.

High-risk occupations include construction workers, mechanics, shipyard workers, refinery workers and refractory plant workers.

Employees who manufactured products for asbestos companies that Federal-Mogul acquired may have also faced asbestos exposure hazards. Workers often handled asbestos materials and used machines that contained asbestos parts.

Recommended Reading