Pittsburgh Corning Corp. is closer to emerging from 13 years in bankruptcy following a judge's confirmation of a reorganization plan that calls for a $3.5 billion trust to resolve thousands of asbestos-related claims that pushed the glass block and insulation company into Chapter 11 protection.
The final plan, confirmed late Friday by U.S. Bankruptcy Court Judge Judith Fitzgerald -- despite objections from some insurance companies involved in the case -- would establish a trust to settle an estimated 235,000 lawsuits from people who claimed the company manufactured and sold asbestos pipe insulation that caused cancer and other illnesses.
The trust will be funded by PPG Industries and Corning Inc., which own Pittsburgh Corning through a 50-50 joint venture, and insurance companies.
Under the plan, PPG would pay about $825 million to the trust through 2023 along with 1.4 million shares of PPG stock or the cash equivalent. Corning would pay $290 million. Insurers for PPG and Corning would pay $1.7 billion.
Once the company is out of bankruptcy, PPG and Corning will relinquish their ownership shares in Pittsburgh Corning, which they founded in 1937 to produce glass block for windows and other applications. The ownership shares will transfer to the trust.
During a hearing on the proposed plan last week, lawyers representing Mt. McKinley Insurance Co. -- one of two insurers that did not support the final plan -- asked Judge Fitzgerald to reconsider her final order, arguing that it would alter their policies.
The judge said it was unlikely she would change her mind.
Though the plan is subject to appeals and approval by the U.S. District Court, Pittsburgh Corning Chairman and CEO Phillip Martineau called it a "turning point" in the long bankruptcy saga.
The trust created to settle the claims, he said, "is intended to help support the people and families who were harmed by asbestos." He doesn't expect the reorganization plan to affect the company's day-to-day operations "other than having different owners."
Plum-based Pittsburgh Corning has about $300 million in annual revenues and 1,500 employees worldwide. It operates three plants in North America and three in Europe plus administrative and sales offices. Last year it announced plans to open a production facility in China.
The lawsuits that sent the company into bankruptcy are related to Unibestos, a pipe insulation product that Pittsburgh Corning produced from 1964 to 1972 at plants in Tyler, Texas, and Port Allegany, McKean County. The Texas plant closed in 1972. Before it filed for Chapter 11 bankruptcy protection, the company resolved more than 200,000 of the claims.
Joyce Gannon: email@example.com or 412-263-1580. First Published May 28, 2013 9:45 AM