An asbestos trust fund will now handle all claims against Owens-Illinois Inc. In 2019, Owens-Illinois split into two companies, O-I Glass Inc. and a subsidiary called Paddock Enterprises LLC. It placed its asbestos liabilities in Paddock, after which Paddock declared bankruptcy. In June 2022, a bankruptcy court approved the plan to create the trust fund.
Owens-Illinois’s strategy, called the “Texas Two-Step,” is gaining acceptance in bankruptcy courts. This past February, a court approved Johnson & Johnson’s (J&J) use of the same tactic. Critics of the strategy warn that it threatens the integrity of the bankruptcy system.
Owens-Illinois Inc. Asbestos Products Led to Hundreds of Thousands of Lawsuits
Mesothelioma lawsuits against Owens-Illinois go back decades. The lawsuits stem from a period in the 1940s and 1950s when the company manufactured its Kylo brand of asbestos products. These products included block insulation, pipe covering and pipe insulation.
This period of manufacturing asbestos insulation put many people at risk of asbestos exposure, including:
- Occupants of older buildings: Older homes, schools and other buildings may still contain Owens-Illinois asbestos products.
- Owens-Illinois employees: Owens-Illinois employees risked occupational exposure if they worked around Kylo insulation products.
- Tradespeople: Tradespeople who used Owens-Illinois asbestos products risked asbestos exposure. At-risk tradespeople include boilermakers, construction workers and roofers.
Owens-Illinois asbestos products have resulted in hundreds of thousands of lawsuits. For 2019, the company estimated its asbestos liabilities amounted to almost $500 million. The same year, the company reported a market value of almost $2 billion.
Owens-Illinois Inc. Used “Texas Two-Step” Maneuver to Shield Itself From Asbestos Lawsuits
In late 2019, Owens-Illinois developed a plan to offload its asbestos liabilities and protect the company from asbestos lawsuits. The plan ultimately resulted in the creation of an asbestos trust fund in June 2022. To establish the trust, the company used a legal move called the “Texas Two-Step.”
The Two Steps in the “Texas-Two Step” Explained
- Step 1: A company splits itself into two companies. It places its valuable items, or assets, in one of the new companies. At the same time, it puts its financial obligations, or liabilities, into the other new company.
- Step 2: The new liability-holding company files for bankruptcy. The new company cites its financial obligations and lack of assets as the reason for seeking a bankruptcy reorganization. The bankruptcy proceedings provide certain protections, like halting asbestos lawsuits.
First, Owens-Illinois split into two companies: O-I Glass Inc. and a subsidiary called Paddock Enterprises LLC. The company then put all its asbestos liabilities onto the new subsidiary. Less than a month later, Paddock declared bankruptcy.
In June 2022, Paddock emerged from its bankruptcy proceedings and established an asbestos trust fund. According to the trust plan, the trust will also handle all claims against O-I Glass.
The plan states that both Owens-Illinois offshoots are insulated from asbestos lawsuits. Instead of filing a lawsuit against Owens-Illinois, mesothelioma patients must file a claim with the trust. The trust is being funded with $610 million to handle all present and future asbestos claims.
Asbestos Trust Fund Claims Are Just One Compensation Option for Mesothelioma Patients
Mesothelioma patients may have several options for compensation. Asbestos victims can no longer file lawsuits against Owens-Illinois. But many victims were exposed at more than one jobsite and may be able to file a lawsuit against other companies.
Lawsuits may result in higher payouts than asbestos trust claims. At the same time, filing a lawsuit does not prevent mesothelioma patients from taking other types of legal actions like filing a trust fund claim.
A mesothelioma lawyer can help patients explore their various options for compensation.