The Medina, OH based RPM International, makers of Rust-Oleum and other specialty paints, has agreed to spend nearly $800 million to fund a trust that would resolve asbestos-based personal injury claims against the company. The settlement is less than the $1.17 billion a judge had previously suggested they could owe and still needs to be approved by a U.S. bankruptcy court.
Details of the agreement are provided by MarketWatch:
Under the terms of the agreement in principle, a trust will be established under Section 524(g) of the United States Bankruptcy Code for the benefit of current and future asbestos personal injury claimants, funded as follows:
• Upon the plan becoming effective, the trust will be funded with $450 million in cash;
• On or before the second anniversary of the effective date of the plan, an additional $102.5 million in cash, RPM stock or a combination thereof (at the discretion of RPM in this and all subsequent cases) will be deposited into the trust;
• On or before the third anniversary of the effective date of the plan, an additional $120 million in cash, RPM stock or a combination thereof will be deposited into the trust; and
• On or before the fourth anniversary of the effective date of the plan, a final payment of $125 million in cash, RPM stock or a combination thereof will be deposited into the trust.
The settlement hinges on a reorganization plan for Bondex and Specialty Products, owned by RPM. As Bloomberg explains, bankrupt companies can win immunity from future lawsuits by setting up trusts such as the one agreed upon here.