March 13, 2009  
ASBESTOS LITIGATION: Suits Still Pending v. Inactive Quaker Unit

An inactive subsidiary of Quaker Chemical Corporation continues
to be a defendant in numerous lawsuits alleging injury due to
exposure to asbestos, according to the Company's annual report
filed with the Securities and Exchange Commission on March 5,
2009.

The Company acquired the subsidiary, which sold certain products
containing asbestos, in 1978. The subsidiary discontinued
operations in 1991 and has no remaining assets other than the
proceeds from insurance settlements received.

To date, most of these claims have been disposed of without
payment and there have been no adverse judgments against the
subsidiary. It is currently projected that the subsidiary's
total liability over the next 50 years for these claims is about
US$12.2 million (excluding costs of defense).

These cases were handled by the subsidiary's primary and excess
insurers who had agreed in 1997 to pay all defense costs and be
responsible for all damages assessed against the subsidiary
arising out of existing and future asbestos claims up to the
aggregate limits of the policies.

A significant portion of this primary insurance coverage was
provided by an insurer that is now insolvent, and the other
primary insurers have asserted that the aggregate limits of
their policies have been exhausted. The subsidiary has
challenged the applicability of these limits to the claims being
brought against the subsidiary.

In response to this challenge, two of the three carriers entered
into separate settlement and release agreements with the
subsidiary in late 2005 for US$15 million and in the first
quarter of 2007 for US$20 million.

The payments under the latest settlement and release agreement
are structured to be received over a four-year period with
annual installments of US$5 million, the first of which was
received early in the second quarter of 2007, and the second of
which was received in the first quarter of 2008.

The subsequent installments are contingent upon whether or not
Federal asbestos legislation is adopted by the due date of each
annual installment.

During the third quarter of 2007, the subsidiary and the
remaining primary insurance carrier entered into a Claim
Handling and Funding Agreement, under which the carrier will pay
27 percent of defense and indemnity costs incurred by or on
behalf of the subsidiary in connection with asbestos bodily
injury claims for a minimum of five years beginning July 1,
2007.

At the end of the term of the agreement, the subsidiary may
choose to again pursue its claim against this insurer regarding
the application of the policy limits.

The Company also said it believes, that if the coverage issues
under the primary policies with the remaining carrier are
resolved adversely to the subsidiary and all settlement proceeds
were used, the subsidiary may have limited additional coverage
from a state guarantee fund established following the insolvency
of one of the subsidiary's primary insurers.

Headquartered in Conshohocken, Pa., Quaker Chemical Corporation
develops, produces, and markets formulated chemical specialty
products for various heavy industrial and manufacturing
applications. The Company offers and markets chemical management
services.
return to main page

   
   
   
   
   
   

 


Lloyd's Asbestos Litigation Reporter is a weekly newsletter distributed every Friday co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA.

Copyright 2008. All rights reserved. ISSN: 1945-4694.

This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed.

The Lloyd's Asbestos Litigation Reporter subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof, are $25 each. For subscription information, contact Christopher Beard at 240/629-3300 ext 1.