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$610 Million Asbestos Trust Fund Approved for O-I Glass (Kaylo Products)

$610 Million Asbestos Trust Fund Approved for O-I Glass (Kaylo Products)

Asbestos Litigation

The US Bankruptcy Court has approved a $619 Million Asbestos Trust Fund. Paddock Enterprises LLC, a wholly owned subsidiary of O-Glass, Inc., will emerge from bankruptcy. 

The reorganization plan received the support of 99% of the Asbestos Claimants, who voted to approve the reorganization plan and establish the Asbestos Trust Fund.


Owens Corning manufactured Kaylo Products that contained asbestos fiber. Decades of workers’ compensation claims and civil actions for negligence have resulted in large monetary awards that exhausted insurance reserves and threatened the economic existence of many asbestos manufacturing companies. Asbestos is a known cause of fatal cancers, including mesothelioma. Since the late 1970’s corporate entities have sought the protection of bankruptcy to avail of total insolvency.


A household contact of a spouse, even though previously employed by her husband's company, may bring an action against the employer of her spouse where there was an exposure to a known carcinogen, such as asbestos, and the spouse contracted mesothelioma as a result of the bystander exposure. Aetna insurance company performed industrial hygiene studies at the Owens Corning Fiberglas Corporation facility in Berlin, NJ, where the employee was exposed to asbestos from 1967 to 1968. The injured worker worked with an asbestos pipe covering Kaylo and took the asbestos products out of the mold. Gelman, Jon L, Workers’ Compensation Law, 38 NJPRAC § 9.22. Asbestos-related disease—Liability claims directly against the employer. (Thomson-Reuters 2023).

The US Bankruptcy Court wrote:

 For a period of time ending in 1958, Old O-I manufactured commercial quantities of certain products under the “Kaylo” brand, which were primarily pipe covering and block insulation products. See Burns Decl. ¶ 4. Kaylo products contained either chrysotile or amosite asbestos fibers, depending on the year of manufacture, and had specific industrial applications. Id.

In April 1953, Old O-I entered into a five-year sales agreement covering Kaylo products with Owens Corning Fiberglas Corporation (“Owens Corning”), which then began distributing Kaylo products. Id. at ¶ 6. Owens Corning purchased the Kaylo business in its entirety from Old O-I in April 1958, and Old O-I did not manufacture or sell any Kaylo products thereafter. Id. No other entities within the Company were ever involved in the production or sale of Kaylo products. Id.

As of the Petition Date, the Debtor had been named as a defendant in personal injury and/or wrongful death or property damage actions seeking recovery for damages allegedly caused by the sale of, manufacture of, presence of, or exposure to, asbestos or asbestos-containing products. Prior to the Petition Date, the Debtor was annually subject to hundreds of new claims and lawsuits alleging personal injuries and death from exposure to Kaylo-related asbestos, and the Debtor was also aware of approximately 850-900 asbestos-related personal injury lawsuits pending against it as of the Petition Date asserting liability for damages caused by its legacy asbestos-related liabilities. See Burns Decl. at ¶ 7.

Most Asbestos Claims were historically presented to the Debtor through a variety of administrative claims-handling agreements. Id. at ¶ 8.

As of September 30, 2019, the Debtor had resolved over 400,000 Asbestos Claims and had incurred gross expense of approximately $5 billion for asbestos-related costs. Id. at ¶ 10. 

Prior to the Petition Date, the Debtor settled or otherwise exhausted all insurance that might cover Asbestos Claims. Id. As such, the Debtor could only rely on Company cash flows to satisfy asbestos-related claims and expenses. Id. 

The Debtor initiated chapter 11 proceedings on January 6, 2020, to utilize section 524(g) of the Bankruptcy Code to establish and fund a trust that would provide for the fair and equitable treatment of all current and future asbestos-related claims and demands. 

In re: PADDOCK ENTERPRISES, LLC Debtor., Slip Copy (2022) Case No. 20-10028 (LSS) Filed 05/31/2022 (United States Bankruptcy Court, D. Delaware. 2022) 2022 WL 1746652

The approved Plan was jointly proposed by Paddock, the Asbestos Claimants’ Committee (“ACC”), the Future Claimants’ Representative (“FCR”), and O-I Glass and received the overwhelming support of Paddock’s asbestos Claimants, with more than 99% voting in favor. 

The centerpiece of the Plan is a trust established under section 524(g) of the Bankruptcy Code (the “Asbestos Trust”) that will process and pay Asbestos Claims under Asbestos Trust Distribution Procedures (“TDP”). In exchange for funding the Asbestos Trust, Paddock and its parent company, O-I Glass, as well as certain additional parties (collectively, the “Protected Parties”), will be protected by an injunction that will prohibit assertion of Asbestos Claims against the Protected Parties and will channel all such Asbestos Claims to the Asbestos Trust. As of the effective date, the Asbestos Trust will be funded with cash and other consideration totaling $610 million. 

Paddock next will seek the United States District Court for the District of Delaware’s (the “District Court”) affirmation of the Bankruptcy Court’s order.  Pending this approval by the District Court, Paddock expects to emerge from Chapter 11 in mid-2022, resulting in a permanent resolution to Paddock’s legacy asbestos liabilities. 

Recommended Citation: Gelman, Jon L., $610 Million Asbestos Trust Fund Approved for O-I Glass (Kaylo Products),, Jun 22, 2022),

By  Jon L. Gelman who practices law in Wayne, NJ. He is the author of NJ Workers’ Compensation Law (Thomson-Reuters) and co-author of the national treatise Modern Workers’ Compensation Law (Thomson-Reuters). For over five decades, the Law Offices of Jon L Gelman  1.973.696.7900 have represented injured workers and their families who have suffered occupational accidents and illnesses.

© 2001-2023 Jon L Gelman. All rights reserved.

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