To separate its asbestos liabilities from its true operating potential, Federal-Mogul Corporation and its US subsidiaries have voluntarily filed for financial restructuring under Chapter 11 of the US Bankruptcy Code.
In addition, Federal-Mogul subsidiaries in the United Kingdom have filed jointly for Chapter 11 and Administration under the UK Insolvency Act of 1986. No company subsidiaries outside of the United States and the United Kingdom are included in these filings.
The filings, made in the US Bankruptcy Court in Wilmington, Delaware, and the High Court of Justice, Chancery Division, London, England, enable Federal-Mogul to develop a plan to resolve its asbestos liabilities. During these restructuring proceedings, Federal-Mogul will continue business operations without interruption.
In conjunction with the filings, Federal-Mogul has obtained commitments of up to $675 million in a new loan through debtor-in-possession financing from a group of banks led by JP Morgan Chase & Co.
Following the US Court’s approval, Federal-Mogul can use these funds to meet the future needs and obligations associated with normal business operations. This includes payment under normal terms to suppliers and vendors for all goods and services that are provided after today’s filing.
No Federal-Mogul job losses or facility closures are expected as a direct result of the filings. The company expects its employees worldwide will continue to be paid in the normal manner and that their benefits will not be disrupted.
Federal-Mogul is one of more than 30 companies involved in asbestos-related litigation to voluntarily file for Chapter 11 since 1982. Ten companies involved in asbestos-related litigation have filed since January 1, 2000.