Another result with Layn Phillips, Clay Cogman and Greg Danilow mediating for Phillips ADR:
Article originally published here
By Lauren Berg
Law360 (October 18, 2024, 11:35 PM EDT) — Carrier Global Corp. revealed in a U.S. Securities and Exchange Commission filing Friday that it will pay at least $615 million as part of a settlement in connection to its ownership of bankrupt Kidde-Fenwal Inc., which faces multidistrict litigation arising from its manufacture of firefighting foam with deadly “forever chemicals.”
In a Form 8-K filing, Carrier explained it will enter three distinct settlement agreements: one with Kidde-Fenwal — now known as KFI Wind-Down Corp.; a second with the official committee of unsecured creditors appointed in KFI’s bankruptcy case; and a third with the co-leads of the plaintiffs’ executive committee appointed in the firefighting foam MDL in South Carolina federal court.
Kidde-Fenwal filed for bankruptcy in May 2023 because of the thousands of lawsuits it faces from firefighters, water suppliers, governmental entities and others over its aqueous film-forming foam, which is used to put out fires.
Claimants assert that the product contains per- and polyfluoroalkyl substances, or PFAS, that are dangerous to public health and the environment. The company was facing more than $1 billion in claims when it entered Chapter 11.
The first of Carrier’s proposed settlements relates to estate claims, the filing states.
“Upon bankruptcy court approval, the estate claims settlement will permanently resolve all present and future claims that Carrier is responsible for any liabilities of KFI, including all liabilities arising from KFI’s manufacture and sale of” the firefighting foam, Carrier said.
The other two proposed settlements relate to a “substantial amount” of direct claims against Carrier on allegations that United Technologies Corp. — which was spun-off as part of Carrier’s separation from the company in April 2020 — engaged in conduct separate from KFI that harmed MDL claimants, according to the filing. As part of their split, Carrier said it had agreed to indemnify UTC for the direct claims.
Carrier emphasized in the filing that it is not admitting liability or wrongdoing by entering into the settlement agreements.
Under the agreements, Carrier will pay $615 million in cash over five years; all net sale proceeds from the sale of KFI’s assets, which are estimated to be $115 million; and contribute a portion of the right-to-recover proceeds under insurance policies. Carrier will receive up to $2.4 billion of proceeds from such insurance policies and will contribute the first $125 million to the direct claim settlements, the filing states.
Carrier said it expects the insurance payments it receives, on the whole, to cover the full amount required under the proposed settlements.
A representative for the company did not immediately respond to a request for comment late Friday.
In August, Carrier announced that it had inked an agreement to sell its commercial and residential fire units to an affiliate of Lone Star Funds at an enterprise value of $3 billion, completing the company’s strategic plan to sell off several business units and focus on its core ventilation business.
Paul Weiss Rifkind Wharton & Garrison LLP and Linklaters LLP are guiding Carrier on the deal, which is expected to close by the end of the year, subject to regulatory approvals and other customary conditions, Carrier said.
The sale is the final piece of a plan Carrier disclosed when it agreed to buy Viessmann Climate Solutions in April 2023 in a roughly $13.2 billion deal. At that time, the company said it would exit its fire, security and commercial refrigeration businesses.
Before that deal, Carrier agreed to sell its industrial fire business to Sentinel Capital Partners for about $1.4 billion; the security business to Honeywell at an enterprise value of about $5 billion; and the commercial refrigeration business at a $775 million enterprise value.
–Additional reporting by Al Barbarino and Vince Sullivan. Editing by Michael Watanabe.
