US car parts maker Federal-Mogul has filed for Chapter 11 bankruptcy in an attempt to protect itself from mounting asbestos claims.
The company inherited huge asbestos liabilities when it bought British company T&N for £1.5bn in 1997. At the time, it made provision for T&N's lawsuits by setting aside $2.1bn, but that is apparently not enough to cope with the scale and level of the claims.
The company's chairman and chief executive, Frank Macher, said a complicated £500m insurance package arranged by T&N to cap liabilities above £380m had yet to pay out. It is believed the insurance was taken with Zurich Financial Services, Swiss Re and Munich Re.
Federal-Mogul said its British businesses would continue to operate and that none of its 4,500 workforce would lose their jobs.
