The Pump Company

A pump manufacturer purchased a Newcastle-based company and their subsidiaries for £ 12 million. The various companies had been operating since the1930s and at various times used asbestos panelling to insulate the pumps which also contained asbestos gaskets. The main exposure was replacing gaskets, which had become worn and friable.

On completing the purchase the client obtained a full indemnity from the vendor against all past liabilities.

To date 7 claims have arisen against the company, 4 for minor asbestos disease, 1 for asbestosis and another 2 for mesothelioma. As both mesothelioma claims are for family men with school aged children, the overall claims costs are estimated in excess of £ 1 million.

However the indemnities were unenforceable in law, as within the sale the indemnity was provided by a company which the vendors quickly liquidated.

As such the purchasers, who thought themselves protected, were forced to fund all claims themselves.

Had an indemnity been obtained which provided joint & several liability against any or all of the vendor company’s subsidiaries, the client may have been able to recover its costs.

InSolutions managed to trace EL coverage back to 1963, reducing the clients costs by approximately £ 600,000.

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