Creditors of the UK subsidiaries of the US industrial giant Turner & Newell have been asked to approve a new scheme to ring fence its asbestos liabilities.

The company voluntary arrangements (CVAs) proposed by the firm if accepted will enable the T&N group to trade forwards in the UK, free of the legacy of liability. T&N's asbestos claimants will receive payments in settlement of the claims against them under the CVAs.

Creditors have been invited to a series of meetings to be held in Manchester on 7 September, where they will be able to express their views on the new arrangements.

T&N was involved in the large-scale manufacture and distribution of asbestos and asbestos-containing products in the US and UK prior to its acquisition by Federal Mogul Corporation in the UK in 1997. The substantial rise in prospective liabilities for asbestos related diseases, along with an inexorable rise in damages awards for these conditions, led the group to embark on US bankruptcy and English administration processes at the beginning of October 2001.

Law firm Lovells has advised the Official Committee of Asbestos Claimants (the ACC) of Federal Mogul in respect of the CVAs.

Lovells’ Joe Bannister, said: "The mailing of the CVAs to creditors is the result of four years' intricate and highly innovative work by the legal advisers to the companies and the key stakeholders including our clients.

“The legal and accounting teams have devised a way to protect the companies from their liabilities for asbestos personal injury claims. This is a key stage in the wider task of concluding a successful balance sheet restructuring of the US parts of the Federal Mogul group. Furthermore, the CVAs, assuming they are approved by creditors, illustrate the flexibility of English techniques for compromising claims and delivering bespoke solutions for complex multinational groups."