Carrier Global Corporation (CARR, Financial) has announced a significant development in its ongoing legal matters by entering into a Settlement and Plan Support Agreement (PSA) with KFI Wind-Down Corp., the Official Committee of Unsecured Creditors, and the Plaintiffs’ Executive Committee in the multi-district litigation concerning aqueous film-forming foam (AFFF). This agreement aims to resolve various claims related to the manufacture and sale of AFFF by KFI, a former subsidiary of United Technologies Corporation (UTC).
The PSA outlines three distinct settlement agreements, collectively referred to as the Proposed Settlements, which do not constitute an admission of liability by Carrier. The first agreement, the Estate Claims Settlement, seeks to permanently resolve all current and future claims against Carrier related to KFI's AFFF liabilities, pending approval by the U.S. Bankruptcy Court.
The second and third agreements, known as the Direct Claims Settlements, address substantial direct claims against Carrier. These claims allege that UTC engaged in conduct independent of KFI that caused harm to AFFF claimants. Carrier, which agreed to indemnify UTC for these claims upon its spin-off, will resolve these issues with participating public water systems and airports, subject to approval by the MDL Court.
As part of the Proposed Settlements, Carrier will pay $615 million over five years, contribute 100% of the net sale proceeds from KFI's assets, estimated at $115 million, and provide rights to recover proceeds under certain insurance policies. Carrier expects insurance recoveries to cover the full settlement amount.
Each settlement is contingent upon final documentation and court approvals. Carrier retains the option to terminate the Direct Claims Settlements if opt-out levels exceed specified thresholds, without affecting the Estate Claims Settlement.
This strategic move by Carrier Global Corporation (CARR, Financial) aims to bring closure to the AFFF-related litigation, providing a clear path forward for the company and its stakeholders.
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