On May 14, 2023, Kidde-Fenwal filed for bankruptcy protection in the Delaware court system, citing the costs of PFAS litigation and liabilities as untenable and substantially exceeding the company’s ability to pay. By way of background, Kidde-Fenwal did not manufacture the AFFF product that is at issue in the over 4,400 lawsuits that the company has been named in related to PFAS since 2016. Rather, the company supplied the product from 2007 to 2013 to parties that used the products. As a supplier, Kidde-Fenwal is routinely named in PFAS litigation in which it is alleged that a PFAS-containing AFFF product contributed to environmental pollution or personal injury. While the court documents filed with the court do not indicate the total estimated liabilities for the company due to the AFFF litigation, the documents do indicate that Kidde-Fenwal has $318 million in assets and had $200 million in sales revenue in 2022, with litigation costs of over $6 million to date in 2023.

We have written in the past that the PFAS litigation has the potential to mirror and eventually surpass the asbestos litigation in terms of its scope and the liabilities that it imposes on downstream companies (i.e. – those who did not manufacture PFAS). Consider that when the asbestos litigation truly began to gather litigation steam in the early 1980s, the suppliers of raw asbestos fiber and manufacturers of products such as thermal insulation and spray fireproofing (akin in many ways exposure-wise to AFFF) were the companies pursued in the litigation. Over time, due to the number of asbestos lawsuits and associated costs, these companies sought and obtained bankruptcy protection from the courts. Rather than resulting in the end asbestos litigation, plaintiffs’ counsel pivoted and began suing companies that utilized asbestos in component parts, such as gaskets, brake linings, clutches, boilers, etc. Today, the litigation has evolved further and has started targeting cosmetics and beauty products.

It is not outside of the realm of possibility to imagine a similar trajectory for the PFAS litigation. Of course, much of this will depend on the scientific community reaching conclusions regarding the dose of PFAS, if any, capable of causing disease in humans from the slew of consumer goods that used PFAS throughout the decades. The science is not there yet, at least to a level of consensus that would enable plaintiffs’ attorneys to file PFAS personal injury cases en masse, but it is coming. Several groups of scientists are working on reaching conclusions on this very topic as I write.

Time will tell if the Kidde-Fenwal news is one of very few companies that seek bankruptcy protection, or if it is the first in a long line of such companies. Regardless, companies, insurers, and financial world risk assessors must pay close attention to this development and determine the impact on other similarly situated companies.