AIG Unit Agrees to Pay $42.5M for Environmental Cleanup
A subsidiary of American International Group Inc. has agreed to pay $42.5 million to clean up environmental contamination at four industrial facilities that had been owned by Fruit of the Loom.
The money will be used to clean up four sites in Michigan, New Jersey and Tennessee, the Associated Press reports.
The Justice Department announced that American International Specialty Lines Insurance Co. will make an initial payment of $30 million plus interest and then 10 annual payments of $1.25 million to two Fruit of the Loom trusts, Business Insurance reports. The trusts were set up to receive and distribute company assets after it filed for bankruptcy.
A 2005 suit filed by AISLIC contended a Fruit of the Loom conglomerate violated the insurance policy when it transferred coverage rights to the bankruptcy trusts. The U.S. Justice Department intervened in the case.
“Insurers should take note that they may be liable for the cost of cleaning up their bankrupt clients’ environmental messes,” Granta Nakayama, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance, said in a press release.