Oct 25 (Reuters) - Point Blank, the bankrupt body armor
company, has agreed to pay $1 million to settle a civil suit
lodged last year by the Department of Justice, according to
court documents filed on Monday.
Point Blank, whose chief executive officer David Brooks was
convicted of cheating his company out of $200 million, supplies
body armor to the U.S. military and law enforcement agencies.
The company was formerly known as DHB Industries.
The settlement, which Point Blank submitted to bankruptcy
court for approval, will allow its proposed sale in bankruptcy
court to private equity firm Gores Group to move forward,
according to the documents.
The company was one of a handful that made bullet proof
vests out of a fabric that degraded in the heat, becoming
ineffective, according to this and other suits filed against
other body armor makers.
The settlement releases the Point Blank corporate entities
from related lawsuits but does not include Brooks and certain
other executives and their family members.
According to the documents filed by Point Blank, the United
States filed a civil complaint against the company on Oct. 7,
2010 in District Court for the District of Columbia.
The government asked for "tens of millions" of dollars in
penalties and damages, saying that from 1999 to August of 2005
the company made bullet proof vests using defective Zylon fiber
made by Japan's Toyobo Co even though it knew or disregarded
the fact that the fabric was defective. Other companies
including Hexcel Corp., Second Chance Body Armor, Armor
Holdings and Gator Hawk Armor, used this fabric as well,
according to a statement from the government issued when it
settled with Hexcel in 2007 for $15 million.
DOJ spokesman Charles Miller had no comment.
In the court documents asking for the judge's approval of
the settlement, Point Blank described its settlement with the
government as "a favorable resolution" to a very large claim.
The case is in Re: Point Blank Solutions, United States
Bankruptcy Court for the District of Delaware, Case No.
10-11255.
For Point Blank: Laura Jones, David Bertenthal, Curtis Helm
and Timothy Cairns of Pachulski Stang Ziehl & Jones.
(Reporting by Caroline Humer; Additional reporting by
Jeremy Pelofsky)
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