Asbestos and Bankruptcy

• Asbestos and Bankruptcy
• What You Need to Know
• SimmonsCooper: A Powerful, Integrated Approach
• Inside the Bankruptcy Process

Asbestos and Bankruptcy 

Since the early 1980s, several leading manufacturers and installers of asbestos-containing products have filed for bankruptcy, most notably companies such as Johns-Manville (filed 1982), Owens Corning (filed 2000), and W.R. Grace (filed 2001). 

When a company files bankruptcy, by federal law any then-pending or future lawsuits against it are suspended during the length of the bankruptcy case.  Typically, in the case of asbestos defendants who file bankruptcy, the company attempts to gain bankruptcy court approval of a plan of reorganization that will transfer all current and future asbestos lawsuits against it to a settlement trust that the company will create.

The trust will be funded with some combination of cash, available insurance, and stock of the (reorganized) company.  The trust will use these assets to settle and pay claims from asbestos victims that otherwise would be brought against the company as lawsuits in courts around the country.  

What You Need to Know 

Since many of the companies that filed bankruptcy were leaders in the asbestos industry, if you have an asbestos-related injury, it is likely that you may have one or more claims against existing or future trusts.

Your trust claims are handled separately from your lawsuit against solvent (non-bankrupt) defendants, because federal law prohibits asbestos-related lawsuits against the reorganized company or the trust. 

Each trust is run as a separate entity, subject to its own “trust distribution procedures”- bankruptcy court-approved rules that dictate how the trust evaluates and pays asbestos claims.  These procedures define the specialized medical and product exposure requirements which must be met in order to receive compensation from the trust.  Also, because of the financial difficulties experienced by many companies establishing trusts and the sheer number of asbestos victims, many settlements payable by the trusts are often paid at a lower “payment percentage” of a fraction of the face value of the settlement offer.

SimmonsCooper: A Powerful, Integrated Approach 

At SimmonsCooper, the way we handle bankruptcy trust claims is exceptional. Our Bankruptcy Claims department is a highly specialized practice group that focuses solely on investigating and filing trust claims.

SimmonsCooper has a full-time bankruptcy attorney on staff.  Robert Phillips, a career bankruptcy lawyer with experience in asbestos and other mass tort bankruptcy cases, who manages the trust claims process and represents the firm’s asbestos clients in pending bankruptcy cases.  He also serves on numerous official committees for asbestos victims in bankruptcy cases, including those for the Quigley Company and ASARCO, among others.

As a result, you can be assured that SimmonsCooper LLC is equipped to help you recover the compensation on your asbestos claims to which you are entitled in a timely manner.

Inside the Bankruptcy Process 

During the bankruptcy case, an official committee of asbestos victims, appointed by the United States Trustee’s office, usually represents the interests of current asbestos victims, while a “future claimants’ representative” (or “FCR”) is appointed by the bankruptcy court to represent the rights of future asbestos victims (who are not yet diagnosed with an asbestos-related disease).  Other interested parties who will participate in the bankruptcy case may include the company’s bondholders, stockholders, and insurance carriers (whose policies may pay asbestos claims).

The bankruptcy court process can take a very long time for asbestos defendants (far longer than is usual in business bankruptcy cases), with some current cases entering their eighth year and counting.  In some instances, the company vigorously fights whether it is liable and how much it has to pay for asbestos claims.  In other instances, the company may be willing to concede its liability for asbestos claims, but other parties in the bankruptcy case - such as insurance carriers, company bondholders, or company stockholders - want to fight over the company’s liability for asbestos claims so that they may recover more money relative to asbestos victims.  In any event, the result of such litigation is that the bankruptcy case itself can be strung along for years.

Even after a bankruptcy case is concluded and a trust created, in some instances, it may take even longer for the trust to turn its assets into sufficient cash to pay asbestos claims - particularly where the trust is funded with insurance that is contested by insurance carriers or with an active business operation or stock that is difficult to sell.  The trustees who operate the trust have a fiduciary duty to asbestos victims to maximize the amount of money in the trust to pay asbestos victims, which means they must often move slowly and deliberately to convert trust assets to usable cash.

As a result, it is unfortunately often a long road from the day a company files bankruptcy to the day a trust is funded and able to pay asbestos claims.  Nonetheless, the amount of money placed into trusts is substantial and worth the fight to obtain. 

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