5 Asbestos Settlement Lessons From The Pros
Asbestos Bankruptcy Trusts
Generally asbestos bankruptcy trusts are created by companies who have filed for bankruptcy. These trusts cover personal injury claims made by asbestos exposure victims. In the mid-1970s, at least 56 asbestos bankruptcy trusts were set up.
Armstrong World Industries Asbestos Trust
Armstrong World Industries was founded in 1890 in Pittsburgh. It is the largest wine bottle cork maker in the world. It has more than 3000 employees and operates 26 manufacturing facilities across the globe.
The company used asbestos in a variety of items, including tiles, insulation vinyl flooring, and tiles in its early years. Workers were exposed to asbestos which can lead to serious health issues like mesothelioma and lung cancer.
The asbestos-containing products of Armstrong were widely used in the commercial, residential and military construction industry. Because of the exposure hundreds of Armstrong employees were affected by asbestos-related diseases.
While asbestos is a natural mineral, it is not safe to consume by humans. It is also known as a fireproofing material. Companies have created trusts to pay victims for the dangers of asbestos.
A trust was set up to compensate victims of Armstrong World Industries' bankruptcy. In the first two years, the trust paid more than 200k claims. The total amount of compensation was greater than $2B.
The trust is managed by Armor TPG Holdings, a private equity firm. The company owned more that 25 percent of the fund as of the beginning of 2013.
According to the asbestos symptoms Victims Compensation Trust, the company is estimated to have been responsible for more that $1 billion in personal injury claims. The trust has more than $2 billion of reserves to cover claims.
Celotex Asbestos Trust
During the early to mid 1980s, Celotex Corporation, a manufacturer and distributor of building materials, was hit with an avalanche of lawsuits claiming asbestos-related property damage. These claims, in addition to others were a flurry of billions of dollars in damages.
In 1990, Celotex filed for bankruptcy protection. To process asbestos-related claims, the Asbestos Settlement Trust was created by Celotex's reorganization plan. The Trust made a claim in the United States District Court for Middle District of Florida. Saiber L.L.C. represented the Trust.
In the process the trust sought to secure coverage under two extra general liability insurance policies. One policy provided five million dollars of coverage while the other provided 6.6 million. Jim Walter Corporation was also requested to provide coverage. However, the trust did not find proof that the trust was required to send notice to the excess insurers.
Celotex Asbestos Trust submitted proofs of bodily injury claims on December 31 the year 2004. The trust also filed a motion seeking to overturn the special master's decision.
Celotex had less than $7 million of primary coverage at the time of filing however, the company believed that any asbestos litigation would affect its excess coverage. In fact, the company anticipated the need for a number of layers of excess insurance coverage. However the bankruptcy court concluded that there was no evidence to show that Celotex gave reasonable notice to its excess insurance carriers.
The Celotex Asbestos Settlement Trust is complex. It is responsible for settlement of claims against Philip Carey (formerly Canadian Mine) and provides treatment for asbestos-related diseases.
It can be difficult to understand. Fortunately, the trust offers a user-friendly claims management tool and an interactive web site. The website also has an entire page dedicated to claims inaccuracies.
Christy Refractories asbestos legal Trust
Christy Refractories originally had an insurance pool of $45 million. The company filed for bankruptcy in 2010 however. The reason for filing was to settle asbestos lawsuits. In the meantime, Christy Refractories' insurance carriers have been settling asbestos-related claims for about $1 million per month.
Since the 1980s, asbestos litigation asbestos trust funds have paid out more than 20 billion dollars. These funds are able to cover the cost of therapy as well as lost income. Among these funds are the Western MacArthur Trust, the M.H. Detrick Asbestos Trust, the Thorpe Insulation Settlement Trust, and the M.H. Porter Asbestos Trust.
The Thorpe Company's product range included insulation and refractory materials, which contained asbestos. The company filed for Chapter 11 bankruptcy in 2002 However, it reemerged in the year 2006. It has handled more than 4,500 claims.
The Western MacArthur Trust has paid out more than $1.1 billion in claims. Pneumo Corporation, Abex Corporation and Synkoloid all employed asbestos in their products. The United States Gypsum Company used asbestos in its products.
The Utex Industries, Inc. Successor Trust has paid more than 2,000 asbestos claims. It provided sealing products to the oil industry.
The Prudential Lines Trust was subject to hundreds of lawsuits, mass tort actions and a 20 year time limit on the distribution of funds.
The Western MacArthur Asbestos Settlement Trust has paid out over $500 million in claims. It also manages claims against Yarway.
The Thorpe Insulation Settlement Trust includes the Pacific Insulation Company as well as the Thorpe Insulation Company.
Federal Mogul's Asbestos PI Trust
Originally filed in 2007, Federal Mogul's Asbestos Personal Injury Trust is a trust that is meant to aid victims of asbestos exposure. Federal Mogul Asbestos PI Trust is a trust in bankruptcy that offers financial compensation to asbestos-related diseases.
The trust was founded in Pennsylvania with 400 million dollars in assets. Following the trust's creation, it paid out millions to those who claimed.
The trust is now located at Southfield, MI. It is comprised of three separate money coffers. Each is dedicated to settling claims against asbestos-related entities of the Federal-Mogul group.
The main purpose of the trust is to provide financial compensation for asbestos-related ailments among the approximately 2,000 occupations that employ asbestos. The trust has paid out more than $1 billion in claims.
The US Bankruptcy Court figured that the asbestos liabilities' net value was about $9 billion. It was also decided that creditors should maximize the value of their assets.
The Asbestos PI Trust was created in 2007. Elihu Inselbuch, a partner in the firm Caplin & Drysdale, served as the Trust attorney.
The trust created Trust Distribution Procedures, asbestos litigation or TDPs to manage claims. These TDPs are designed to be fair to all claimants. They are based upon past precedents for nearly identical claims in the US tort system.
Asbestos companies are protected against mesothelioma lawsuits with reorganization
Many asbestos lawsuits are settled each year, due in part to bankruptcy courts. As a result, big corporations are employing innovative methods to gain access to the judicial system. Reorganization is a common strategy. This permits the company to continue to function and provide relief to unpaid creditors. Additionally, it could be possible for the company to be protected from individual lawsuits.
For instance an trust fund might be set up for asbestos-related victims as part of a reorganization. The funds could be paid out in the form of cash, gifts or any combination of the two. The reorganization discussed above consists of an initial funding estimate, followed by a court-approved plan. A trustee is appointed after an reorganization is approved. This could be an individual, a bank or a third party. A successful reorganization will benefit all affected.
In addition to announcing a brand new strategy for bankruptcy courts, the restructuring exposes some powerful legal tools. It's not shocking that a number of companies have filed for chapter 11 bankruptcy protection. Certain asbestos companies were required to make chapter 7 bankruptcy filings in order to protect themselves. For instance, Georgia-Pacific LLC filed for chapter 7 in 2009. The reason is easy. Georgia-Pacific filed for an order of reorganization in order to safeguard itself from a surge of mesothelioma suit. It also rolled all its assets into one. It has been selling its most valuable assets to get control of its financial problems.
FACT Act
The "Furthering Asbestos Claim Transparency Act" is currently in Congress. It will make it more difficult to make fraudulent claims against asbestos trusts. The legislation will make it much more difficult to submit fraudulent claims against asbestos trusts, and will give defendants unlimited access to information in litigation.
The FACT Act requires asbestos trusts to publish the list of claimants in a public court docket. They are also required to disclose the names of the claimants, their exposure history, as well as compensation amounts paid these claimants. These reports, which can be viewed by anyone, would help to prevent fraud.
The FACT Act would also require trusts to share any other information, including payment details even if they are part of confidential settlements. The Environmental Working Group's report on FACT Act found that 19 House Judiciary Committee members voted in favor of the bill. They also received campaign contributions from asbestos-related groups.
The FACT Act is a giveaway to big asbestos companies. It could also lead to delays in the compensation process. It also creates privacy issues for victims. The bill is also a difficult piece of legislation.
In addition to the information that has to be made public in addition to the information required to be released, the FACT Act also prohibits the release of social security numbers, medical records and other information protected by bankruptcy laws. It's also more difficult to seek justice in courtrooms.
Aside from the obvious question of how a victim's compensation may be affected by the FACT Act is a red herring. The Environmental Working Group studied the House Judiciary Committee's greatest accomplishments and found that 19 members were given campaign contributions from corporate interests.
