Articles Posted in Asbestos Bankruptcies

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On April 16, 2000, (Case No. 00-22876 JKF) Pittsburgh Corning Corporation filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Western District of Pennsylvania. Inundated by asbestos claims, the company saw no other means by which to resolve this legal liability. Over 13 years later, Judge Fitzgerald of the United States Bankruptcy Court for the Western District of Pennsylvania issued a Final Order Confirming the Modified Third Amended Plan of Reorganization. PPG Industries and Corning Inc. are the two companies that own Pittsburgh Corning. Under the final plan proposed for Pittsburgh Corning, PPG Industries would pay about $825 million to the trust through 2023 along with 1.4 million shares of PPG stock or the cash equivalent. Corning Inc. would pay $290 million for the next six years. Their insurers would kick in over $1.7 billion.

amositeasbestospic.jpgPittsburgh Corning developed, manufactured, and supplied building materials on a national and international level. Specifically between 1962 and 1972, the company manufactured a pipe-covering and insulation branded UNIBESTOS. Unibestos Pipe Insulation and Unibestos Insulation were durable, withstood temperatures of 1500 degrees Fahrenheit, were extremely resistant to corrosion, and when the dust they created was inhaled, they were potentially lethal. Both products were composed primarily of thin, long-fibered Amosite asbestos. Amosite is known as one of the more deadly types of asbestos because of its long fiber characteristic that is brittle and breaks easily causing it to be inhaled.

Approximately 400,000 claims were filed against Pittsburgh Corning as a result of exposure to their asbestos containing products. Nearly 200,000 claims were settled before the company filed for chapter 11 bankruptcy. The 3.5 billion dollars allotted to the bankruptcy trust is still just out of reach to the over 200,000 victims left uncompensated. The down side of all this is that it will likely take at least one more year before the final confirmation of the plan and for trust to actually begin accepting the claims that will be paid at approximately 37% of the value. Victims will wait even longer for even a small percent of justice.
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Yarway trust.jpgYarway is the most recent in a long line of manufacturers who have had to claim bankruptcy as a result of asbestos claims. On April 22, 2013, Yarway filed a chapter 11 bankruptcy in the United States bankruptcy Court for the District of Delaware (In re Yarway Corp., 13-bk-11025). The reason for the financial downfall is said to be a continued influx of asbestos related claims. Exposure to Yarway’s asbestos containing products is distinguished, by the company, in two separate categories. The first group of claimants are those who were exposed to Yarway’s gaskets and packing. Although the gaskets and packing were manufactured by other companies, they were included in Yarway’s production of its steam valves and traps between the 1920s and 1970. The second are those exposed to joint packing, consisting of Teflon and asbestos, that was manufactured by Yarway between the 1940s and the 1970s.

Having exhausted all available insurance for asbestos related claims that began in 1991, Yarway hopes that the bankruptcy will allow for the equitable resolution of asbestos claims and the reorganization of a once profitable company. The over $128 million ($18 million for this fiscal year alone) paid out in settlement costs has proven too much for the company to withstand.

A little company history: The company was founded in 1908 by Robert Yarnall and Bernard Waring and given the name Simplex Engineering Company. They supplied steam straps, valves and controls to the flourishing steam-power industry. Based out of Chestnut Hill, PA, they put out a world-class product working out of a renovated machine works. The company evolved into the Yarnall Waring Company and eventually, in 1962, took its final namesake, YARWAY, which is displayed on its products still today.

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philip-carey-manufacturing.gifRapid American Company is a New York based company and formerly acted as a holding company for McCrory variety stores. The company never actually manufactured asbestos, but thanks in no small part to a series of acquisitions beginning with Philip Carey Manufacturing Co., Rapid American Company currently faces approximately 275,000 personal injury claims totaling an estimated $100 million in liabilities – specifically asbestos litigation.

Phillip Carey Manufacturing Corporation was established in Ohio in 1888. The company originally mined asbestos and manufactured various asbestos containing products. After multiple changes of ownership and name, the corporation eventually merged with Rapid American in 1972. Now Rapid American has found themselves facing a plethora of lawsuits as a result of the multitude of individuals who were exposed to the asbestos containing building products manufactured by Phillip Carey. Although there are actually fewer claims filed now than in previous years, the number of mesothelioma claims have increased. The increase in mesothelioma claims inevitably results in an increase in the settlement value / amount. The increase in claim value and decline in insurance coverage have left the company in a pecuniary quandary.

The financial burden of the pending claims, which now rests upon Rapid American, has resulted in the filing of a chapter 11 bankruptcy [In Re Rapid-American Corp., 13-10687, U.S. Bankruptcy Court, Southern District of New York (Manhattan)]. The company listed $86.9 million in assets. They did not immediately specify indebtedness, but as required by law, did produce the list of top 20 to which they are indebted.
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BONDEX.jpgBondex was a joint compound created and marketed by the Reardon Company. The bonding agent / joint compound was used on both commercial and residential projects. Because of the success of the product, in 1969 The Reardon Company (amongst quite a few other up-and-coming companies) was acquired by RPM International. Bondex contained asbestos – CHRYSOTILE ASBESTOS to be exact – and even after the dangers of asbestos were known, RPM International continued to manufacture and market the product. In late May of 2010 a press release announced that Bondex filed chapter 11 bankruptcy as a result of the pending and anticipated asbestos claims.

Chrysotile_Asbestos.pngChrysotile asbestos is also known as “white” asbestos and makes up nearly 95% of the asbestos found in the United States today. It is a naturally occurring fibrous group of minerals resistant to heat and are excellent thermal, electrical and acoustic insulators.

There are actually six types of asbestos: Serpentine, Amphibole, Amosite, Crocidolite and Chrysotile. The debate has been which type of asbestos is more toxic. All types of asbestos fibers are known to cause serious health hazards in humans. While it is agreed that amosite and crocidolite are the most hazardous asbestos fiber types, chrysotile asbestos has produced tumors in animals and is a recognized cause of asbestosis and malignant mesothelioma in humans.

During an asbestos estimation trail, Bondex put forth an expert witness that testified that Chrysotile joint compound is not likely to cause mesothelioma. Dr. Allan Feingold, a lung specialist in Miami, went to bat for the debtors. Fiengold testified that it [chrysotile] is “much less likely” to stay in the mesothelium, or the lining of the lungs, than other forms of asbestos, such as amphibole asbestos.. He later admitted that he worked only with a small sampling of 229 mesothelioma sufferers and that he was never actually given access to the lung tissue samples of those claimants. Instead, Feingold admitted that all he had to go by was the information that he was given.

Of course, Plaintiffs marched their own expert onto the witness stand who did not hesitate to testify that there is no question that Chrysotile exposure leads to cancer of the lining of the lung. After recapping her own studies she concluded that at this point – the link between Chrysotile asbestos and mesothelioma – “has been very well established”

There are two undisputed facts and that is that there are over 2000 cases of mesothelioma diagnosed each year as a result of asbestos exposure. Secondly, that 95% of the asbestos found in the United States is Chrysotile asbestos. One need not be a genius statistician to do the math.
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Trust Percentage Changes / Reductions:

One reason why you should not hesitate to pursue and file your asbestos related claim now is because many asbestos manufacturing companies are going or have gone bankrupt and the percentage of the claim value that the trusts can pay are consistently being reduced.

H.K. Porter, effective October 25, 2012 was reduced from 6.3% to 4%
Plibrico, effective November 25, 2012, was reduced from 1.2% to 1%
The Babcock & Wilcox Company, during the last quarter of 2012, was reduced to 7.5%

Trust / Bankruptcy Updates:

Metex Manufacturing, formerly known as Kentile Floors, Inc. filed for Bankruptcy (for the second time) in 1992. Although a Metex Asbestos PI Trust Pre-Effective claims Review was set up in anticipation of a bankruptcy plan being approved, they are NOT accepting claims at this time even for pre-review or pre-approval. When they are finally ready to evaluate claims, the trust will likely be handled by MFR Claims Processing.

North American Refractories Company (NARCO)
filed for bankruptcy in 2002. The company’s products include: hearths, inwalls and other blast furnace fittings; bottom checkers, domes and other black stove fittings; the MAGNECON, developed in 1928 for rotary kiln burning zones; Shotkast flue crowns; Emisshield™ coating; and the Nacrogun. The company reorganized and emerged from bankruptcy in 2008. With an estimated 6.23 billion dollars, it plans on establishing an asbestos trust in 2013
United Gilsonite (UGL)
filed for bankruptcy in 2011. This company manufactured a product called Drylock, used for leak prevention and waterproofing as well Zar wood finish. Under a plan constructed in September of 2012, UGL will put aside 11.75 million dollars for an asbestos trust fund, plus an additional 8 million in the future. This plan will hopefully be approved in 2013.

W.R. Grace finally sees the light hopefully marking the completion of a nearly 12 year bankruptcy. The company entered into bankruptcy in 2001 and hopes to finalize a plan and exit bankruptcy by the end of 2013. The light, although dim, began to flicker hopefully in a statement issued in November 2012 addressing the final appeals and a plan that would govern a trust with $250 million and the rights to proceeds under the company’s asbestos-related insurance coverage, cash and stock arising from settlements with other third-party defendants, and deferred payments of $110 million per year for five years between 2019 and 2024 — backed by more than half of the reorganized company’s stock in the event of default.

Information regarding asbestos claims through bankruptcy trusts is constantly changing and not always easy to decipher. Values are difficult to calculate and publicized information can be misleading. Be sure that you have the right information and the right people representing you and your interests.
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open database.jpgShould the Asbestos Trust’s database of claimant information be an OPEN BOOK??? The Furthering Asbestos Claim Transparency Act of 2012 or FACT as it has become known (Officially H.R. 4369) was introduced on April 16, 2012 by Rep. Ben Quayle. This Act proposes to amend title 11 of the United States Code to require the public disclosure by trusts established under section 524(g) of such title, of quarterly reports that contain detailed information regarding the receipt and disposition of claims for injuries based on exposure to asbestos, and the filing of such reports with the Executive Office for United States Trustees.

In a statement released by Mr. Quayle following the release of FACT he claims:

“by requiring the trusts to operate transparently, Congress can deter further abuse and preserve the trusts’ assets for truly needy and sick victims of asbestos exposure”.

Those who are already inundated by the red tape of bankruptcy filings say this is just another attempt to discourage and prevent those “sick victims of asbestos exposure” from receiving just compensation in a fair and timely manner. Additionally, the dissemination of submitted information, as well as disclosing settlement amounts, trample on the individuals right to privacy. Moreover claims of abuse and fraud within the bankruptcy trust are unfounded.

There have been some efforts at the state level to bring more transparency to the trusts’ operation. At least two states have proposed similar trust reform. Ohio’s senate heard testimony in March on a bill already passed by the House of Representatives, while Oklahoma’s senate passed a bill on March 14. The Oklahoma bill is currently sitting in the House Judiciary Committee. The House bill; however, is the first step in moving the legislation at the federal level.

Thumbnail image for ancient-antique-scroll-on-white-background-israel.jpgThis bill or resolution was assigned to a congressional committee on April 17, 2012, which will consider it before possibly sending it on to the House or Senate as a whole.
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bankruptcy_court-300x187.jpgThe U.S. Court of Appeals for the Second Circuit ruled April 10 that suits against Pfizer over the Insulag product, which was produced by Quigley Co., are not barred by a preliminary injunction. What this means is that Pfizer is not protected from asbestos-related lawsuits that have been filed by more than 160,000 plaintiffs against the now-bankrupt Quigley. In 1968, Pfizer bought out Quigley, a company that is alleged to have sold asbestos-containing products, creating a health hazard. Even though Quigley stopped most operations in 1992, and filed for bankruptcy in 2004, these suits are still an issue for Pfizer. Parent Companies, or companies that have purchased in part or in whole a second company have often sought to escape liability for the actions of the acquired company. What are a parent’s liabilities???. For Pfizer, along with the financial rewards of the acquisition, the were found culpable.

This order is the latest in what seems to be an endless ping pong volley of appeals in the determination of liability in asbestos cases. Quigley’s bankruptcy court imposed a preliminary injunction in 2004 that prevented all parties from filing claims against Pfizer while Quigley’s chapter 11 case was pending. The injunction was modified in 2007, preventing claims against Pfizer over its ownership or management of Quigley. The case is In re Quigley Co., 04-15739, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The appeals case is 11-2635, 11-2767, 2nd U.S. Circuit Court of Appeals (Manhattan).

Pfizer.gifPfizer is known to be the world’s largest research-based pharmaceutical company and the world’s biggest drug-maker by revenue. They are not the typical defendant in an asbestos case. Although the company never actually manufactured the product, the Pfizer logo was clearly placed on the Quigley Insulag packaging. This fact played no small part in the court’s decision to uphold a previous ruling at the district level. Now Pfizer has again been ordered to face culpability for the damage this asbestos containing product has done. Pfizer continues to argue that they are not responsible for products manufactured by Quigley, but they cannot deny that they profited from its sales and the courts could not ignore the bright blue PFIZER logo that donned the asbestos containing Quigley products.
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MONEY BAG.png MONEY BAG.png MONEY BAG.png DIMINISHING DOLLARS
for Asbestos Victims
According to the Environmental Working Group Action Fund, 10,000 people a year die from asbestos-caused diseases in the United States, including one out of every 125 American men who die over the age of 50. The Environmental Protection Agency (EPA) has no general ban on the use of asbestos. However, asbestos was one of the first hazardous air pollutants regulated under Section 112 of the Clean Air Act of 1970, and many applications have been forbidden by the Toxic Substances Control Act (TSCA).

The first lawsuits against asbestos manufacturers were brought in 1929. Since then, many lawsuits have been filed. As a result of the litigation, manufacturers sold off subsidiaries, diversified, produced asbestos substitutes, and started asbestos removal businesses.

JOHNS-MANVILLE3291718464_d2cf85713b.jpgThe Manville Corporation, formerly the Johns-Manville Corporation, was one of the first asbestos companies to file for Chapter 11 bankruptcy. At the time, they were the largest producer of asbestos-containing products. Johns-Manville filed for reorganization and protection (Chapter 11) under the United States Bankruptcy Code in August 1982. At the time, it was the largest company ever to file bankruptcy, and was one of the richest. Manville was then 181st on the Fortune 500, but was the defendant of 16,500 lawsuits related to the health effects of asbestos. Since then approximately 115 additional companies have filed bankruptcies as a result of asbestos related lawsuits. full list prided below *1 Claimants now are now forced to seek relief through the bankruptcy courts. Once these companies set up trusts through the bankruptcy courts, the injured party may seek compensation. But they will likely only receive a small percentage of the actual claim value. Manville reports claim filings for the second quarter 2011 were approximately 9,300 compared to 4,600 for the second quarter 2010. Year to date the Trust has received over 20,800 claims compared to 8,900 claims for the first six months of 2010.

As a result of the extended latency period for asbestos related conditions (the amount of time between exposure and the occurrence of symptoms) which is between 15 and 50 years the number of claims both new and unresolved remain substantial. The ability of the trust to pay, is based on a forecast of anticipated claims and the actual money held by the trust. Based on that data, the trust determines what percentage of the actual claim value it is capable of paying. For the majority of the bankruptcy trusts, the number of actual claims far exceeds the number of anticipated claims and so the percentage of the claim value that is being paid is being drastically reduced every year.

NAT GYP ADVERTISEMENT.jpgNational Gypsum is latest of the bankruptcy trusts to significantly reduce their payment percentage. Plaintiff’s / Claimant’s counsel received notice this week that, even though only earlier this year the trust reduced the payment percentage from 56% TO 41%, the payment percentage was going to be reduced AGAIN to a mere 18% of the liquidated value. National Gypsum manufactured and sold many products that contained asbestos. Many of these products were marketed under the “Gold Bond” brand name. Potentially dangerous National Gypsum products that contained asbestos included wallboard, roofing, shingles, cement board, gaskets, cements, adhesives, plasters, compounds, fireproofing materials, pipe covering and ceiling panels. Asbestos was chiefly used for its insulating and fire-resistant properties, and because it was readily and cheaply available. The company filed for bankruptcy on or about October 28, 1990.

U.S insurance companies have witnessed an increase in asbestos related claims in the first half of this year as AIG (NYSE:AIG), Hartford Financial Services (NYSE:HIG) and MetLife (NYSE:MET) have all reported an increase in asbestos related claims in their second quarter reports. Met Life reports an 11 percent increase in asbestos related claims.

Summing it up… Each year the bankruptcy courts allow for the review of the financial condition of the trust. They review the number of potential claims – an anticipated number based on industry trends and the amount of money held by the trust at the time. They then determine what percentage of the actual debt, or liquidated value of each potential claim they are capable of paying. That percentage – The percentage that the injured party will eventually be rewarded – continues to be reduced each year as the trusts perform their analysis. Some current Trust Payment Percentages are as follows:

  • Halliburton 52%
  • Harbison Walker 52%
  • Combustion Engineering 48.33%
  • Kaiser Aluminum 35%
  • United States Gypsum Company 30%
  • National Gypsum 18%
  • Babcock & Wilcox 15%
  • Plibrico 1.2%
  • and Keene which is paying a mere 0.8% of the claims liquidated value

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WR GRACE BUILDING.jpgThe Grace Company, which operated the chrysotile asbestos mines in Libby, Montana for decades, filed for Chapter 11 reorganization back in 2001 to protect itself from more than 100,000 personal injury claims. They manufactured a product called Zonolite Vermiculite Concrete. Over one decade later, the victims of asbestos exposure continue to wait for the opportunity to seek compensation.

While under bankruptcy protection, WR Grace has continued to buy and sell assets. Despite its, recent failure to acquire additional assets at a secret auction and Although it has required approval from the bankruptcy courts for each transaction, The company still operates on a grand scale; maintaining operations in 40 countries with an estimated 6,000 employees and $2.5 billion in annual sales.

U.S. Bankruptcy Court Judge Judith Fitzgerald in Wilmington OK’d Columbia-based Grace’s reorganization plan. The company said its plan involves establishing a pair of trusts to compensate personal injury claimants and property owners in connection with their asbestos-related claims against Grace. In order for Grace to emerge from Chapter 11 bankruptcy court protection, however, its plan also needs the approval U.S. District Court Judge Ronald L. Buckwalter, of the Eastern District of Pennsylvania. Buckwalter is hearing the personal injury and property claims against the company.

zonollite.jpgGrace no longer manufactures asbestos containing products and the asbestos mines in Libby have been closed since 1990. Grace now makes specialty chemicals used in catalytic converters and construction products. Its stock has jumped 76 percent in the past year largely due to strong emerging market sales. However, cases of asbestos-related illnesses continue to haunt the town because It can take anywhere from 10-50 years after the exposure to asbestos fibers for an asbestos related condition such as mesothelioma cancer to show obvious symptoms.

“We recognize that there are a few more steps in the legal process, which we hope will move forward expeditiously,” said Chairman, President, and CEO Fred Festa. “I look forward to Grace emerging from Chapter 11 as a vibrant, growing company with a great future.” Should it win final approval to leave protection, Grace Company said it plans to pay creditors in full and set up a trust fund to pay victims of asbestos-related diseases. THAT remains to be seen.
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