Asbestos Bankruptcy Update
There have been some recent developments in the world of asbestos bankruptcies that justify this brief note. After many many years of contentious litigation, the Congoleum Trust Fund, established in the reorganization of the Congoleum Corporation, has become effective. I was pleased to be one of five members of the Asbestos Creditors Committee counsel group in this case and have been appointed by the Court as one of three members of the Trust Advisory Committee. My colleagues have elected me Committee Chair, and I look forward to working with our sole Trustee, the Honorable Alfred M. Wolin, retired United States District Judge from the District of New Jersey, and R. Scott Williams, the court-appointed Future Claimants Representative. This Trust will be funded with approximately $300 million in assets, and we hope to get it up and running quickly so that claims can start to be paid shortly after the new year.
On June 5, Coltec Industries filed a Chapter 11 Petition for Reorganization of its subsidiary, Garlock Sealing Technologies. The Bankruptcy Court Administrator proposed that the court appoint a committee of seven present claimants to act as the Asbestos Creditors Committee, and I was pleased to represent one of those members. At the hearing on July 15, she explained her selection by telling the court that I was the “grandfather of the mesothelioma claimants” litigation, to which the judge wisely responded that this seemed the same kind of mixed blessing as being qualified for the senior citizens’ discount at Arby’s. He expanded the committee to eleven members, and I was pleased to be unanimously selected as co-chair of the committee with my friend, Joe Rice of Motley Rice in Mount Pleasant, South Carolina. We expect this to be a fairly long and drawn-out bankruptcy proceeding and hope it will result in a reorganization with the establishment of a Trust Fund with the maximum possible value for all future claimants.
Finally, on July 12, Circor International filed a Petition for the Chapter 11 reorganization of its asbestos subsidiary, Leslie Controls, Inc., which specialized in the manufacture of valves and pumps and other fluid management systems, with an emphasis on shipboard applications for the United States Navy. This plan had been in a pre-negotiation status since late last year, during which Circor and Leslie fully explored the potential for a consensual plan with an informal committee of plaintiffs’ counsel, which I had been asked to chair. At a meeting with the U.S. Trustee’s representative on July 22 in Wilmington, Delaware, he decided to appoint a committee of nine claimants, one of whom is a client of our office. On July 26, the committee unanimously selected me to serve as co-chair of this committee with my friend John Cooney of Cooney & Conway in Chicago, Illinois. We believe this reorganization will proceed efficiently and quickly and hope for establishment of the Leslie Asbestos Trust before the end of this year. We expect that the Trust will be funded with somewhere between $80 and $100 million in cash and insurance assets. I look forward to working in this case to get the Trust up and running as soon as possible. We hope that an efficient resolution of this particular reorganization will serve as a blueprint for other companies facing significant asbestos liabilities and desiring to eliminate as much as possible the money they are spending on defense lawyers and litigation expenses while maximizing potential resources for their victims.
All in all, it has been a busy couple of months and I fully expect that these and the other pending bankruptcy reorganizations and established Trust funds will continue to take a significant portion of my time in the years ahead.