A plan by RPM International, Inc. to put two nonoperating units into bankruptcy in order to resolve thousands of asbestos claims filed by mesothelioma lawyers has come under criticism by the U.S. Trustee assigned to monitor the bankruptcy.
RPM, a manufacturer of specialty chemicals and paints, faces in excess of 10,000 asbestos lawsuits that have been filed against it or one of its subsidiaries. On May 31, two of the company's units, Specialty Products Holding Corp. and Bondex International Inc., filed for protection under Chapter 11 of the bankruptcy code.
RPM had planned to use the two holding companies to create a fund to resolve the asbestos cases. Similar claims had already cost RPM as much as $82 million a year since 2005.
RPM, a manufacturer of specialty chemicals and paints, faces in excess of 10,000 asbestos lawsuits that have been filed against it or one of its subsidiaries. On May 31, two of the company's units, Specialty Products Holding Corp. and Bondex International Inc., filed for protection under Chapter 11 of the bankruptcy code.
RPM had planned to use the two holding companies to create a fund to resolve the asbestos cases. Similar claims had already cost RPM as much as $82 million a year since 2005.
Under U.S. bankruptcy law, a bankrupt company can force all of its asbestos lawsuits to be settled by an adequately funded trust. In one example of this strategy, Federal-Mogul Corp., the maker of Champion spark plugs, used a trust to resolve up to $9.4 billion in asbestos claims.
But the trustee, Richard Schepacarter, told U.S. Bankruptcy Judge Kevin Carey in Wilmington, the District of Delaware, that "there needs to be a hard look at [this] case." He told the court that RPM's plan appears to conflict with previous bankruptcy court rulings involving asbestos trusts.
RPM is not the only company to place units in bankruptcy in an attempt to resolve asbestos lawsuits. Less than a week after its Chapter 11 filing, EnPro Industries, Inc., another manufacturer facing thousands of asbestos claims, saw its Garlock Sealing Technologies subsidiary file for Chapter 11 protection. Garlock, too, is planning to create a trust to pay claims.
Asbestos exposure - long linked to diseases like lung cancer and mesothelioma, a nearly always fatal cancer of the protective lining covering many internal organs - remains a tremendous health concern as the deadly conditions often develop decades after individuals come in contact with the material or, even more worrisome, inhale dangerous asbestos particles. Even if parts no longer contain asbestos, the problems - and fears - remain, because it is exposure from many years past that is triggering many of the asbestos lawsuits now pending.
While mesothelioma lawyers have been successful in obtaining large - often multimillion-dollar - settlements and verdicts from manufacturers like RPM and Garlock, these are bittersweet victories for the claimants, who invariably face a grim future.
In the RPM bankruptcy case, Judge Carey issued a 14-day moratorium on asbestos lawsuits pending against the company. During that period, a panel is to be created to represent individuals who developed asbestos related illnesses, like mesothelioma, related to materials produced by an RPM company. Judge Carey set a hearing on June 15th to determine whether to continue or rescind that temporary restraining order.
Schepacarter's concern as a trustee focused on the nonoperating status of the two RPM units. "Because they are holding companies with no operations, he questioned whether the companies are eligible to use bankruptcy to set up an asbestos trust". Judge Carey said the question was legitimate and required an answer before the case went much further.
Attorneys representing the RPM units have requested the judge to bar any asbestos lawsuits from proceeding during the time that the trust is being created and funded under bankruptcy court supervision.
That request was opposed by Natalie Ramsey, the attorney representing the law firms that have filed asbestos lawsuits against RPM on behalf of thousands of asbestos victims. Ramsey and the other mesothelioma lawyers contend that the bankruptcy case might have been improperly filed.
According to the company attorney for RPM "in order for the trust to comply with bankruptcy law, it must be supported by 75 percent of the people who currently have asbestos claims against the two RPM units."
This news story was brought to you by the Chicago mesothelioma lawyers at Cooney & Conway. For more than half a century, we have been advocates for those injured because of the wrongful actions of others. We have litigated and resolved some of the nation's most significant asbestos lawsuits, bringing justice - and compensation - to victims of asbestos-related diseases like lung cancer and mesothelioma.
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