Historical Tort System Claim Values Cannot Be Reduced By "Nuisance" Settlements and "Implicit Defense Costs" To Determine Present and Future Asbestos Liability in § 524(g) Bankruptcies


Delaware Bankruptcy Judge Judith Fitzgerald in the bankruptcies of Specialty Products Holding Corp. (a/k/a RPM, Inc.) and Bondex International, Inc. rejected the Debtors’ “novel” claim estimation approach that reduced from the Debtors’ settlement history the settlement of “nuisance” claims and “implicit defense costs” for the purpose of determining present and future asbestos liability. As a result, the Court rejected Debtors’ efforts to minimize the present value of their asbestos exposure to $300 - $575 million and estimated their asbestos liability at $1.2 billion. To receive the protection of a channeling injunction, Debtors' non-debtor parent RPM International Inc. will be required to provide a substantially greater contribution than it intended to meet the "fair and equitable" requirement of § 524(g) . RPM International Inc. states that it will appeal the decision.

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Published In: Bankruptcy Updates, Insurance Updates, Personal Injury Updates, Products Liability Updates, Toxic Torts Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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