How an Asbestos Bankruptcy Affects Your Asbestos Lawsuit
Sometimes no matter how strong your case is you may find that you will have to contend with a defendant company’s asbestos bankruptcy. When you file an asbestos lawsuit, you may find that one or more of the companies responsible for exposing you to asbestos has gone into hiding in bankruptcy. This is what’s known as “gaming the system” – using the rules and procedures meant to protect a system in order, instead, to manipulate the system for a desired outcome.
A company that reaped profits while it knowingly exposed people to asbestos, potentially causing their deaths, now can dodge full financial responsibility for each worker’s lawsuit by declaring bankruptcy. With an asbestos bankruptcy, the company will still have to pay the plaintiffs in an asbestos lawsuit but not as much and not as quickly.
This is what happened with the Johns-Manville Corporation, the first major company to be sued for asbestos exposure. I was one of the attorneys who pioneered some of the first asbestos lawsuits against Johns-Manville. Johns-Manville offered asbestos-containing products for sale from their founding in 1901 through 1985. Johns-Manville products were used extensively in construction and naval shipyards, putting many workers at risk for developing mesothelioma or other diseases caused by asbestos exposure.
When thousands of people began developing serious illnesses as a result of asbestos exposure from Johns-Manville products and filed lawsuits, the company filed for bankruptcy in 1982. In 1988, the company emerged from their asbestos bankruptcy and the Manville Personal Injury Settlement Trust took over the company’s liabilities.
Berkshire Hathaway, Inc., acquired Johns-Manville in 2001, and today the company is back in the insulation and construction products business. They simply changed their name by dropping the hyphen. It’s now Johns Manville.
How did this happen? Under Title 28 of the U.S. code, federal bankruptcy laws govern how companies go out of business or recover from debt. A bankrupt company, the “debtor,” might use Chapter 11 of the Bankruptcy Code to “reorganize” its business and try to become profitable again. Management continues to run the day-to-day business operations but all significant business decisions must be approved by a bankruptcy court. This protects the company’s creditors and investors, i.e. banks, suppliers and bondholders.
A number of asbestos companies have filed for bankruptcy; many have set up settlement trusts that are separate from the litigation process. After moving a case towards trial, we submit claim forms and negotiate with these settlement trusts. The money received from these trusts is generally much less than would have been received had they been in the litigation – often pennies on the dollar – and payment may be delayed , but Kazan Law and the plaintiff have no control over this and we do the best we can in the circumstances.