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asbestos bankruptcy

Garlock Bankruptcy Plan Shortchanges Current and Future Mesothelioma Claimants

Garlock bankruptcy could hurt asbestos victims.The bankruptcy reorganization plan submitted by Garlock Sealing Technologies LLC and The Anchor Packing Company in May of this year represents an insult to people with mesothelioma, asbestos-related lung cancer, and other diseases caused by exposure to asbestos. Under the proposed plan, the rights of current claimants would be significantly curtailed and future claimants would be shortchanged. In addition, if the Garlock plan is finally adopted and approved, it could set a precedent that would affect the ability of people injured by asbestos to receive fair compensation for themselves and their families from other companies.

Asbestos Trust Funds

Section 524(g) of the bankruptcy code was designed to ensure that people exposed to asbestos receive fair compensation, even when the companies responsible for that exposure file for bankruptcy. Under this law, a company that files for bankruptcy because of the cost of asbestos lawsuits must set up a trust fund to compensate current and future claimants.

Since mesothelioma and other asbestos-related illnesses can take decades to manifest, it is important for trust funds to contain sufficient resources to cover estimated future claims, as well as those claims currently in litigation. When determining the amount to be set aside, courts take the company’s resources into account as well.

Garlock Plan Would Lead to Reduced Asbestos Compensation

Along with the other claimants’ representatives on the Asbestos Creditors Committee (ACC), which I co-chair, we at Kazan Law oppose Garlock’s reorganization plan. The $362 million proposed asbestos trust fund falls far short of the amount needed to fairly compensate current and future claimants against Garlock and Anchor while it unjustly enriches these companies’ shareholders. Garlock has the resources to create a larger asbestos trust fund; mesothelioma victims should not suffer so shareholders can profit.

In addition, the plan put forth by Garlock creates significant roadblocks that will make it hard for people injured by asbestos exposure to receive the compensation to which they are entitled. The plan would require burdensome paperwork in order to prove eligibility and payments would be based on a matrix that sets compensation values lower than they should be.

If claimants decide their best option is to sue, the plan requires them to file their lawsuit in federal court in North Carolina. For injured people in other states, this could create such a significant obstacle that they will have effectively lost their right to have their day in court. Why should a man dying of mesothelioma in California have to spend weeks in a North Carolina courtroom to get justice?

Asbestos Victims Protect Your Rights

For the reasons above and more, all 12 members of the ACC oppose Garlock’s proposed reorganization plan. If you have suffered asbestos exposure because of Garlock or Anchor’s products, you (or your lawyer on your behalf) may be entitled to vote on the plan. Your “no” vote is a step toward further negotiations and a better outcome for all current and future claimants. You can learn more about your voting rights here. The deadline for voting is October 6, 2015.

If you are a current claimant against Garlock or Anchor, you may need to take action to protect your rights to compensation. If Garlock’s plan is approved, some current claimants may find their claims blocked if they don’t take action by the bar date of October 6, 2015. You are a current claimant if you received a diagnosis of mesothelioma or other asbestos-related illness on or before August 1, 2014 and you filed a legal action or pursued compensation from an asbestos trust fund on or before that date. To avoid being blocked from receiving the compensation you deserve, you may need to take action to assert your right. You may want to consult an asbestos attorney, to make sure your rights are protected.

Seeking Justice For Those Yet to Come

Because it takes so many years for those exposed to asbestos to become sick with mesothelioma, lung cancer, or other diseases, asbestos claims will continue to come to light over the coming years and decades. The outcome of the Garlock bankruptcy could have repercussions for asbestos settlements in other states and against other companies. That’s why we at Kazan Law take the fight to achieve a fair reorganization plan in the Garlock bankruptcy so seriously.

The plan put forth by Garlock doesn’t give enough weight to the financial and emotional hardship Garlock and Anchor’s negligence has inflicted on a yet unknown number of people. You and your family deserve better than this.

Insuring that current and future claimants are treated with the dignity and justice they deserve is a core mission of the dedicated lawyers at Kazan Law. That’s why we are committed to fighting the proposed Garlock asbestos plan.

Asbestos Bankruptcy Trusts Explained

Asbestos bankruptcy trusts are a complex but important aspect of asbestos litigation. This is video of the presentation I was asked to give on how asbestos bankruptcy trusts work at the 2014 International Mesothelioma Interest Group conference in Cape Town, South Africa last month. Here are some highlights.

How Asbestos Bankruptcy Trusts Started

The asbestos bankruptcy industry – and I call it that- started in 1982 with the first asbestos bankruptcies. There are now about 50 asbestos bankruptcy trusts. They came about because of asbestos litigation –and corporate decisions to evade full responsibility for the death and disease they caused– we sued enough companies often enough and beat them badly enough that many of them decided they had enough and needed to find a legal way to pay up and move on.

I have been involved with almost all of these bankruptcies and resulting trusts since the beginning, often as a chair or co-chair of what is known as the victims’ creditors or advisory committees.  That means I am one of the watchdogs who help make sure that the victims’ interests are being served.  In fact, the Wall Street Journal reported that our firm is involved with more trusts and handle more trust funds than any other American law firm.

Asbestos Bankruptcy Trust Assets and Payouts

The US bankruptcy trusts to date have already paid out over $21 billion dollars.

We’ve put together a list of their assets which is a daunting task because it requires us to dig through a lot of records filed with the courts.

This year’s figures aren’t public but as of the end of last year, the asbestos bankruptcy trusts together have close to $32 billion dollars in assets. This is money that is set aside to be paid out over the next 30 to 40 years to asbestos victims.  The funds earn about 5 percent annually on their investments so they will ultimately pay out well above their current asset total.

The bulk of the funds go to mesothelioma cases. The amount paid on each case is based on the number of present cases and how many cases are projected for the future divided into the amount in each trust. Under this formula, a typical shipyard worker or construction worker with mesothelioma would receive about $260,000.

Are You Eligible To Receive Funds From an Asbestos Bankruptcy Trust?

To be eligible to receive funds from a bankruptcy trust, you do not need to prove that the company’s products contained asbestos. The companies involved have admitted that their products contained asbestos and were handled by workers at sites around the country and aboard many ships. We’ve got lists of them. There are 115,000 identified sites in the U.S. plus 19,000 ships. You just need to prove that you worked at one of them and that you are now ill.

All the trusts provide information on how to file a claim on their websites. We’ve made the procedures the same for each trust.

For a claim to be approved you must show:

  • Exposure to a product of the company for which that trust is responsible, when and where you worked and your trade or job, and what asbestos disease you have.
  • Claimant’s occupation when claimant worked with the product
  • Time period claimant worked with the product
  • Asbestos-related disease
  • Who claimant’s dependents are
  • Claimant’s medical expenses and/or economic loss (optional]

If you have any questions about asbestos bankruptcy trusts after you watch the video, please email me and I will answer them for you.

Asbestos Bankruptcy Trust Funds Update

I was honored to have been asked to give an oral presentation on changes in the U.S. asbestos bankruptcy trust fund system at the 2014 conference of the International Mesothelioma Interest Group (iMig) this week in Cape Town, South Africa.

This video will give you a basic understanding of asbestos bankruptcy trust funds and who is eligible to file a claim.

How an Asbestos Bankruptcy Affects Your Asbestos Lawsuit

asbestos bankruptcySometimes 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.

Kazan Partner David McClain Serves as Key Witness in Major Asbestos Bankruptcy Trial

David McClainBecause of Kazan, McClain, Satterley & Greenwood’s acknowledged expertise in asbestos claims, one of our principal partners David McClain recently was asked to serve as a key fact witness in a major asbestos bankruptcy case underway in Charlotte, NC.[1]  The outcome of this trial will determine how much Garlock Sealing Technologies and its parent company Enpro will have to pay into a trust fund for victims exposed to its asbestos-containing products.

According to David, “It was acknowledged by the counsel representing both present and future asbestos victims that we are among the foremost experts in this type of litigation and would be in the best position to tell the judge about Garlock’s liability.”

Garlock wants to set aside about $270 million for the trust. The claimants are asking for over a billion dollars from Garlock and its parent company Enpro.

As part of its legal strategy, Garlock filed for asbestos reorganization in federal bankruptcy court. The gasket manufacturing company’s case went to trial in early August to determine its total liability.  Although the evidence is now closed[2] a decision is not likely soon as the judge has much to consider

Garlock went to federal bankruptcy court to avoid more expensive lengthy trials for individual claims, which often resulted in big settlements. Now, to reduce the amount of the trust for claimants as part of a bankruptcy settlement, Garlock is attempting to prove that the victims’ cases are dishonest, because they may have been exposed to asbestos from sources other than their products, even though this argument has never worked for it in court when they actually tried cases.

“They (Garlock) have the money to pay up.  They just want to keep it for themselves. So they were trying to claim that the plaintiffs were being dishonest.  I countered that, and showed that it’s not true,” David commented when we discussed the case.

David pointed out to the judge how under California law, plaintiffs only need to show that the company’s gaskets increased the risk of developing mesothelioma, the fatal cancer caused by asbestos exposure. This ruling provided incentive for Garlock to avoid individual trials by paying its fair share in settlements of those cases.

When the judge hands down a decision on this asbestos bankruptcy case, I will report to you about it right here on the Kazan Law Blog.

[1]    Evolving litigation landscape led to settlements, witness testifies at Garlock trial; Legal Newsline; Aug 7, 2013

[2]  Garlock bankruptcy trial concludes in N.C.; Legal Newsline; Aug 23, 2013

Asbestos Litigation Today: Protecting Mesothelioma Victims in Bankruptcy Trusts

The history of asbestos litigation took a turn in the summer of 1982, when the first asbestos manufacturers filed for Chapter 11 bankruptcy protection to avoid paying compensation to the growing number of victims of asbestos diseases caused by exposure to its asbestos products.

A wave of asbestos bankruptcies followed over the course of the next couple of decades and the entire asbestos textile industry was in bankruptcy, as were several major asbestos insulation manufacturers.

In this video Steven Kazan discusses Kazan Law’s involvement in the history of asbestos bankruptcies and the critical reactions that have been necessary to protect the rights of mesothelioma victims.

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