LEGAL NEWSLINE

CHARLOTTE, N.C. (Legal Newsline) - Asbestos claimants intending on filing claims against the debtors in the Garlock Sealing Technologies bankruptcy case have objected to a proposed bar date plan that establishes a deadline for when settled asbestos claims must be submitted.

The debtors - which include Garlock, Garrison Litigation Management Group and The Anchor Packing Company - requested a bar date on April 28 in the United States Bankruptcy Court for the Western District of North Carolina.

A bar date in a bankruptcy proceeding is a deadline for asbestos victims or companies to make their claims against Garlock, which is intended to prevent surprise claims from arising.

On May 16, the Future Claims Representative sided with the debtors.

Representative Joseph W. Grier III claims a bar date will provide certainty as to the pool of existing settled claims, both disputed and undisputed, which will permit reliable provision for such claims under any plan of reorganization.

Judge George Hodges appointed Grier just after a Jan. 10 bankruptcy ruling in favor of Garlock, ordering the gasket manufacturer to put $125 million in an asbestos trust - roughly $1 billion less than what plaintiffs' representatives felt was proper. In his decision, Hodges noted how attorneys had been withholding evidence while pursuing claims against Garlock.

However, the official Committee of Asbestos Personal Injury Claimants moved to adjourn the debtors' request for a bar date, arguing that it cannot take a position on the proposed bar date due to the debtors' plan of payment. The debtors plan to pay settled asbestos claims in full, which could raise issues of "desperate [sic] treatment" between settled claims, allowed unliquidated claims and future claims, the committee claims.

Therefore, the committee wanted to first see an amended plan of reorganization before the bar date request is heard.

Hodges granted the committee's motion to adjourn the bar date motion on May 22

"The debtors may file and serve an amended notice of hearing regarding the bar date motion when or after the debtors have filed a proposed amended plan of reorganization and disclosure statement," Hodges wrote.

After Garlock submitted its Amended Plan of Reorganization on May 29, the committee again objected to the bar date proposal on June 20.

Five days later, the debtors responded to the committee's objections, addressing each one individually.

The committee suggested cutting off the claims resolution process before proofs of claims are filed in their objections.

The debtors explain that there is a "substantial uncertainty" regarding the number of settled Garlock claims; and in their amended plan, the debtors intend on paying all claims in full, which can be difficult to prepare for when the number of claims are unknown.

"To accomplish this, debtors plan to move aggressively to resolve as many settled Garlock asbestos claims as possible," the debtors stated.

However, the committee suggested that the court eliminate the claims process, requiring debtors and claimants to return to the court before attempting to resolve claims through the standard bankruptcy process.

Furthermore, the committee predicts that the process would yield "uncontrolled allowance proceedings [that] would impede the fundamental bankruptcy goal of speedy and efficient reorganization."

The debtors argue there is no basis to predict the number of claims that may be filed or the extent and magnitude of potential disputes.

The debtors "should not be made to speculate about the extent of these obligations when the Code offers a process that will facilitate resolution," the response states. "Until the Code process proves unworkable, the Court should decline the Committee's demand to restrict that process before it even starts."

Unsatisfied by the bar date timing, the committee also seeks to change it to a 90-day time period.

While the debtors believe extending the time period is unnecessary for settled claimants to file their claims, they are willing to agree to the extension in order to avoid any further delay in the claiming process. Therefore, the bar date was extended to Sept. 30.

However, the debtors were not so accommodating with the committee's request for an extension of time for schedule revisions, arguing that the debtors expect to file updated schedules before service of the bar date and don't want to allow for uncertainty from additional amendments.

"Debtors are giving broad notice designed to make all putative claimants aware of the settled claims bar date," they wrote. "There is no reason why settled claimants cannot file their claims, scheduled or not, within the 90 days the committee has requested."

"Parties in interest, in addition to debtors, have a need for finality," the debtors continued. "Permitting additional settled claims to be lodged, at any time though amendments to debtors' schedules, would not provide the finality the bar date process is designed to achieve."

Furthermore, the committee seeks to eliminate the finality effect of the bar date, raising concerns about settled Garlock claimants' ability to vote.

The debtors argue this proposal should be rejected. For the bar date to work, it "must raise a bar against unfiled settled claims."

Specifically, it must be made clear that failure to file timely proof of claim forms will bar claimants asserting settled claims. Instead, they would have to file unsettled, unliquidated claims.

The debtors explain that the committee is correct in assuming that claimants filing in an untimely manner would not be able to vote as a settled claimant.

On the other hand, the debtors added that the "committee is wrong to suggest that a late-filed claimant would be barred from voting on a proposed plan of reorganization. The settled claims bar date would permit such a claimant to vote as a [Garlock] asbestos claimant."

During Garlock's estimation trial, Legal Newsline appealed Hodges' decision sealing portions of the trial and documents associated with it.

After Hodges' ruling, several common asbestos defendants filed similar motions requesting access to sealed Rule 2019 filings.

Hodges originally granted access to Rule 2019 filings on May 6 after previously denying the same request for several defendant companies that believe they may have been victimized by the withheld evidence and have fought for access to the sealed information.

The committee filed an appeal to the order granting access to the Rule 2019 filings the same day access was approved.

Just one day later he stayed the order granting access to the documents pending the Committee's appeal.

On June 11, Judge Max O. Cogburn, Jr., concluded that due to the large number of redundant filings stretched over nine separate cases, the court would consolidate the cases seeking to unseal documents under the first action filed, which is Legal Newsline's appeal for access to estimation proceeding documents.

Cogburn scheduled a hearing for the consolidated cases on July 15 to address all pending motions, including the formal motions to consolidate filed in early June, which will still be heard.

For the same reason, Legal Newsline's remaining appeal after being shut out of the courtroom during the estimation proceeding was also consolidated on July 2 for the motion hearing.

Several defendants filed responses to the motions to unseal, but the court granted their request to file the unredacted responses under seal on July 1.

From Legal Newsline: Reach Heather Isringhausen Gvillo at asbestos@legalnewsline.com