Garlock responds to motion to adjourn bar date, calls opposing arguments "mistaken"

By Heather Isringhausen Gvillo | May 27, 2014

CHARLOTTE, N.C. (Legal Newsline) - Debtors involved in the Garlock Sealing Technologies bankruptcy case have responded to the Committee of Asbestos Personal Injury Claimant's motion to adjourn the debtors' request for a bar date for current settled asbestos claims, saying the Committee is alone in its arguments.

The debtors, which include Garlock, Garrison Litigation Management Group and The Anchor Packing Company, responded to the committee's motion to adjourn, arguing that all litigation regarding disputed claims should play out at the same time as the confirmation process rather than delaying the process as the Committee requests.

The debtors requested a bar date for filing settled Garlock asbestos claims on April 28 in U.S. 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.

"As debtors indicated in the motion," the response states, "it will be important to the parties in interest, under any proposed plan, to define as precisely as possible the amounts of settled Garlock asbestos claims."

However, the committee seeks to adjourn the settled claims bar date motion before it is even heard.

In their May 19 response, the debtors argue the committee is under the idea that the debtors must submit an amended proposed plan of reorganization before the court can consider their request for a bar date, because the committee can only argue its position after completely studying the anticipated plan.

"The committee's motion to adjourn is wrong," the response states. "Debtors' settled claims bar date motion was made because it is debtors' view that a settled claims bar date is necessary for confirmation of any plan - not simply the amended plan debtors intend to file.

The debtors explain that the committee attempted to suggest 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 disperate treatment between settled claims, the committee argues.

The debtors say the committee is alone in its position. Of all the principal estate parties involved in the bankruptcy case, only the committee objects to establishing a bar date.

In fact, on May 16, the Future Claims Representative filed a brief siding with the debtors, claiming a bar date will provide certainty as to the pool of existing settled claims. A better estimate of the number of future claims, the FCR argues, will help ensure that future claimants are not prejudiced and will also prevent fraud in the trust system.

"The FCR response points out that, in other asbestos bankruptcy cases, the failure to define settled claim obligations as detrimentally impacted future claimants because trust assets were diverted to settled claimants because those obligations were never defined," the response states.

The FCR was appointed by U.S. Bankruptcy Judge George Hodges to represent the interest of the holders of future asbestos personal injury claims against the Debtors.

Hodges appointed Joseph W. Grier as FCR 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.

The debtors also argue that a bar date will be much less burdensome on the court and will typically handle obligations to settled Garlock claimants without litigation. However, they add that the motion to adjourn will certainly cause "substantial delay" when considering any plan of reorganization. The Committee stated that may claimants with debatable settlement claims will litigation their claims.

"Whether litigation is of a magnitude the committee predicts or not, the fact that some litigation during the allowance process will occur supports considering a settled claims bar date now," the response states.

The debtors add that the motion could delay considerations of the bar date until a disclosure statement hearing occurs, which could be at least six weeks.

"For the foregoing reasons, the court should deny the committee's motion to adjourn, and hear the settled claims bar date on May 29 - as already properly noticed," the response concludes.

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

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