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Confirmation hearing scheduled for Bondex bankruptcy settlement agreement

By Heather Isringhausen Gvillo | Oct 28, 2014

WILMINGTON, Del. (Legal Newsline) – A Delaware bankruptcy judge has scheduled a confirmation hearing in the Bondex International bankruptcy settlement agreement.

Judge Peter J. Walsh filed an Oct. 20 order scheduling a hearing on confirmation of the proposed joint plan and approved related notice procedures for Dec. 10 in the U.S. District Court for the District of Delaware.

In his order, Walsh approved the debtors’ disclosure statement, the solicitation and tabulation procedures, the certified plan solicitation directive and the ballots.

On July 28, RPM International Inc. announced its agreement with the bankruptcy representatives of current and future claimants in order to resolve Bondex-related asbestos liability. According to the agreement, RPM would pay $797.5 million over four years and resolve all present and future asbestos personal injury claims related to its subsidiary Bondex. 

The debtors in this case include Specialty Products Holding Corp., Bondex, Republic Powdered Metals, Inc. and NMBFiL, Inc.

In his order, Walsh held that each asbestos personal injury claim shall be temporarily allowed for voting purposes to accept or reject the plan in accordance with the approved solicitation and tabulation procedures. However, the claims are not temporarily allowed for the purposes of “the allowance of, or distribution on account of, a claim and without prejudice to the rights of the debtors or the asbestos personal injury trust in any other context.”

To be counted as votes, all ballots must be executed by Dec. 2.

Walsh ordered that any claimant seeking to challenge the allowance of his or her claim for voting purposes is required to file a motion for an order temporarily allowing a claim in a different amount by Nov. 3.

“Any motion shall be counted solely in accordance with the solicitation and tabulation procedures unless and until the underlying claim is temporarily allowed by the court for voting purposes in a different amount after notice and a hearing,” he wrote.

Any objections to the confirmation of the plan must be filed by Dec. 2 before the hearing.

The debtors, Asbestos Claimants Committee (ACC) and the Future Claims Representative (FCR) are permitted to file a consolidated reply to any objections to the plan by Dec. 5.

Furthermore, Walsh held that the debtors, ACC, FCR and debtors’ voting agent are “authorized to take or refrain from taking any action necessary or appropriate to implement the terms of, and the relief granted in, this order without seeking further order of the court.”

Logan & Company, Inc. will serve as the debtors’ voting agent.

Bondex’s settlement stemmed from a May 2013 ruling by Former U.S. Bankruptcy Judge Judith Fitzgerald, in which she estimated Bondex’s liability at $1.166 billion. However, Bondex argued during the estimation proceedings that its actual liability amounted to $135 million.

RPM appealed the decision to the U.S. Court of Appeals for the Third Circuit, arguing Fitzgerald reached the escalated number by placing too much weight on past settlement agreements. In fact, many of those settlements were reached to push aside nuisance lawsuits, the company argued.

Fitzgerald was unconvinced, concluding that “if a mesothelioma claim was settled by debtors for a nominal amount, there must have been some evidence of exposure against other defendants in the tort system but, because debtors made a payment nonetheless, debtors must have determined that the claimant either was exposed to a Bondex product or that Bondex was not going to contest exposure. That is, the settlement indicates that Bondex was either agreeing that there was some liability, which would be its defense in the tort system. Therefore, the settlements are relevant to estimation because they place a value on the claims.”

Prior to the RPM/Bondex estimation proceeding, the debtors filed discovery requests for access to information from the plaintiffs firms that have filed asbestos claims against them in order to determine their appropriate liability.

The debtors claimed that the information would have shown they settled prepetition claims on an inflated basis, even though they concede they investigated the claims before they settled.

The plaintiffs objected, claiming discovery would be burdensome and beyond what the debtors need in order to establish a trust.

They also argued that the information is confidential and has no relevance to the debtors’ liability.

Fitzgerald agreed and denied the debtors request for discovery, resulting in her decision to hold Bondex liable for $1.166 billion.

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

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