CHARLOTTE, N.C. (Legal Newsline) - Lawyers representing asbestos claimants are hoping to block Bestwall's bankruptcy, telling a North Carolina court the company has more than enough money to pay alleged victims.
The Official Committee of Asbestos Claimants filed a motion to dismiss Bestwall's bankruptcy proceeding on March 30. The company, a unit of Georgia-Pacific, wants to set up a trust in North Carolina bankruptcy court to expeditiously pay out claims.
But asbestos lawyers would rather those disputes be heard in various courts around the country, with the possibility of settlements and verdicts larger than what would be paid by a bankruptcy trust.
Plaintiff lawyers elsewhere have so-far successfully objected to both Johnson & Johnson and 3M funding bankruptcies by subsidiaries to pay talc and ear plug liabilities, respectively, and are hoping for the same outcome in Bestwall's case.
"The Funding Agreement between Georgia-Pacific and Bestwall affords Bestwall the financial wherewithal to meet all of its obligations as they come due, inside and outside of bankruptcy, now and in the future," the motion says.
"In the absence of bankruptcy, the Funding Agreement requires that Georgia-Pacific pay all costs and expenses associated with Bestwall's assigned asbestos liabilities..."
This agreement precludes Georgia-Pacific from seeking safety in the bankruptcy system, the committee of asbestos claimants argues. It also points at the cash the parties have on hand.
"Bestwall created and funded a $1 billion qualified settlement trust, which is being overseen by this Court," the motion says. "In addition, New GP, the counterparty to the Funding Agreement, has been financially successful and has continued to improve on many annual economic metrics.
"During the more than five-year period since Bestwall filed this bankruptcy, NEW GP has reported that its equity value has increased by $7.1 billion to $27.8 billion. Simultaneously, New GP has upstreamed over $5 billion in dividends to its ultimate parent, Koch Industries."
Dozens of companies facing asbestos lawsuits have created bankruptcy trusts to avoid the costs of litigation when paying claimants. Bestwall has argued asbestos lawyers manipulate their clients' claims in order to score bigger paydays than they are entitled to.
Bestwall is currently sorting out how much it needs to place in its trust and wants to show past settlements from the civil justice system are no indication of future responsibilities because those settlements were inflated by the business practices of plaintiffs lawyers.
The argument – one that has been successful before – is that asbestos lawyers target some companies with civil lawsuits while blaming others that have set up bankruptcy trusts for the same illnesses.
Before Garlock Sealing Technologies convinced a judge this was happening, companies facing lawsuits had no way to prove the same clients were telling different exposure histories in claims made to bankruptcy trusts.
After the Garlock ruling, which came after the company showed exposure history contradictions in the 15 cases it was permitted to investigate, 17 states passed laws requiring automatic disclosure of trust claims to civil defendants so they could find out who was being blamed for what.
Bestwall is taking the hit for all asbestos liabilities for Georgia-Pacific, which has argued through the years with lawyers over whether its joint compound contained asbestos.