Imerys headquarters in Paris, France. Photo by Balint Porneczi/Bloomberg Imerys headquarters in Paris, France. Photo by Balint Porneczi/Bloomberg

 

While bankruptcies can prove highly disruptive and stressful to corporate law departments, the Chapter 11 proceeding may not take too great of a toll on the metro Atlanta-based legal team at Imerys Talc America Inc., experts told Corporate Counsel.

The subsidiary of Paris-based Imerys, which supplies talc for Johnson & Johnson Services Inc.’s baby powder, as well as to other manufacturers for their products, recently filed for bankruptcy protection, citing the 14,650 claimants who allege that its product causes cancer. Two other units of the company also filed for protection.

“The Debtors lack the financial wherewithal to litigate against the mounting Talc Claims being asserted against them in the tort system,” Imerys Talc America’s Chief Financial Officer Alexandra Picard said in court documents.

In such cases, however, bankruptcy law allows the formation of a litigation trust and so-called channeling injunction that forces litigants into a single forum where claims are satisfied through trust assets. The process was used in asbestos litigation, and Pacific Gas & Electric Co. announced in January that it expects to use the tool in its Chapter 11 proceeding.

And during this time, it generally is business as usual at the company, and by extension its legal department, said John Mills, a litigation partner at Taylor English Duma.

Through a representative, Ryan Van Meter, Imerys’ vice president and general counsel for North America for the past nearly four years, declined to comment about the duties of his department during this time and what it will look like afterward. A search of the Georgia Bar’s online membership directory indicates that Imerys employs eight attorneys licensed in the state.

This procedure “is to address litigation issues only, and there is no hint that there is a problem with operations,” Mills said. “What’s stressful for in-house counsel is where there is going to be a downsizing, [which is not the case here]. Most of the in-house folks will stay in place and operate normally.”

Assuming a channeling injunction is granted, he added, the bulk of the heavy lifting would lie with the GC and the legal team’s litigators, both of whom would work closely with outside counsel to establish the fund. Alternatively, someone in-house could take on the role, Mills said.

“The GC and litigation folks will be called on to do additional work over and beyond their normal workload, so it could get busy,” he said.

Rob Williamson at Scroggins & Williamson predicted that the Imerys North America in-house lawyers will “become conversant with the bankruptcy requirements” throughout this process.

“On top of their normal duties, they’ll also be working with outside counsel making sure the company complies with all of its bankruptcy obligations,” he said. “There also are a lot of reporting requirements that Chapter 11 imposes on the company, and everybody inside will be looking to the in-house lawyers to help, as well as the outside counsel.”

He added: “It adds to their job security. They’ll know a lot about bankruptcy law and have another skill set.”