Asbestos. (Photo: Anneke Schram/iStockphoto.com)
RPM International Inc. has announced that two of its subsidiaries have reached an agreement to resolve their liability for asbestos exposure by setting up a bankruptcy trust seeded with $797.5 million in cash or stock.
Bondex International Inc. and its parent company, Speciality Products Holding Corp., will file a plan of reorganization in the U.S. Bankruptcy Court for the District of Delaware. They initially filed for bankruptcy in May 2010.
In May 2013, retired U.S. Bankruptcy Judge Judith K. Fitzgerald estimated that Bondex and Speciality Products faced liability of $1.2 billion. The judge said she was adopting for the most part the estimation of $1.1 billion in liability put forth by the witness for the future asbestos claimants.
Bondex International, which was formed as a wholly owned subsidiary in 1972, faces liability for a company acquired in 1955 that made asbestos-containing joint compounds and for continuing to manufacture the joint compounds until 1977.
Bondex ceased operations in 1999 and its only activity has been the litigation of asbestos-related claims. RPM International was formed in 2002, leaving Specialty Products an intermediate holding company.
According to Fitzgerald’s opinion, Bondex and Speciality Products claim that joint compound manufacturers began to be targeted in asbestos tort litigation in 2000 and claims began to increase “dramatically” as other asbestos companies began to file for bankruptcy. Fitzgerald found that the bankruptcy filings of other defendants were not the sole cause of the claims increasing.
The other factors for claims increasing, Fitzgerald said, were that more products made by Bondex were identified, “Bondex began to have a higher profile as a defendant … as plaintiffs were experiencing some success in suits against other joint compound manufacturers,” and studies showed that exposure to chrysotile-only asbestos was associated with fatal mesothelioma cancer. Mesothelioma is almost always associated with asbestos exposure.
Although amphibole asbestos is more potent, “chrysotile has not been ruled out as a cause of mesothelioma, even if the chrysotile is uncontaminated or minimally contaminated with an amphibole asbestos,” Fitzgerald said.
If the plan gets court approval, the trust will be funded with at least $450 million in cash and the other $347.5 million will be cash or RPM stock.
Speciality Products will remain a wholly owned subsidiary of RPM International.
This article first appeared in The National Law Journal, a Legal affiliate based in New York.
Amaris Elliott-Engel is a contributor for Law.com.