W.R. Grace proved bankruptcy didn't have to happen
Three years ago, Sen. Joe Biden and other Democrats on the Senate Judiciary Committee argued that if Congress created an asbestos trust fund, plaintiffs would immediately wipe it out and resume suing in state courts.
They promised that more bankruptcies would follow.
This year, however, an American corporation proved that the long string of asbestos bankruptcies didn't have to happen.
W.R. Grace and Company forced the issue by asking U.S. bankruptcy judge Judith Fitzgerald to calculate the value of asbestos suits against it.
At trial in January, epidemiologist Howard Ory testified that 13 of 14 asbestos plaintiffs suffered no real harm.
He estimated that among 380,000 plaintiffs who filed asbestos claims from 1989 to 2001, about 27,000 presented valid claims.
Plaintiff lawyers then settled their claims on terms so favorable to Grace that the value of its stock multiplied by 15.
No company in bankruptcy had ever seen its stock gain so much value.
Now the banks that carried Grace with low interest bankruptcy loans say they should collect back interest because Grace never was bankrupt.
In that case, many corporations that went through bankruptcy weren't really bankrupt.
They declared bankruptcy despite possessing great assets, because the cost of asbestos claims appeared to exceed their assets.
No corporation in bankruptcy had demanded a fair appraisal of claims, until Grace did.
Company owners may have gained courage from U.S. District Judge Janis Jack of Texas, who declared in 2005 that among 10,000 asbestos and silicosis claims she had found one with a genuinely injured plaintiff.
Jack couldn't penalize anyone because she held temporary jurisdiction, so she sent the cases back to various judges to carry out justice.
Nothing happened to any of the lawyers who filed the bogus suits.
This year, justice crashed down on a famous asbestos lawyer from a different direction.
Dickie Scruggs of Oxford, Miss., went to federal prison after pleading guilty to charges that he conspired to bribe a judge.