WILMINGTON, Del. – Asbestos lawyers and manufacturer W. R. Grace and Company have crafted a plan to reorganize Grace and release it from bankruptcy court.
Grace's creditors, however, don't like the plan.
Twenty parties have objected to the plan that Grace submitted to U.S. Bankruptcy Judge Judith Fitzgerald in bankruptcy court at Wilmington, Del., in September.
Insurers, investors and lenders filed most of the objections.
A committee of unsecured creditors alleged that Grace's plan would pay their claims at an interest rate two percent below what they
Lewis Kruger of New York, representing unsecured creditors, argued that Grace shouldn't pay bankruptcy rates because it was never insolvent.
Banks that carried Grace through bankruptcy court for seven years have raised the same point, claiming that the value of asbestos suits that pushed Grace to bankruptcy court turned out far lower than Grace estimated.
"The Debtors cannot in good faith argue that there is a question concerning their solvency when they have disclosed that they are solvent with very valuable equity interests post-emergence," Kruger wrote.
He wrote that Grace and asbestos lawyers erected procedural hurdles to hush dissent.
Canada's attorney general also objected, on behalf of "her majesty the queen."
Even bankruptcy trustee Roberta De Angelis, who appointed the asbestos lawyers that negotiated the reorganization, objected.
The loudest cry of protest came from Libby, Mt., where Grace mined a mountain of vermiculite from 1963 to 1990.
The harmless vermiculite contained harmful asbestos fibers, according to Rebecca Butcher of Landis, Rath and Cobb in Wilmington.
Average verdicts in Libby cases ranged from $271,170 for victims with nonmalignant conditions to $550,200 for impaired victims and $1,506,450 for those with mesothelioma, according to Butcher.
Under Grace's plan, she wrote, a Libby claimant would receive no more than any other asbestos plaintiffs.
Other plaintiffs sued multiple defendants, she wrote, raising issues of causation and relative fault that Libby plaintiffs don't raise.
She wrote that Libby claimants originally hired Montana lawyers, not the nationwide firms that filed more than 100,000 asbestos suits against Grace.
The bankruptcy court's asbestos injury committee included only one representative of Libby claimants, she wrote.
Otherwise, Butcher wrote, the committee was "a reunion of the same lawyers who serve together on personal injury committees in most of the significant asbestos bankruptcy cases in this country."
She named a dozen: Fred Baron, John Cooney, Mark Meyer, Robert Jacobs, Steven Kazan, Michael Kelley, Thomas Wilson, Joseph Rice, Nancy Davis, Ian Cloud, Steven Baron and Perry Weitz.
She wrote that David Austern, counsel for future injury claimants, had responsibility for Libby claimants but took no steps to represent them.
Butcher also wrote that asbestos lawyers were concerned only with maximizing their own revenues.
Responding for Grace on Oct. 23, attorney David Bernick wrote, "There is nothing about the nature of Libby claimants' claims against the Debtor that differentiate such claims from any other asbestos personal injury claims."
Bernick wrote that Grace would consider changes in response to other objections.
The next day, the asbestos injury committee joined in Grace's response.
Fitzgerald held a hearing Oct. 27. She restricted access to the transcript until February.
Fitzgerald, of Pittsburgh, presides as visiting judge.
Earlier this year she held an estimation trial to establish the value of asbestos suits against Grace.
Asbestos lawyers asked her to admit a history of Grace's settlements as evidence, but she turned them down.
She ruled that an attorney could testify about settlements if he obtained permission from all 3,000 of his clients.
The asbestos lawyers promptly settled for a few hundred dollars per claim now and a little more in the distant future.
The SimmonsCooper firm of East Alton filed many of the asbestos suits against Grace.