Lawyers accuse asbestos defendant of filing phony bankruptcy

Steve Korris Jun. 17, 2010, 9:54am


WILMINGTON, Del. – Asbestos lawyers from Philadelphia accuse former gasket maker Durabla Manufacturing Corp. of filing a phony bankruptcy petition to shield owner David Moser from liability.

"DMC has nothing to reorganize, and did not file its Chapter 11 case for the good faith purpose of reorganizing its business," Natalie Ramsey of Wilmington wrote for the Shein Law Firm of Philadelphia in May.

"There are no products being manufactured or sold by DMC," she wrote.

For the moment, Durabla's bankruptcy prevents Shein clients from pursuing claims against Moser as the company's "alter ego."

Moser has started an adversary proceeding that would enjoin alter ego claims.

Ramsey wrote that before DMC filed its petition, in a case filed by Shein plaintiffs in the Philadelphia Court of Common Pleas, Moser and related companies lost motions to dismiss the same alter ego claims they now seek to enjoin.

"Since the DMC bankruptcy amounts to nothing more than a litigation tactic in an effort to protect Moser and his related entities from the Shein plaintiffs' claims, and has no other valid purpose, DMC's case is subject to dismissal as a bad faith filing," she wrote.

For Durabla, Thomas Francella of Wilmington answered on June 9 that Moser doesn't intend to escape alter ego claims.

Moser and his other companies have offered to contribute to a trust in exchange for the protections of an injunction against alter ego asbestos claims, Francella wrote.

Durabla intends to bring proceeds of alter ego claims into the estate, in order to carry out a reorganization that would benefit all creditors, he wrote.

"Such a result would be impossible in a state court forum," he wrote.

"Outside of bankruptcy, all of the benefits of the alter ego claims would accrue to the first parties to the courthouse to litigate those claims," he wrote.

The prospect of sharing equally with other creditors apparently threatens the Shein plaintiffs, he wrote.

"The debtor was running out of insurance, and was facing an upcoming trial which could have depleted the entirety of its assets," he wrote.

"The debtor was under no duty to wait until the Shein plaintiffs' trial was adjudicated," he wrote.

"No other creditor has joined the motion to dismiss," he wrote.

Durabla faced more than 100,000 asbestos suits when it petitioned for bankruptcy.

The roster of lawyers suing Durabla fills 38 pages.

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