WILMINGTON, Delaware – To the horror of national asbestos injury lawyers, U.S. Bankruptcy Judge Judith Fitzgerald will let insurers of W.R. Grace and Company see confidential documents the lawyers previously shared only with Grace.

Fitzgerald granted GEICO and six other insurers access to files of asbestos firms on Dec. 17, subject to the same confidentiality restrictions she has applied to Grace.

Lawyers for the people of Montana will see the secrets too.

Fitzgerald disregarded an objection that nine asbestos firms filed on Dec. 14.

Their attorney, Sandra Esserman of Dallas, wrote, "Such information includes confidential settlement data and information subject to work product privilege objections, some of which goes to the very heart of the manner in which the law firms conduct the representation of their clients."

"The law firms strenuously resist this easing of confidentiality protections," she wrote.

When Grace sought the information, she wrote, the firms "fought them tooth and nail."

The firms provided it only under the strictest confidentiality provisions, she wrote.

Fitzgerald's order allows insurers to share documents with "counsel, consultants, accountants, experts, auditors, examiners, financial advisors or other agents or professionals who are working on the Chapter 11 case."

Montana needs the documents because Grace's asbestos mine in Libby, Mt., emitted pollution that created a different set of facts from routine asbestos cases.

Grace filed bankruptcy in 2001, in the face of mounting liabilities from asbestos suits.

Last year, Grace proposed to reorganize as a profitable company through a settlement agreement with asbestos firms.

Insurers, lenders and others objected to the reorganization plan, protesting that personal injury claimants would get more than they deserve and everyone else would get less.

The plan would require an injunction channeling assets to a personal injury trust fund.

Even the acting trustee of U.S. Bankruptcy Court, Robert DeAngelis, opposes the plan.

"The plan may not be feasible and may violate the absolute priority rule," DeAngelis wrote on Dec. 22.

He wrote that he worked with Grace on release and injunction provisions and was "still assessing the legal justification of confirmation for all of these provisions."

He entered a preliminary objection that the provisions are in violation of Third Circuit law and bankruptcy code.

He wrote that "the plan contains a broad exculpation clause that may not be appropriate under relevant Third Circuit law."

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