Manville OKs $125-Million Trust Fund : Money for Removal of Asbestos Part of Reorganization Plan
Manville Corp., once the nation’s largest asbestos manufacturer, has agreed to set up a trust fund of at least $125 million to compensate individuals and organizations for the expense of removing the dangerous insulating material from their buildings.
Manville’s agreement to set up the property claims fund--yet another step toward settling multibillion-dollar claims against it--came during negotiations aimed at reorganizing the company. Payments to claimants won’t begin until after the reorganization is approved and Manville emerges from bankruptcy court protection.
Last August, Manville presented the broad outline of its reorganization proposal, including plans to set up a trust fund for victims of asbestos-related diseases. That fund would receive at least $815 million, as well as insurance compensation, receivables and between 50% and 80% of the company stock.
Asbestos Disease
The health claims fund is expected to continue paying 33,000 victims of asbestos disease for 25 years after the company emerges from bankruptcy court reorganization. Manville sought protection under Chapter 11 of the U.S. Bankruptcy Code, saying the health claims gave it no alternative.
In addition to the $125 million, the property claims fund also would receive insurance proceeds not set aside for the health claims fund and any assets from the health claims fund that are not spent to compensate asbestos disease victims.
The company could not estimate how much would be set aside from insurance or the other sources for the property claims fund.
Manville’s reorganization proposal, including plans for the property claims fund, has the endorsement of Leon Silverman, the New York attorney appointed by the federal court to represent the interests of asbestos disease victims who have yet to be diagnosed or whose claims have not yet been filed. Asbestos-related diseases, which are sometimes fatal, can take three decades to develop.
“I think the proposal does an outstanding job, considering the obvious difficulty of dividing limited resources” among thousands of claimants, Silverman said late Friday.
Yet the proposal faces important hurdles in winning approvals that must come from representatives of Manville shareholders, banks and commercial creditors, as well as those with health or property claims.
The property claims fund will fall far short of satisfying all claimants. Ray Gomez, a Manville spokesman, said 9,246 property claims against the company have been filed by companies, homeowners, school districts and state and local governments.
Manville has long contended that the property claims are overstated because many seek damages for removal of spray-on asbestos insulation, which Manville never manufactured, Gomez said.
The negotiators, who include court-appointed committees representing claimants, creditors and Manville stockholders, are expected to spend additional weeks, if not months, working out the details that remain of the reorganization. The plan will then be presented to a federal bankruptcy court in New York for a final blessing.
