Robins Files Its Fourth Reorganization Plan
A. H. Robins Co. has filed a fourth version of its reorganization plan to guide it from Chapter 11 bankruptcy into a merger with the American Home Products Corp. while providing a settlement for Dalkon Shield claimants.
The plan and an accompanying disclosure statement were submitted to a federal bankruptcy judge Monday night and will be the subject of a March 10 hearing in U.S. District Court.
The reorganization plan, which has been revised as Robins’ intended merger partners have changed, calls for the New York-based American Home Products to acquire Robins through an exchange of common stock worth $700 million.
It also calls for setting up a $2.475-billion trust fund that would pay off about 195,000 claims from women who contend they were injured by the Dalkon Shield, an intrauterine birth-control device sold by Robins in the early 1970s.
Robins sought protection in August, 1985, because of the thousands of claims filed by women alleging they were harmed by using the IUD.
Both the committee representing Dalkon Shield claimants and a panel for Robins’ stockholders in the bankruptcy case have endorsed the amended plan.
How Plan Would Work
The plan calls for Dalkon Shield claimants to receive payments from Robins, American Home Products and Aetna Casualty & Surety Co. on a yet-to-be determined date.
Aetna, the product liability insurer of the Dalkon Shield, also would contribute insurance coverage expected to be at least $300 million in return for release of claims against it in the bankruptcy case and settlement of a separate class-action lawsuit brought against the insurer by claimants.
The amended plan also calls for full payment to non-Dalkon Shield creditors of Robins and for indemnity protection against lawsuits for Robins’ officers, directors and employees.
If the disclosure plan is approved next month, Robins’ shareholders, trade creditors and Dalkon Shield claimants would vote on the reorganization plan. For the plan to be implemented, the endorsement of U.S. District Judge Robert R. Merhige Jr. also would be necessary.
