Dalkon Shield Claimants OK Reorganization : Robins Bankruptcy Plan Backed by Shareholders
More than 95% of A. H. Robins Co.’s stockholders and Dalkon Shield claimants have approved a reorganization plan that could end the company’s nearly three-year bankruptcy struggle, lawyers said Monday.
The plan would set up a nearly $2.5-billion trust fund to satisfy claims by women who allege that they were injured by using the Dalkon Shield intrauterine birth-control device and provides for a $3.2-billion buyout of the 122-year-old company by the American Home Products Corp.
Dennis Drebsky, an attorney for the pharmaceutical company, said about 95% of the 141,094 Dalkon Shield claimants who sent in ballots voted in favor of the plan.
He said more than 99% of the 19 million Robins common stockholders who voted also backed the plan.
The New York-based American Home Products also would pay Robins’ creditors in full.
Drebsky and Murray Drabkin, who represents the Dalkon Shield Claimants Committee that speaks for claimants in the case, urged approval of the plan during a federal court hearing.
‘Trust Inadequate’
Drabkin said the plan “provides a just and fair resolution of the case.”
While it is not an ideal solution, Drabkin said it meets the claimants’ requirements for the possibility of independent claims resolutions and the certainty of money being available for awards.
But another lawyer representing several hundred Dalkon Shield claimants said the trust fund would be inadequate. Attorney Ralph Pittle also said more claimants would have voted against the plan if they had been better informed. Ballots were mailed to creditors in April and had to be returned by July 11.
U.S. District Judge Robert R. Merhige Jr. and U.S. Bankruptcy Judge Blackwell N. Shelley, who have presided over Robins’ Chapter 11 proceedings, must approve the plan before it can take effect.
If they approve the plan, parties will have 30 days to appeal before a final confirmation order is issued. Payments to claimants from a $100-million cash fund set up by Robins will begin 30 days after Merhige’s approval, regardless of whether any appeals are filed.
Lawyers for Robins also revealed Monday that the company will pay $27 million plus interest to satisfy Internal Revenue Service claims. The IRS had sought $62 million in disputed back taxes from the company, unrelated to the bankruptcy proceedings.
Richmond, Va.-based Robins filed for Chapter 11 bankruptcy protection in August, 1985, after paying about $530 million to settle 9,500 of 15,000 lawsuits stemming from its sale of the IUD, about 4.5 million of which were distributed in this country and abroad in the early 1970s.
The reorganization plan calls for the claimants to receive payments from Robins, American Home Products and Aetna Casualty & Surety Co., which carried liability insurance on the Dalkon Shield.
