After 6 Years, Manville Begins a New Chapter

Building-products giant Manville Corp. emerged from more than six years of protection under federal bankruptcy court Monday and began paying creditors and asbestos health and property claimants.

“With the constraints of bankruptcy behind us, we can now dedicate all of our attention to growing Manville and creating shareholder value,” said Tom Stephens, chairman and chief executive, in officially marking what the company considers the first day of the rest of its life.

Manville sought protection from creditors under Chapter 11 of the U.S. bankruptcy law Aug. 26, 1982, saying it faced ruin from billions of dollars in suits claiming health problems from asbestos once produced by the company.

Its refuge in bankruptcy court marked one of the biggest and most exhaustive filings in U.S. history and raised major questions about use of the federal bankruptcy laws to defer or avoid health-related liability claims.

Manville helped lay the precedent for another major company, A. H. Robins & Co., to seek Chapter 11 protection when it felt threatened by billions of dollars in escalating health claims for a now discontinued controversial product, the Dalkon Shield intrauterine birth control device.

The Manville bankruptcy contributed to the company’s tarnished image over the handling of asbestos claims, and some surveys called it one of the least admired U.S. businesses.

Before its Chapter 11 filing, property damage claims alone had come to $85 billion, or about 40 times the company’s total assets. Manville also faced more than 17,000 personal injury claims in the billions of dollars.

The filing allowed Manville to operate shielded from liability suits while it worked out a way to pay the bills. It also allowed the company time to draft a $2.5-billion trust fund plan to pay asbestos victims.

Manville’s reorganization plan was approved by the bankruptcy court in December, 1986. After several appeals, the final order implementing the plan was given Oct. 28, to become effective in 30 days. The plan has been both praised and condemned.

Manville shareholders will be the big losers, winding up with one share of new Manville stock for every eight shares they once held, said Calvert Crary, a litigation analyst with Martin Simpson & Co., a New York investment research firm.

The reorganization plan established a Personal Injury Settlement Trust to settle claims of asbestos health victims for the next 25 years. Manville paid $150 million into the trust, and its insurers will add $615 million. Beginning in 1991, Manville will make annual payments to the trust of $75 million until 2012.

A second trust, called the Property Damage Settlement Trust, would settle asbestos-related property claims. Manville paid $100 million into it, and the company’s insurance carriers also will contribute millions of dollars.

Manville also faces immediate cash obligations of $247.5 million to commercial creditors.

Manville said that as of the close of business Monday, trading of its old securities ceased. The new securities will trade under the symbol MVL.