NEW YORK - ACandS Inc. has entered the final stage of Chapter 11. Faced with some $3 billion in asbestos liability, the insulation contractor filed for Chapter 11 protection in 2002.
ACandS is a unit of Irex Corp., based in Lancaster, Pennsylvania. In 2002 the company faced 300,000 asbestos lawsuits arising from its installation of asbestos insulation between 1958 and 1974. The firm had already settled about 240,000 suits. The company filed its bankruptcy-reorganization outline which will call for $500 million in insurance settlements which they say will resolve all of its asbestos liabilities. No one has objected to the outline, says ACandS, a hopeful sign that the company will emerge from bankruptcy smoothly.

As long as there are no objections, U.S. Bankruptcy Judge Judith Fitzgerald can approve the disclosure statement and authorize the company to solicit votes from its creditors. A positive vote would move all asbestos liabilities to a trust funded by Travelers Insurance.

Claimants against the company will recover an estimated 6 percent of their claims. The figure takes into account claims already filed as well as possible future claims.

The ACandS bankruptcy settlement was negotiated by Gilbert Randolph LLC, a law firm that has become well known for its role in Chapter 11 asbestos cases. The firm will collect a portion of the insurance settlement funds because of a contingency fee agreement with ACandS. The law firm has negotiated a number of significant and well-known settlements, including one case in which the firm was forced to return $13 million in fees because of conflict of interest allegations.

ACandS struck a deal in September with Travelers Casualty that will put aside $449 million in a trust that is expected to earn another $10 million in interest by the time the ACandS’s bankruptcy plan is confirmed. The deal ends decades of litigation over whether or not the insurance company was obligated to cover the asbestos claims against ACandC.

The firm will collect approximately another $44 million under a settlement with ACE Ltd., which will be invested in a trust along with the Travelers money and other sources to pay for claims, both current and future.

The structuring of the bankruptcy plan follows the structure typical of companies in similar situations. While some smaller companies have closed due to asbestos litigation, the big players have been emerging from bankruptcy one by one, most in very strong financial positions.

The asbestos lawsuits stem from decades when the defendant companies profited from the manufacture and sale of asbestos and asbestos containing products despite their knowledge that asbestos was responsible for fatal illnesses, including the rare cancer, mesothelioma, which occurs at a far higher rate among those who worked regularly with asbestos than it does in the general population. Asbestos and its legacy have been called “the worst industrial accident in history”.

This entry was posted on Monday, January 14th, 2008 at 5:45 pm and is filed under Asbestos Litigation. You can follow any responses to this entry through the RSS feed. Responses are currently closed, but you trackback from your own site.