In May 2010, Specialty Products and Bondex Inc., a subsidiary of RPM International, filed for Chapter 11 bankruptcy protection from asbestos claims.
Under bankruptcy law in the United States, companies seeking bankruptcy can set up a trust fund to compensate any current and future claimants in asbestos cases.
Bondex and Specialty Products previously manufactured and distributed chemical product lines, insulation, finishing systems and powder coating. Exposure to asbestos-containing insulation has been linked to the development of diseases such as malignant mesothelioma.
Specialty Products, and its subsidiary Bondex, have claimed liability for up to 25,000 asbestos claims, which are expected to exceed $500 million. Because both Specialty Products and Bondex are no longer operational companies, the bankruptcy judge has halted any further litigation while a trust is funded. Provisions in bankruptcy law allow companies that are not in bankruptcy to make contributions to a trust and be released of liability in any claims.
However, before a trust is completely set up and funded, over 75 percent of the plaintiffs currently undertaking lawsuits must agree to the reorganization plan. Both companies intend to negotiate with the asbestos victims so the trust can provide adequate funding for legitimate health claims. Since the discovery motions in November, the judge has held five hearings to set up a bankruptcy trust. None have been approved, due to opposition from asbestos lawyers and their clients.
On April 18, 2011, U.S. Bankruptcy Judge Judith K. Fitzgerald threatened to appoint a Chapter 11 trustee as a result of the inability of the plaintiff lawyers to reach an agreement with the defense. One of the lead attorneys for the plaintiffs has long argued that the bankruptcy case has been improperly handled from the beginning and is opposed to the halt on lawsuits.