Georgia-Pacific Pledges $1B to Bestwall Asbestos Trust Fund
Georgia-Pacific has pledged $1 billion to fund an asbestos trust for bankrupt affiliate Bestwall LLC, clearing the path to a settlement of longstanding liability claims involving mesothelioma cancer.
Bloomberg Law reported earlier this month that Georgia-Pacific made the financial commitment to advance a consensual resolution in the U.S. Bankruptcy Court for the Western District of North Carolina.
Bestwall is a wallboard and joint compound product manufacturer that filed for Chapter 11 bankruptcy in 2017 with more than 62,000 pending claims involving asbestos.
It was known earlier as Bestwall Gypsum Company, and was purchased by Georgia-Pacific in 1965. It became Bestwall LLC just before the bankruptcy filing as part of Georgia-Pacific’s reorganization to absorb future legal disputes.
Georgia-Pacific had paid almost $2.9 billion to settle more than 400,000 claims prior to the reorganization in 2017.
Koch Industries Inc. acquired Georgia-Pacific and its affiliates in 2005.
The $1 billion trust fund will be under the direction of an independent trustee and will be used to pay past and future claims against the company. Only a court ruling could send it back to Georgia-Pacific.
Bestwall’s original asbestos trust, funded by Georgia-Pacific, was worth just $175 million, far short of what is considered adequate to settle the claims.
Georgia-Pacific Move Could Spark Upcoming Settlements
As part of the $1 billion commitment, Bestwall urged the court to approve the “qualified settlement fund” as part of an adequate asbestos trust.
The claimants and the company have been at odds in bankruptcy court over the size and adequacy of a funding agreement that would cover past and future claims involving asbestos toxicity.
In 2019, a group of asbestos plaintiffs filed a motion in court asking a judge to dismiss the bankruptcy proceedings and accusing Bestwall of stalling to avoid paying for its liabilities.
“Establishing and funding the QSF Trust [qualified settlement fund] at this time should address concerns expressed by the claimant representatives that [Georgia-Pacific’s] payment obligations under the Funding Agreement are not secured or guaranteed,” the court filing said.
Asbestos trusts are created typically by asbestos manufacturers that have gone into bankruptcy proceedings. They are designed to compensate victims of negligence that put them at risk of health issues such as mesothelioma.
Mesothelioma is a rare but aggressive cancer caused by asbestos exposure that is diagnosed in an estimated 3,000 people annually in the United States.
There are approximately 60 asbestos trusts today worth an estimated $30 billion.
Bestwall Products Filled With Asbestos
The avalanche of claims against Bestwall stems from the company’s use of asbestos-containing products, including its gypsum wallboard, acoustical plaster, joint compounds and drywall adhesives.
Asbestos, a naturally occurring mineral, was once used ubiquitously in myriad products to strengthen them and promote heat resistance. Its versatility and affordability made it popular with many industries.
Unfortunately, asbestos is toxic, and the inhalation or ingestion of its microscopic fibers causes serious medical problems, including mesothelioma cancer, asbestos-related lung cancer and asbestosis.
Both employees making the products and the consumers using the products encountered asbestos regularly.
Under mounting pressure as the danger of asbestos became more well known, Bestwall Gypsum stopped using it in the late 1970s. Health problems from long-ago exposure, however, continued to mount.
This stems from the long latency period of many diseases. Mesothelioma, for example, can take from 20 to 50 years to develop after an exposure to asbestos.
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- Wolf, A. (2020, August 13). Georgia-Pacific Puts Up $1 Billion to Fund Asbestos Trust. Retrieved from: https://news.bloomberglaw.com/bankruptcy-law/georgia-pacific-puts-up-1-billion-to-fund-asbestos-trust