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Asbestos Bankruptcy Cases: The Rise of Objections By Disfavored Plaintiffs' Attorneys
There has been an emerging and interesting development in recent asbestos-related bankruptcy cases: the filing of objections by disfavored plaintiffs' attorneys. The filing of asbestos-related bankruptcy cases has increased dramatically with the establishment of Section 524(g) of the Bankruptcy Code. See Stephen J. Carroll, et al., Asbestos Litigation, 151-55 (Rand Inst. for Civ. Just., 2005) (reporting at least 73 asbestos-related bankruptcies since 1982, more than half of which were filed in the past 6 years). Section 524(g) provides asbestos-challenged companies a way to reorganize to shed their asbestos liabilities and channel all future asbestos claims to a trust established through the bankruptcy process. To achieve confirmation of a plan incorporating relief under Section 524(g), a debtor must have the consenting vote of 75% of the present affected asbestos claimants, among other things. This consent requirement has led debtors to enter into negotiations with asbestos claimants in advance of a bankruptcy filing in order to ensure sufficient voter approval for the plan of reorganization.
The debtors' pre-filing negotiations have in turn led to the emergence of different classes of asbestos claimants: the favored class that has entered into pre-petition settlement agreements, and the disfavored class of present and future claimants who were not privy to the pre-petition settlements. The settlements normally provide the favored claimants with preferential treatment, whether it is higher compensation for their claims, a security interest in insurance proceeds or estate assets, or a priority in the order of payment by the reorganization trust. In return, the debtor expects that the favored claimants will agree to vote for the debtor's plan of reorganization, thus allowing the debtor to satisfy the 75% consent requirement.
In recent bankruptcies, attorneys representing the disfavored claimants have started to voice criticisms of this process by filing objections to the debtor's disclosure statement and plan of reorganization. They have asserted arguments regarding discrimination among present and future asbestos claimants, manipulation of the voting process through the creation of artificially impaired “stub” claims, bad faith in the plan negotiation and vote solicitation processes, and outright “vote-buying.” Their objections have met with varying success. In this article, we discuss the objections filed by disfavored plaintiffs' attorneys in three asbestos-related bankruptcies: In re Combustion Engineering; In re Congoleum Corporation; and In re Quigley Company, Inc. In Combustion Engineering, after hearing the appellate arguments of the disfavored group (and certain insurers), the Third Circuit vacated the lower court's decision confirming the plan of reorganization and remanded for further findings. In Congoleum, the disfavored claimants were successful in forcing the debtor to renegotiate the plan of reorganization to restructure the priority of payments, although the plan is still the subject of ongoing modifications ' particularly in light of a recent ruling that enables other parties to submit competing plans. In Quigley, the disfavored plaintiffs filed their objections on Sept. 15, 2005. The debtor immediately countered with a modified plan of reorganization that addresses some but not all of the objectors' arguments. Given the early stage of the Quigley proceedings, it remains to be seen whether these objectors will be fully accommodated as part of the plan re-negotiation process.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
The Stranger to the Deed Rule
In 1987, a unanimous Court of Appeals reaffirmed the vitality of the "stranger to the deed" rule, which holds that if a grantor executes a deed to a grantee purporting to create an easement in a third party, the easement is invalid. Daniello v. Wagner, decided by the Second Department on November 29th, makes it clear that not all grantors (or their lawyers) have received the Court of Appeals' message, suggesting that the rule needs re-examination.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.