Caroselli, Beachler & Coleman, L.L.C.

Asbestos producers resort to bankruptcy courts

Court for the Middle District of Pennsylvania. A trust fund has been set up by the court concerning the settlement of asbestos-related lawsuits involving companies going through Chapter 11 Bankruptcy reorganization.

One particular company called United Gilsonite Laboratories (UGL) claimed the costs of being sued for asbestos litigation has driven it to bankruptcy. UGL used asbestos in sealant materials when working with cement from 1954 to 1975, and this company has since been named a defendant in more than 950 asbestos-related cases.

The courts will be looking at contributions from insurance companies to the fund as well. What this means is that insurance companies may be covering some of the costs for these cases, and companies like UGL may not be able to write it all off as a bankruptcy expense. There will be a short time period for allowing objections concerning companies filing for bankruptcy - especially under these circumstances.

Because companies can go through Chapter 11 reorganization after facing a number of significant verdicts (and possibly still remain in business), the practice of representing injured plaintiffs in asbestos-related lawsuits can become even more complicated for personal injury lawyers. An injured plaintiff may be rendered a significant jury award, but that award could be substantially reduced if a company then files for bankruptcy. This type of lawsuit is never really over until the money is deposited in the bank accounts of injured plaintiffs and their families.

Before we feel too sorry for these companies, we do need to remember which individuals are suffering from mesothelioma, asbestosis and lung cancer due to exposure from asbestos. Many companies made their fortunes off of such individuals.

Source: Citizen's Voice, "Dunmore-based UGL considers $11.75M trust to settle asbestos-related claims," by James Haggerty, Oct. 5, 2012

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