Bondex May Owe $1.1 Billion Over Asbestos, Judge Says

Bondex International Inc., the bankrupt unit of Rust-Oleum maker RPM International Inc. (RPM), may owe current and future victims of asbestos poisoning $1.17 billion, a judge estimated.

U.S. Bankruptcy Judge Judith K. Fitzgerald in Wilmington, Delaware, today sided with lawyers representing asbestos claims and rejected the method Bondex and Specialty Products Holding Corp. used to estimate they owed no more than $575 million.

“We decline to accept debtors’ novel approach in this case,” Fitzgerald wrote in her opinion. The ruling will help determine how much Bondex and its affiliates must try to set aside as part of the company’s reorganization plan.

Bondex and Specialty Products filed for bankruptcy in May 2010 with plans to set up an asbestos-victims trust to resolve future and current suits. To calculate how much money must be placed into the trust, the companies and creditors submitted detailed estimates of the size of all current and future asbestos claims.

RPM fell 15 cents to $33.70 at 10:50 a.m. in New York trading.

Bankrupt companies and their parents can win immunity from future asbestos lawsuits by setting up trusts to cover medical and other costs associated with exposure to asbestos.

In 2011, Bondex bankruptcy attorney Gregory Gordon told Fitzgerald that RPM understood that it would have to put money into an asbestos trust to win immunity from related lawsuits targeting its subsidiaries.

Barry M. Slifstein, an RPM spokesman, didn’t immediately return a call seeking comment on the ruling.

The bankruptcy case is In re Specialty Products Holdings Corp., 10-bk-11780, U.S. Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporter on this story: Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.

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