Dec. 27 (Bloomberg) -- Pfizer Inc., the world’s largest drug company, should have the bankruptcy of its Quigley unit which has protected it from asbestos-related health problems since 2004 dismissed, lawyers for the U.S. Trustee said.
While the bankruptcy has been pending, creditors with alleged asbestos-related health problems have been unable to sue New York-based Pfizer, and many have died, wrote lawyers for the U.S. Trustee, an arm of the Justice Department that oversees bankruptcy. A hearing to decide the U.S. Trustee’s request is set for Jan. 13, according to court papers filed Dec. 23.
“The harm in delaying the inevitable dismissal of this case is to the individuals who have filed asbestos claims against the Debtor and Pfizer,” lawyers for acting U.S. Trustee Tracy Hope Davis wrote in court papers. “For some of those individuals, time may be of the essence.”
A judge in September denied Quigley Company Inc. permission to exit bankruptcy under its fourth proposed Chapter 11 plan. U.S. Bankruptcy Judge Stuart M. Bernstein found the world’s largest drug company manipulated the bankruptcy process to benefit itself. Bernstein said the plan was filed in “bad faith” by Pfizer and cited testimony that asbestos claims directed at Quigley could total $4.45 billion over the next 42 years.
Pfizer spokesman Christopher Loder said the company is prepared to contribute additional funds to Quigley’s plan to satisfy the court’s concerns, and will discuss fair compensation of asbestos claims at the Jan. 13 hearing.
“It’s important to note that in 30 years of asbestos litigation, Pfizer has never been found to be derivatively liable for Quigley’s liabilities,” Loder said in an emailed statement.
$701 Million Charge
Pfizer reported in its third-quarter report in November a $701 million charge for asbestos litigation for Quigley. In a report filed Nov. 12 with the U.S. Securities and Exchange Commission, Pfizer said it was filing an appeal of the Quigley ruling to “preserve its right to address certain legal issues raised in the court’s opinion.”
An ad-hoc committee representing 43,100 individual asbestos claimants in Quigley’s bankruptcy had also asked in October that a judge end the case, and also end the injunction that has shielded Pfizer from lawsuits since 2004.
“Quigley and Pfizer have enjoyed an exceedingly valuable reprieve from defending asbestos claims in the tort system for that entire time, and accordingly have, at numerous junctures throughout this case, been content to let the bankruptcy proceedings languish,” lawyers for the committee wrote.
Working With Quigley
Pfizer said in court papers requesting an appeal that it was working with Quigley to come up with a plan that took into account some of the points in Bernstein’s ruling. Pfizer challenged Bernstein’s statement that Pfizer should put an amount of money into a trust that is equal to the alleged value of present and future claims against the drugmaker.
The bankruptcy court “erred by precluding Pfizer from introducing evidence that Pfizer does not have any liability for Quigley’s conduct in making or selling asbestos-containing products,” lawyers for Pfizer wrote.
Under the proposed Chapter 11 plan, Pfizer would have paid about $450 million into a trust to satisfy claims about products for which it allegedly has derivative liability.
The bankruptcy code would direct all future claims to the trust, covering death and personal injury claims over Insulag, Panelag and Damit, Quigley products for the steel industry containing asbestos that were made from the time of World War II to the 1970s.
The plan barred claimants from taking future actions against Pfizer. Pfizer was a defendant in 280,343 of the 411,100 claims served against Quigley, Bernstein noted in his ruling.
Quigley, founded in 1916, made three products containing asbestos from the 1940s to the 1970s. It was bought by Pfizer in 1968.
The case is In re Quigley Co., 04-15739, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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