Bondex May Owe $1.1 Billion Over Asbestos, Judge SaysSteven Church
Bondex International Inc., the bankrupt unit of Rust-Oleum maker RPM International Inc., may owe current and future victims of asbestos poisoning $1.17 billion, a judge estimated.
The ruling was a victory for asbestos victims, who have been negotiating with RPM lawyers about how much money the company may contribute to a trust fund to cover lawsuits related to Bondex’s former asbestos products, creditor attorney Natalie Ramsey said in an interview today.
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.
Before it filed for bankruptcy, Bondex estimated it had $397.7 million in asbestos-related liabilities.
RPM fell 1 percent to $33.51 in New York Stock Exchange 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.
Fitzgerald has overseen some of the biggest asbestos-related bankruptcies in the U.S., including W.R. Grace & Co. and Federal-Mogul Corp.
Those cases took years to complete and cost the companies billions of dollars in cash and stock to set up the trusts that would make them immune to future lawsuits.
Asbestos particles can lodge deep in human lungs and can cause cancer. The damage caused by the particles is irreversible and unique, making a diagnosis easier than for some other product-liability ailments.
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 return calls seeking comment on the ruling. RPM attorney William M. Wycoff declined to comment.
The ruling came out today a few minutes before a previously scheduled bankruptcy court hearing for Bondex and Specialty, Ramsey said. Fitzgerald told the lawyers about her decision and then took a brief break so they could quickly scan the ruling before resuming.
“We still haven’t had time to digest it,” Ramsey said.
The bankruptcy case is In re Specialty Products Holdings Corp., 10-bk-11780, U.S. Bankruptcy Court, District of Delaware (Wilmington).