In another set back for the asbestos plaintiffs bar, the Congoleum bankruptcy settlement plan was thrown out by Judge Kathryn Ferguson of the Third Circuit last week. The issue of asbestos bankruptcy's and how they are handled is of huge interest to the settlement community, and rulings that change the already established process can have a substantial impact on structuring annuity payments out of trusts, how trusts are funded, managed and handled in both current and future asbestos cases.
I won't pretend to be an expert on the case or the facts behind it, in fact i'm out side the loop on asbestos litigation in general. However, you can get up to speed on the decision by clicking the following news stories and reports:
Wall Street Journal editorial.
The general consensus is that this is a major set back for prepackaged bankruptcy plans that systematically exclude the insurance companies that generally foot the bill for the establishment of the settlement. In most prepackage cases the property and casualty companies in the past have had no standing to help craft the plan, despite largely footing the bill and funding the trusts. By Judge Ferguson granting Congoleum's insurer standing to object it makes the previously standard process of pre packaging much more difficult to pull off, and in the Congoleum case, will likely require the company filing for bankruptcy put more of their own assets into the trust instead of getting the bulk of the funds from the insurance companies.
The business and legal press are all starting to dig into the asbestos litigation, and unfortunately, some of the practices don't reflect well on some of the participants. Time will only tell if these ruling either accelerate or doom a comprehensive federal solution to the asbestos litigation problems in the US.
