Document RaEkY51JBNNYLKm0BkKVOk17B

THE WALL STREET JOURNAL January 27, 1983 SECTION' jManville Plans to Seek Strict Limit jOn Its Liability for Asbestos Claims By Dec. Rotexrt Sic/.'r?oMr o/Tnf W *ll Strlit Jot. r.al j DE.YVEE-MannNe Corp ttunks if has I figured out a way to resolve its unusual ' bankruptcy status. I Among other features, the working reor1 ga.rt.tat)or. plan would let the company wash i its hands of all liability resulting from health claims involving exposure to Man! vilie asbestos. The proposal would set a j limit or. the si2? &nd number of claims the company would have to pay, and then ar1 range the funding to pay those claims and I no more. The plan would require concessions by ' asbestos victims as well as payment of some [ claims b> the federal government and eon(inbutions from both Manville and its insur: ance earners Strong resistance is certain. | but many at Manvilie think the plan stands ; a good chance of wxir.ing court approval [ And Manville thinks the liability limit is crucial. "The business organisation that 1 emerges from Chapter Jl can't be subject to any further asbestos claims." say's G. Earl Parker, a MarvUle senior nee president ! who is leading the company s reorganization 1 efforts. ; Thousands of Lawsuits , Despite a relatively strong balance sheet ! and cash flow, the maker of building materi als ar.d other products last August filed for court protection under Chapter Jl of the fedj era: Bankruptcy Cede, pnmanly to cope with me growing number of asbestos liabil ity suits pending against it. Manville said at , the time it coJd eventually face 52,000 such j suits at a cost of 12 billion. Under Chapter j U. a company receives court protection i from creditors while it works out a reorgamut.cr. plan. j MarvUlf has until Feb. 22 to present a ' formal reorganization plan to Bankruptcy Judge Purton Lifland in New- York Despite [ certain opposition to the plan, which is sull in rough outline, some members of Manj Mile's trade and asbestos-related creditors' , ct'.ur.tttees say they believe many creditors ! will find the proposal acceptable. j The plan promises to pay Manville's lenders and suppliers most of their hundreds of millions of dollars worth of daLms. Even J some asbestos-victim litigants say they are | attracted to the proposal because U would break ibe legal logjam that was certain to J tie up their claims for years. But the part of the company's proposal i that deals with asbestos victims is consid ered Ukely to cause the most sparks. Some I of the- victims already accuse Manville of J1 covering up its knowledge of the health risks associated with, exposure to asbestos. Some 1 also accuse the company of using the Chap{ter 11 filing to try sLrxjng its responsible' lies to asbestos victims Manville denies ! both allegations "Wr djdn't get into this J (reorganization! to cheat anybody." Mr. Parker says. ' Manville repeatedly has argued that the j best way to hand* all the asbestos claims isn l through litigation which, it says, often [ results in inequitable verdicts for victims. ; Company executives cite several cases of Ju nes awarding seriously injured workers lowamounts. while other Junes awarded work ers with Jess serious injuries more money. Manville wants to see the asbestos claims against ii convened from tort claims, which are litigated, to something resembling a workman's compensation claim But unlike a workman's compensation claim, which would set specific compensation amounts for vanous tnjunes anstng from asbestos expo sure. Manville is considering proposing a prevision for bunding arbitration. With such a provision, the company would be able to challenge claimants n believes aren't de serving of the predetermined recovery, and claimants couJd ask for mere, if they believe their specific cases warrant it The plan would also entitle Manville tc settle with vic tims outside the setting of the compensation agreement. Attorneys for asbestos litigants have said all along that they wouldn't accept any type of workman s compensation package "I don't think there is a chance in the world that we'd agTee to one now." says a leading attorney for asbestos litigants But ever he says he might be wiiimg to support a 'de fined benefits scheme which includes a cer tain amount of negotiation and an arbtralion system." Asbestos and Illness The plan also proposes various means for Manville to pay a substantial arrnuni tc vie tins While the company has neer cor. "IVe didn't get into this to cheat anybody," a Manville senior Vice president says about a reorganization plan be ing developed under Chapter 11 oj the Bank ruptcy Code. ceded any blanket liability for all the ilnesses claimed, it does concede that some workers who have been exposed to its as bestos products have developed related ill nesses. The company's Mr. Parker and George Johannes, another senior vice president, acknowledge Manville's obligations to pay part of the tab for asbestos claims They won't give any figures, though dher sources have suggested that Manville is prepared to pay about S500 million over the life of the re organization plan toward exiting and future claims. Or.e idea Mannlle says it may propose is to pay a fixed percentage of its future earr ings to creditors. An aJtemative-or addiuor.aI-apprc.ach, Marville says, would be to use retroactive insurance. like that used to pay victims of the MGM Grand hotel fire in Las Vegas. i Such insurance really would be a fir arc | ing plan, whereby Mar.vifle would pay p*?-; miums essentially equal to the size of all de claims that it anticipates. While the cor.-: pary wouldn't save money or. claims, ft' would gain certain tax benefits And cre-dj-[ Curs would know that the ir.s~'*rs stars be-.1 hind ary payments due to them I In order to get such ir.s-ranee. Mr Jo-1 har.nes says, the co,,n wou:d hs.e to se: a.-.. afcsolute ceiling or the fiwmtv: and size of total asbestos related claims against the company. In addition. Manville's relations with its' insurance earners have been s'.ormj. and, are likely tc be a snatle obstacle tc reorga nization under the company's wcr>.ir.g plan Shortly after Mar'ille Med for reorganiza tion. its Johns Manvilie unit, which maJ.es asbestos, filed papers as pan of a sun in San Francisco Superior Court asrg b.' lion it. punti.e damages from its cane's The company claims us ms^rers ha'-r r-r fused to pay their oblicaticns ur.d*-' Nab : '> policies covering asbestos diseas-* an: ; era damage claims Pressure on Insurers Ii is unr<fjr hew Mar.vi.'it m'.^rids tc ge: t!> camera to cor:r:b.'e tc the ct-mr-a'. c reorganization Bui Mr ?:<=: mdua'-s that Mar'i.le may seek to cois-^izat- '.:>* insurance suit under ihe aegis o' the bsv ruptcy cour. and thereby "put so~* p-- sure or tb* insurance earners i: b^gtr s-i "us vrtt'^mert rermiations C<'-"5"l-iv.r r the uaurar.ce suit, ol cou'S-. wv-id rxp-.M ir.sjrers to the nsk of unfavorable bank ruptcy court judgments i Mr Parker adds "I think the insurance recovery will be in I excess of S6M million " j Bps^es getting funds from the ms-mers.1, th Marville plan alsc envis'ons th* fedm-l governments agreeing to con-.7vns.1te \*c | lints exposed to asbestos while doing gov-! emmentrelated work. Through court cases' and lobbying. Manville has tried unsuccess fully for years to get the government to ad mj: partial liability in many construction-' worker cases, particularly involving the government's World War JJ shipbuilding ef-J fort, which used asbestos extensaely. Man j vjjjp recently asked Judge Lifiand for per-j mission to hire additional lawyers to study the possibility of further litigation against1 the government on this issue. Timing ol lb? company's reorganization would depend largely on how the plan is rr- ceived. Mr. Parker says the whole proceed ing could "degenerate into a long protracted confrontation." But. he adds, "if all the par ties who have an Interest in a short proceed ing can keep that interest uppermost . . . L think we can have a very short Chapter 21 ' "Aorn IPM 0003366