Asarco subsidiary debtors' creditors committee asks court to hold company liable for tort claims

By Caroline Salls

Pittsburgh, May 2 - Asarco, LLC's subsidiary debtors' official committee of unsecured creditors filed a complaint in the U.S. Bankruptcy Court for the Southern District of Texas asking the court to hold Asarco liable for asbestos tort claims filed against its subsidiary debtors, according to a Tuesday court filing.

Future claims representative Robert C. Pate is also a plaintiff in the adversary proceeding.

The committee said on June 15, 2005, nearly two months before the subsidiary debtors filed for Chapter 11 bankruptcy, Asarco initiated the adversary proceeding by seeking a judgment that it is not liable under any "alter ego theory" asserted by an asbestos claimant in an attempt to hold Asarco liable for the subsidiary debtors' debts.

According to the plaintiffs, "the subsidiary debtors are shams existing for no other purpose than as vehicles for fraud or to accomplish an improper purpose."

As early as Dec. 31, 1976, the committee said numerous asbestos claims were asserted against Asarco and subsidiary debtors Lac d' Amiante du Québec Ltée, Lake Asbestos of Quebec, Ltd., LAQ Canada, Ltd., Capco Pipe Co., Inc. and Cement Asbestos Products Co.

Also, in the years leading up to 1993, workers and others had become sick and lawsuits were filed across the country against the subsidiary debtors and Asarco for deaths or injuries resulting from exposure to toxic asbestos fibers.

In response to this growing liability, the committee said Asarco began to systematically strip the subsidiary debtors of their assets with the intention of leaving no sufficiently capitalized entity left to sue.

"Ultimately, Asarco left the subsidiary debtors as mere insolvent shells with neither assets nor operations, thereby denying meaningful recourse to the legions of people sickened or killed by the subsidiary debtors' and Asarco's asbestos-related activities," the committee said in the complaint.

The committee said it believes that Asarco's officers and directors are or were also officers and directors of the subsidiary debtors.

In addition, the committee said Asarco, which alleges not to have any individual asbestos liabilities, has entered into joint settlement agreements with asbestos plaintiffs and one or more of the subsidiary debtors, under which Asarco guaranteed settlement payments that the subsidiary debtors agreed to make to the asbestos plaintiffs.

The committee said none of the subsidiary debtors are operating companies.

Asarco is a Tucson, Ariz.-based mining company. It filed for bankruptcy on Aug. 9, 2005. Its Chapter 11 case number is 05-21207.

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