USG sees paying all asbestos, creditor claims in full, to exit bankruptcy with "substantial" equity

New York, Dec. 7 - USG Corp. said it might be able to pay all valid asbestos personal injury claims in full, to repay all other creditors in full and to emerge from bankruptcy with "substantial" shareholder equity.

The Chicago-based building materials maker made its remarks in a filing Tuesday with the U.S. Bankruptcy Court for the District of Delaware ahead of a status conference scheduled for Dec. 21.

Repayment of claims is based on substantive estimation being used to calculate the company's liability for asbestos, a procedure it argues in the filing is the correct one.

USG noted that its liability for present and future asbestos personal injury claims is the key issue in its Chapter 11 proceedings, adding that all parties agree the amount must be estimated because the number of claims makes it impossible to rule on each individual case.

To figure the liability, the company argued that claimants must have meaningful exposure to asbestos-containing products for which it is responsible and an actual injury that could "plausibly" have resulted from exposure to the product.

This substantive estimation process already had support from judge Alfred Wolin before he was recused from the Chapter 11 case. No work had started on preparing estimates.

USG said in its filing that the position of the Official Committee of Asbestos Personal Injury Claimants should be rejected. The committee says that claims should be estimated based on USG's history of paying claims, arguing that because it has a history of settling claims it has no right to present defenses to the claims.

However this would "strip" USG's stakeholders of their property without due process, the company said.

USG also said that it believes the majority of pending asbestos personal injury claims "are based on harmless pleural changes - often diagnosed by dubious methods - that carry no symptoms whatsoever."

It added: "Although these claimants are not medically impaired and therefore have no cognizable injury, the legal system is flooded with their claims. Experts estimate that 88% of an estimated 1.1 million total claims filed or estimated to be filed in this country are expected to be non-malignant - the vast majority of which will be unimpaired claims."

Furthermore, USG said chrysotile asbestos, the type formerly used in its joint compound, has not been shown to cause mesothelioma.

Under substantive estimation, USG expects to show "most, if not all," claims alleging mesothelioma should be put at zero dollars.

USG anticipates its plan of reorganization would create a trust to pay claims. Because all claims will be paid in full, the trust should be confirmed with the 75% vote needed to obtain a channeling injunction.

USG filed for bankruptcy on June 25, 2001. Its Chapter 11 case number is 01-2094.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.