ASBESTOS BANKRUPTCY UPDATE

By Scott Hendler, HENDLERLAW, P.C.
November 10, 2005

Many of our clients have settlements tied up in various asbestos company bankruptcies. The resolution of these bankruptcies has been delayed largely because of the pending federal legislation that threatens to divert all the money available to establish the Asbestos Trust Fund. Most of the bankruptcies have been pending for 4 to 5 years and we remain hopeful that a resolution is not far off, perhaps 1 or 2 years. If the federal legislation is defeated, that should help expedite matters.

There are also ongoing disputes between the lawyers representing asbestos disease victims and other creditors over how much of the companies' assets should be used to compensate asbestos victims versus other creditors. While it is not finalized, most observers estimate that the trusts will pay approximately 20% of the settlements that were already negotiated but have not yet been paid, however it could be less. For claims that have not already been settled, it is unclear what those amounts will be.