Manville Told to Boost Asbestos Trust Quickly : Health: The judge overseeing a fund to help victims of exposure to the material says he may take harsh action if the company dawdles.
NEW YORK — A federal judge warned Manville Corp. on Monday that he may take “serious†steps unless the company acts swiftly to provide additional cash for a trust to benefit asbestos victims.
U.S. District Judge Jack B. Weinstein also extended until Sept. 6 a freeze on payment of claims by the Manville Personal Injury Trust. He imposed the freeze in July at the same time that he ordered a reorganization of the trust’s assets, because it had all but run out of cash to pay claims.
Neither the judge nor Leon Silverman, a special master appointed by a bankruptcy court judge, disclosed how much money they expect Manville to come up with.
Manville, based in Denver, manufactured asbestos for many years. The asbestos has been implicated in diseases such as asbestosis, lung cancer and mesothelioma. Faced with huge claims for damages, Manville filed for bankruptcy court protection in 1982. The trust, which now effectively owns 80% of Manville’s stock, was established under a bankruptcy reorganization plan.
As of June 30, the trust faced 157,000 claims from people who say they were harmed by Manville-produced asbestos.
An injunction issued by the bankruptcy court prohibits asbestos victims from seeking damages directly from the company. In a court hearing, Judge Weinstein said Monday that he won’t attempt to alter the injunction. But he said Manville has a responsibility to see that additional money is made available to the trust, and he appeared to hint that if Manville doesn’t reach a settlement with the trust by September, he may alter terms of the bankruptcy reorganization plan.
“Corporate management (at Manville) may not act as if they are bound only by the letter of the series of agreements that set up the trust,†Weinstein said. “I am not satisfied that management understands the seriousness of the situation as a legal, social and medical matter.â€
Manville has said any threat to the injunction could scare public shareholders and send the value of the company’s stock plummeting, harming the trust’s interest in the company. In a heavily down market, Manville’s stock fell 25 cents a share Monday to close at $6.375.
The judge’s harsh words prompted an angry response from Tom Stephens, Manville’s chief executive. In a telephone interview, Stephens said: “We were surprised he would suggest that the company isn’t taking the matter seriously, when the record is so strong to the contrary.†He added, “We’ve been working on this issue for weeks.â€
Stephens said an infusion of cash to the trust might result either from a direct transfer of Manville assets to the trust or from capital raised in the securities markets.
But Stephens declined to give details of plans under consideration.
Weinstein and other federal judges from around the country are scheduled to meet in Washington on Friday to discuss the possibility of consolidating the thousands of asbestos claims into a single class-action suit.
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