Three years after declaring bankruptcy, the Manville Corporation--one of the world’s leading asbestos suppliers--has offered to pay victims of asbestos-related health injuries $2.5 billion, in what could be the largest health-related settlement ever made by an American company.
The proposed settlement involves individual health claims only and does not include the property-damage claims of school districts and other groups that have had to remove asbestos from their buildings.
But the sheer size of the settlement plan could affect the amount of funds available to schools, according to a spokesman for the company.
Property-damage claims now total more than $81 billion, said Curtis G. Linke, vice president for corporate relations for Manville.
“The pie is only so big,” he added. “How do you divide that pie up to satisfy all claimants? That is a problem the bankruptcy court is wrestling with.”
The proposed settlement was negotiated by a lawyer appointed by the bankruptcy court to represent future health claimants, and was approved by Manville’s board of directors.
According to Steven Wodka, director of health-effects research for a law firm that handles a large number of asbestos-related lawsuits, the proposed plan “fleshes out” how to finance a settlement, but more specific procedures will have to be negotiated before there is a formal plan on which the involved parties can vote.
A provision in the proposed settlement for health claimants states that in the event that Manville’s liability for property-damage claims exceeds $50 million, the health-related settlement would have to be renegotiated.
Manville does not concede liability for property-damage claims at this time. Mr. Linke said the com-mittee representing groups with school-related claims will meet with the company’s representatives soon to discuss the proposed plan, which also includes a requirement that the property-damage claims be resolved.
Ellen P. Chapnik, a lawyer for the school-related claimants, said the $50 million cited in the proposed plan is “grossly inadequate” to settle such claims.
The settlement proposal calls for Manville to set up a trust fund for individual asbestos claims. To that fund, company shareholders would surrender at least half the value of their stock, and the surviving company would divert much of its projected earnings for the next 25 years, including up to $75 million annually and 20 percent of its yearly profits.
The offer must be approved by stockholders, unsecured creditors, co-defendants, current health claimants, and future claimants, as well as the bankruptcy court. Mr. Linke predicted that a reorganization plan for the company could be submitted to creditors for a vote early in 1986. He said the corporation could emerge from bankruptcy by the end of that year.
Manville initiated bankruptcy proceedings in August 1982, after some 16,500 lawsuits had been filed against it over asbestos-related health problems. The company had estimated future liabilities at more than $2 billion. (See Education Week, Oct. 3, 1984.)
The bankruptcy proceedings were unusual, in that Manville was solvent at the time it filed. The company alleged that current and anticipated claims against it by individuals who had been exposed to asbestos and contracted asbestos-related diseases would cripple the corporation financially.
The bankruptcy court has required the company to provide for all current claims, as well as for future claims not yet known on the basis of statistical and epidemiological analyses.
