NEW YORK — Manville Corp. will end its six years of bankruptcy Monday, and, while officials of the former asbestos maker are clearly relieved and strongly optimistic about the future of the reincarnated company, there will be no celebrations.
Facing massive lawsuits by asbestos victims, Manville filed for bankruptcy in 1982. Although its complex reorganization plan, which provides for a $2.5-billion trust to pay for health injury claims, was approved in 1986, the company has been held in bankruptcy because of appeals.
While Manville plans to mark Monday with only a simple press release, it will still be a landmark day for both the company and asbestos victims. On that day, Manville will transfer funds that allow the trust to finally begin paying long-awaited claims. The company will also send out some 10,000 checks worth about $450 million to various creditors.
The initiation of the company's reorganization plan also creates legal history as it presents a unique solution to massive product-liability lawsuits. Manville has been able to finance the huge asbestos victims' trust with the aid of its insurers. However, in return, the reorganization plan protects Manville's insurers from lawsuits.
The provision was quite controversial--and the source of appeals that have kept Manville in bankruptcy for several years. Manville's insurance provision was copied in the reorganization plan proposed by A. H. Robins Co., the drug maker in bankruptcy because of lawsuits over its Dalkon Shield birth control device.
The road out of bankruptcy has not been an easy one for Manville, which no longer sells asbestos. Manville is emerging as a different, more streamlined company focusing on fiberglass, forest and specialty products.
The number of employees has fallen to 19,000, a drop of 8,000, and Manville has cut its overhead by $40 million. Of that amount, $8 million came from selling the company's modern headquarters in the foothills outside Denver.
The company was once known as Johns Manville, the nation's largest producer of asbestos. Although asbestos was called the "the magical mineral" because it could be used as an indestructible fireproof insulator, its fibers have proven deadly. When inhaled, asbestos fibers can lead to lung cancer and other serious diseases.
A series of documents released to the public during congressional hearings in 1979 indicated that Manville and other companies within the asbestos industry covered up and failed to warn millions of the dangers associated with the material. Reports dating as far back as 1908 pointed out health problems that asbestos could cause.
Those documents led asbestos victims to begin filing thousands of lawsuits against Manville, and the company sought bankruptcy court protection. At the time of the filing, more than 17,000 claims were pending against the company, and Manville was being sued more than 400 times a month by people claiming injury from asbestos.
The public was shocked at the bankruptcy filing; many felt the big and profitable Manville sought bankruptcy protection to escape responsibility for so much death and injury.
But instead, through the bankruptcy, on Monday the asbestos victims will become Manville's biggest shareholders. The stock ownership comes through the $2.5-billion health victims' trust, which is being funded with Manville common and preferred stock, bonds and cash from the company and its insurers.
Under the plan, Manville's old stock will be canceled Monday, and new stock will be issued.
The trust will get 50% of the new shares, while holders of the old stock will get very little--one new share for every eight of their old ones.