NEW YORK — Asbestos victims who have been waiting years to get paid by a cash-strapped trust created from the Manville Corp. bankruptcy would get just 10% of the value of their claims under a proposed settlement.
The Manville Personal Injury Settlement Trust, which is independent from the Denver-based corporation, said Thursday that the settlement proposal was presented to U.S. District Judge Jack Weinstein in New York Tuesday.
Fairness hearings on the latest settlement--the third affecting the trust--will begin in November, according to Weinstein's office. The accord excludes claimants from Maryland, and a hearing on those plaintiffs will be held next Tuesday in federal court in Brooklyn, N.Y.
According to the proposed settlement, payments would be made in the order that the claims are approved, provided that cash is available, at a level of 10% of their value.
"This has been a long and complex process, and the trust's claimants have been waiting many years for payments," said Robert Falise, chairman and managing trustee of the trust. "The pro rata percentage payment is unfortunately necessary, but at least we will now be able to provide payment to our beneficiaries."
Falise said the trust hopes that it will be able to increase the percentage when more is known about future claims filings.
The Fairfax, Va.-based trust has been engulfed in legal and money problems almost from the moment it began operation in 1988 when Manville emerged from bankruptcy.
Manville, once the largest U.S. producer of asbestos, filed for Chapter 11 bankruptcy protection in New York in 1982. At the time, the company had been hit with about 1,600 personal injury suits.
The case made history when Manville became the first company to use a Chapter 11 reorganization to create a fund to settle massive physical injury claims.
But parties in the landmark case grossly underestimated the number and size of claims that would be filed against the trust. It had been expected that no more than 100,000 would be filed against the $2.2-billion trust over three decades. The trust has paid 30,000 claimants more than $1 billion, and in the meantime has received 200,000 more with a settlement value estimated at between $5 billion and $6 billion. The trust predicts that it could receive another 300,000 claims in the years to come.
In 1991, Weinstein approved a new distribution plan to increase the trust's financing, but a federal appeals court overturned it.
The current proposal, in addition to settling individual claims, would set up three funds to pay other asbestos manufacturers and distributors hurt by a 1990 stay in litigation against the trust.
One $35-million fund would be used to pay manufacturers that were sued by individuals and had to pay more than their share of damages because of the stay. A second $10.7-million fund would pay asbestos distributors who sought indemnification from Manville for damages as a result of their distributing the company's asbestos. A third for $10 million would pay distributor MacArthur & Co., which had a separate settlement agreement with Manville.