United States Bankruptcy Judge Judith K. Fitzgerald in Wilmington, Delaware ruled on Thursday May 23 that Bondex International Inc.’s method of estimating how much they owe current and future asbestos victims was inadequate. As a result, the company will likely owe asbestos injury victims in excess of $1 billion.
Bondex, a subsidiary of RPM International Inc. (RPM), filed for bankruptcy back in May 2010, with the intention of establishing a trust to compensate past and future victims of asbestos exposure.
In bankruptcy, companies and their parent companies can achieve immunity from future asbestos injury lawsuits by establishing trusts to fund medical costs and other personal injury damages resulting from asbestos exposure. RPM indicated to Judge Fitzgerald, through its representative, that the company understood its commitment to contribute money to the trust in order to maintain this immunity from suits against its subsidiary, Bondex.
As part of the proceedings, Bondex submitted detailed estimates of the size of current and potential asbestos lawsuits to determine how much money needs to be placed in the trust. Lawyers representing the asbestos victims also submitted estimates.
Judge Fitzgerald sided with the attorneys representing the asbestos injury victims, and rejected Bondex’s calculation of how much money should be put in the trust.
Bondex had estimated that they owed no more than $575 million for the trust, but Judge Fitzgerald said that while Bondex’s approach was novel and not irrational, it was likely that the company would need to put aside $1.17 billion.