Update: Yet another article mentions asbestos and provides some big picture facts and thinking. In states, among other things:
“The 60 days projected by the President at an April 30 press conference announcing the automaker’s bankruptcy only applies to a sale of Chrysler’s best assets to a new entity, said the official, who can’t be identified because the matter is confidential. Afterward, creditors would fight over unwanted factories and other assets to recover money, lawyers said.
“The unsold assets and liabilities may take years to sort out due to the complexities of resolving thousands of commercial, tort, future asbestos, dealership and employee claims,” said Dewey & LeBoeuf LLP partner Martin Bienenstock, who has advised General Motors Corp. and Chrysler Financial on restructuring.
The bulk of assets left in the old Chrysler will be eight factories, valued by Chrysler at $2.3 billion. Those with claims against them include the U.S. government, provider of a $4.5 billion bankruptcy loan, and lenders with an unpaid balance of $4.9 billion on a secured loan.”
Popular press articles are now starting to mention the reality that the bankruptcy court at some point will have to sort out Chrysler’s legacy liability issues, including asbestos claims. A prior post here pointed out that the asbestos plaintiff’s bar has a seat on the unsecured creditors’ committee and that plaintiff’s firm SimmonsCooper filed an appearance in the case early on to protect the interests of its asbestos clients. One would assume that before the May 20 hearing, the unsecured creditor’s committee will have something to say about the distribution of the asset sale proceeds and the scope of the order and injunctive terms related to the sale. For example, will the final order regarding the sale include language purporting to immunize Chrysler and Fiat from facing future claims that the asset sale is a conveyance intended to impair collection of claims by unsecured creditors, including tort claimants with non-asbestos claims and those holding asbestos claims ?
Chrysler’s legacy liability issues illustrate the importance of the issues presently pending before the US Supreme Court in the Travelers/Manville case. There, the Court has been asked to decide just how far a bankruptcy court can go in enjoining current and future claims, a topic mentioned in this prior post.