AIG Insurers Seek to Reopen the THAN Bankruptcy to Assert Audit Rights to Look for Fraud in Claiming
The THAN bankruptcy (Thompson-Hayward) was and remains a poster child for some of the many flaws in chapter 11 handling of mass tort bankruptcies. In fact, back in the day (fall 2011), some people (including yours truly) wrote a case study- commentary article pointing out that the THAN bankruptcy was the poster child of the moment for the screwing of future claimants (to use a term of art). How so? The trust supposedly was funded to a 100% level. However, when it opened its doors for new claims, the trust had to drastically reduce its payment percentage because it already had paid so many claims from current claimants. Thus, the THAN trust absolutely exemplifies the major economic conflicts of interest between current and future claimants. The article also pointed out the failure of the Futures Representative, the US Trustee, and the Court to take any action to investigate the screwing of the future claimants.
Now, however, perhaps the THAN disaster will receive more attention. Why? Because various AIG companies have filed a motion to reopen the bankruptcy in order to assert their claim audit rights, which they allege are being defeated by the trust and its past supporters. The AIG motion and the supporting memorandum are online. Let’s hope the trust’s claims payments receive a thorough review. But don’t hold your breath waiting for it to happen.