GAO Asked to Study Secrecy in Asbestos Bankruptcy Trust Administration
Although long overdue, it’s once again good to see growing attention focused on the lack of transparency and accountability with respect to the management and administration of chapter 11 asbestos trusts. The most recent example of increased attention arises from a Texas Congressman, Lamar Smith, sending the Government Accountability Office (GAO) an April 29, 2010 letter asking the GAO to study the administration of chapter 11 asbestos trusts. The letter includes specific requests to focus on the lack of transparency. Thus, the letter requests the following:
"In order to aid Congress in better understanding whether increased transparency could help ward off the potential for abuse related to 524(g) asbestos trusts, I request that the GAO conduct a study to determine:
1. What actions and via what mechanisms, if any, 524(g) asbestos trusts are taking to avoid duplicative payments to claimants or payments to claimants with inadequate proof of entitlement to compensation by the trusts;
2. whether 524(g) asbestos trusts adequately and timely disclose information about demands made by asbestos claimants where relevant between and among S24(g) trusts;
3. whether 524(g) asbestos trusts adequately and timely disclose information about demands made by asbestos claimants where relevant to tort litigation;
4. whether, and to what extent, S24(g) asbestos trusts are making demand and payment information available to courts and other participants in the tort system in order to facilitate full compensation in a manner that avoids a windfall for any claimants while ensuring the trusts have adequate resources to pay future claimants equally, as mandated by Congress; and
5. whether greater cooperation and transparency between 524(g) asbestos trusts and the tort system could reduce the possibility of duplicate payments made by trusts or by tort defendants."
Regular readers may recall my prior posts barking in general about the lack of transparency as to the trusts in particular (e.g. here), and this prior post also addressing the topic and providing links to various articles by Jack Cohn and others regarding the lack of transparency in the trusts. On the subject of the absence of transparency in bankruptcy in general, look to the right for posts collected under the topic "Transparency in Bankruptcy). For me, Congressman Smith’s letter is a great birthday present.