Draft Question-and-Answer Interview with John A. McKinney on Manville's Chapter 11 Filing (1982)

A twelve-page draft, marked "Draft No. 5 of 8/24/82," of a question-and-answer piece headed "Beleaguered By Asbestos Lawsuits - Manville Files for Reorganization" and addressed to Manville's shareholders, employees, customers, suppliers and creditors. In it John A. McKinney, Manville's chief executive, says "Nothing is wrong with our businesses," that the company was "overwhelmed by 16,500 lawsuits," that cases were costing an average of $40,000 each including outside legal fees, and that the company forecast "at least 32,000 more lawsuits." He blames the federal government, Congress and insurers that "are reneging" on their coverage, and says a large reserve "would wipe out most of our net worth."

What it shows

The draft was written two days before the Chapter 11 filing it describes, and closes with the date August 27, 1982. Asked what the lawsuits are about, McKinney answers: "Not until 1964 was it known that excessive exposure to asbestos fiber released from asbestos-containing insulation products can sometimes cause certain lung diseases." That was the company's position in the litigation; the company's own earlier papers are collected in this Library's J-M knowledge chronology. He adds that "In a significant number of cases tried, juries have found that we were not at fault." The board presentation of August 4 counted 53 verdicts for plaintiffs and 38 for J-M in 92 trials, with punitive damages assessed in ten.

On why the company filed, McKinney says the accounting rules required a reserve once the cost could be estimated, that the consultants hired to make that estimate had finished early in August, and that "The booking of a large reserve now for current and future asbestos health liabilities would wipe out most of our net worth," leaving the company without affordable credit. He calls the court system "an intolerable gambling exercise," puts the injured worker's share of the total cost at "less than a third," and asks for a national compensation program like the one for coal miners' black lung disease.

The figures shift within the draft: 16,500 lawsuits pending in one answer, claims for "nearly 20,000 people" in another, and new suits at "500 a month" or "6,000 new ones a year." The board presentation counted 10,977 open cases for 15,542 plaintiffs as of June 30, 1982.