Asbestos Bankruptcies in Asbestos Cases

Decisions in our library in which the court ruled on a defendant's bankruptcy: 249 cases, by state. Each line gives what the court held, in our words; the law differs from state to state and changes, so read the opinion and talk to a lawyer before relying on any of them.

New York

• In re Johns-Manville Corp. (1984). Future asbestos claimants who were exposed before the filing date but have not yet manifested disease are parties in interest under Bankruptcy Code section 1109(b), and the court may appoint a legal representative for them under its equitable powers (28 U.S.C. 1481 and 11 U.S.C. 105(a)).

North Carolina

• In re Bestwall, LLC (2024). Contempt and sanctions orders imposed for violating a Rule 2004 discovery order in an ongoing bankruptcy case do not end a discrete proceeding within the case. They are therefore interlocutory and not immediately appealable under 28 U.S.C. § 158(a).
• In re Aldrich Pump LLC (2023). Financial distress is not a constitutional or jurisdictional prerequisite to filing Chapter 11. Under the Fourth Circuit's Carolin test, a bad faith dismissal requires both objective futility and subjective bad faith, and objective futility was not shown. Section 1112(b) cause also was not shown.
• In re Alrich Pump, LLC (2023). A motion to stay pending appeal under Bankruptcy Rule 8007 is judged by the four preliminary-injunction factors in the Fourth Circuit; the court found all four favored a stay of an order requiring the claimants to identify themselves publicly.
• In re Bestwall LLC (2023). A bankruptcy court has "related to" jurisdiction under 28 U.S.C. § 1334(b) to enjoin thousands of identical asbestos claims against a non-debtor affiliate when they could conceivably affect the debtor's estate. A § 105(a) preliminary injunction in chapter 11 requires only a realistic possibility of successful reorganization, not a showing that a permanent § 524(g) injunction will issue.
• Non-Party Certain Matching Claimants v. Aldrich Pump LLC (2023). A stay pending appeal is judged under the four-factor preliminary injunction standard (likelihood of success, irreparable harm, balance of equities, public interest), and all four were met where disclosure of claimants' identities would moot the appeal and expose confidential information.
• The Manville Trust Matching Claimants v. Dbmp, LLC (2023). A decision whether to allow parties to proceed anonymously is reviewed for abuse of discretion, and a court acts within that discretion in denying anonymity where the parties show only speculative harm and no exceptional circumstances under the Jacobson factors.
• In re Bestwall LLC (2022). Contempt and sanctions orders enforcing an interlocutory questionnaire order in a bankruptcy case are not final orders that finally dispose of a discrete dispute, so they cannot be appealed immediately, particularly where the claimants are not disinterested non-parties.
• In re Aldrich Pump LLC (2021). Under the Texas divisional merger statute the asbestos liabilities belong only to the debtors, so suits against non-debtor affiliates to recover them are stayed under section 362(a)(1). Claims such as fraudulent transfer, alter ego and successor liability are estate property or belong first to the trustee, and are stayed under section 362(a)(3). A preliminary injunction under section 105 was warranted because such suits would interfere with reorganization.
• In re Bestwall LLC (2021). A bankruptcy court order granting a Rule 2004 motion for personal injury questionnaires is not a final order under 28 U.S.C. § 158(a)(1), and the district court declined to grant leave to appeal it as an interlocutory order under § 158(a)(3).
• In re Bestwall LLC (2021). A motion for rehearing under Bankruptcy Rule 8022 is judged by the narrow Rule 59(e) standard. The court kept its ruling that the PIQ Order is not final or appealable on an interlocutory basis. It withdrew its earlier affirmance of the order because it had not reached the merits, and it allowed the committee to challenge the order in an appeal from a later final order.
• In re Bestwall LLC (2021). A party bound by a bankruptcy court's order must comply with it, or seek relief from that court or on appeal, until it is reversed. Filing a separate lawsuit elsewhere in violation of the order's terms is civil contempt, even where the party disagrees with the order.
• In re Dbmp LLC (2021). Because the Texas divisional merger allocated all of Old CertainTeed's asbestos liabilities to DBMP, claims on those liabilities are claims against the debtor and are stayed under section 362(a)(1). Alter ego, successor liability and fraudulent transfer theories against the non-debtor affiliates are estate property or first-crack avoidance claims, stayed under section 362(a)(3).
• In re Ltl Management LLC (2021). A bankruptcy court may transfer a case under 28 U.S.C. § 1412 for the convenience of the parties and in the interest of justice even where venue is proper. A debtor's creation of a venue connection on the eve of filing may be weighed in that analysis.
• In re Bestwall LLC (2019). In the Fourth Circuit, a Chapter 11 case may be dismissed as a bad faith filing only if it is both objectively futile and filed in subjective bad faith. A properly venued case is transferred only if the movant shows by a preponderance of the evidence that the interests of justice or the convenience of the parties require it.
• Gaunt v. Guy M. Beaty & Co., Inc. (2018). A death-benefits claim under N.C. Gen. Stat. § 97-38 is a distinct claim from the worker's underlying compensation claim, so a court setting a § 97-10.2(j) lien need not weigh prospective third-party recoveries tied to the worker's separate claim. The court's lien decision is reviewed for abuse of discretion.
• In re Garlock Sealing Technologies LLC (2017). A reorganization plan that creates an asbestos trust, was approved by the required 75% of voting asbestos claimants, and meets the other requirements of Bankruptcy Code section 524(g) and section 1129 may be confirmed with a channeling injunction protecting the debtors and related parties.
• Garlock Sealing Technologies, LLC v. Simon Greenstone Panatier Bartlett (2015). A party seeking transfer under 28 U.S.C. § 1412 must show that the interest of justice or the convenience of the parties favors it, and a court should presume in favor of exercising jurisdiction, so discretionary abstention under § 1334(c)(1) is warranted only in rare cases and the movant bears the burden.
• Garlock Sealing Technologies, LLC v. Simon Greenstone Panatier Bartlett, A Professional Corporation (2015). A statute of limitations defense, Noerr-Pennington and state litigation privileges cannot be decided on a motion to dismiss unless all necessary facts appear on the face of the complaint. Litigation conduct is not shielded from RICO, and the complaint adequately pleaded fraud, conspiracy and RICO.
• Ketchie v. Fieldcrest Cannon, Inc. (2015). Under the plain language of N.C. Gen. Stat. §§ 97-130(4) and 97-131, a claim is a "covered claim" only if the injury, or for latent occupational disease the last injurious exposure, occurred while the self-insurer was a member of the Security Association.
• In re Garlock Sealing Technologies, LLC (2014). In estimating aggregate asbestos liability, a bankruptcy court may use a merits-based legal-liability analysis instead of the debtor's settlement history when that history is unreliable because exposure evidence was withheld and because settlements reflected avoided defense costs rather than liability.
• Legal Newsline v. Garlock Sealing Technologies LLC (2014). A court may not seal proceedings or judicial records merely because of protective orders or counsel's confidentiality designations. It must determine the source of the right of access, give public notice, consider less drastic alternatives, and state specific findings supporting any sealing.

Ohio

• Estate OF Blandford v. AO Smith Corp. (8th Appellate District, 2016). Under R.C. 2307.78(B), a bankrupt manufacturer that is subject to personal jurisdiction in Ohio and is not shown to be insolvent does not trigger substituted strict liability for its supplier. A supplier can still face negligent failure to warn liability under R.C. 2307.78(A)(1) if fact issues remain on its knowledge of the hazard, exposure to its product, and substantial factor causation.
• Potts v. 3M Co. (8th Appellate District, 2007). Under R.C. 2307.78(B)(1), 'not subject to judicial process' means not subject to personal jurisdiction, and manufacturers that filed bankruptcy but have funded trusts are neither outside judicial process nor insolvent, so a supplier is not vicariously liable for them.
• Greenburg v. Hiner (2005). A securities fraud limitations period begins when investors are on inquiry notice, meaning they have seen "storm warnings" suggesting the possibility of fraud, even if they do not know the full extent of the fraud or the defendants' state of mind. Claims filed more than one or two years after that point are time-barred.
• In re Eagle-Picher Industries, Inc. (1995). Under 11 U.S.C. § 502(b) and (c), asbestos claims are estimated as of the petition date, and future values must be discounted to that date. A debtor's closed-claim settlement history is a sound basis for valuing open and future claims.

Oklahoma

• In re Imerys Talc America, Inc. (2019). Bankruptcy 'related to' jurisdiction over a suit between non-debtors does not arise from indemnification or insurance agreements with the debtor when the defendant has not shown they apply and a separate later lawsuit would be needed to enforce them. The court also stated it would remand on equitable grounds under 28 U.S.C. § 1452(b).

Oregon

• Levin v. Johnson & Johnson (2019). Under 28 U.S.C. § 1452(b), a court may remand removed claims on any equitable ground, and it can do so without deciding whether the claims are "related to" a bankruptcy case. Here the factors (state-law predominance, non-core claims, jury demand, comity, avoiding split proceedings) favored remand.
• Levin v. Johnson & Johnson (2019). The court corrected a clerk's error by remanding the claims against all non-J&J defendants to Multnomah County Circuit Court and denied those defendants' motions to dismiss as moot; the claims against J&J stayed in federal court.

Other federal courts

• In re Ltl Management LLC (2024). A Chapter 11 case must serve a valid bankruptcy purpose, which assumes a debtor in financial distress; a remote, speculative worst-case possibility of future insolvency is not enough, and lack of financial distress is not the kind of bad faith that can be excused under § 1112(b)(2).
• In re Ltl Management, LLC (2023). A Chapter 11 petition must be filed in good faith, which requires the debtor to be in financial distress so that the petition serves a valid bankruptcy purpose. A debtor backed by a funding agreement with highly creditworthy parents, like LTL, is not in financial distress, and its financial condition is judged on its own rather than by looking back to its predecessor.
• In re Ltl Management, LLC (2023). A Chapter 11 petition is filed in good faith only if the debtor is in financial distress, and that is judged by the filing debtor's own finances, including its funding backstop. A debtor backed by a creditworthy payment right with no likely need to exhaust it has no valid bankruptcy purpose.
• Susino EX rel. Estate OF Decedent Susino v. Air & Liquid Systems Corporation (2023). A remand motion is not a prohibited continuation of an action under the bankruptcy automatic stay. Maritime claims brought under the saving to suitors clause are removable only with an independent basis for federal jurisdiction, and a new ground for removal raised after the 30-day removal period is untimely.
• Barraford v. T&N Limited (2015). A bankruptcy reorganization plan that unconditionally allows a trust to sue the debtor in the ordinary course terminates the automatic stay for those claims, which starts the thirty-day window under Code § 108(c)(2). Without plan language that tolls limitations periods, the claims are time-barred once that window closes.
• In re Placid Oil Co. (2014). A creditor is 'known' and entitled to actual notice of a bankruptcy bar date only if the debtor has specific information about an actual, manifested injury, not merely a foreseeable risk. Publication of a general bar date notice in a national newspaper is enough for unknown creditors, and it need not mention potential asbestos claims.
• In re Federal-Mogul Global Inc. (2012). Section 1123(a)(5)(B) of the Bankruptcy Code expressly preempts anti-assignment provisions in insurance policies to the extent they bar transfer of insurance rights to a § 524(g) asbestos trust under a reorganization plan.
• Consolidated Rail v. Ray ex rel. Estate of Boyd (2011). The Rail Act's conveyance of failed railroads' assets to Conrail "free and clear of any liens or encumbrances" covers property-based claims, not personal injury tort claims. The Act therefore does not bar FELA liability for an employee's asbestos exposure that occurred before the conveyance.
• In re Grossman's Inc. (2010). A bankruptcy "claim" arises when an individual is exposed pre-petition to a product or conduct giving rise to an injury, even if the injury appears after confirmation, so the Frenville state-law accrual test is overruled. Whether such a claim was actually discharged depends on due process, including adequacy of notice.
• In re Congoleum Corp. (2005). Pre-petition conduct of a law firm in negotiating a pre-packaged asbestos plan is relevant to whether it may be retained as debtor's counsel. A firm with unwaived concurrent conflicts, serving as co-counsel for claimants and counsel for the debtor, violates the Rules of Professional Conduct and the disinterestedness requirement of 11 U.S.C. § 327(a).
• In re Combustion Engineering, Inc. (2004). Section 105(a) cannot be used to extend an asbestos channeling injunction to non-derivative claims against non-debtors when § 524(g) does not allow it. Related-to bankruptcy jurisdiction needs findings that a suit against the non-debtor would affect the estate, and the pre-petition payments and stub-claim votes may violate the Code's equality-among-creditors principle.
• In re Kensington International Limited (2004). Under 28 U.S.C. § 455(a), a judge must recuse when a reasonable layperson with knowledge of all the facts would question his impartiality; conflicted court-appointed advisors and extensive unrecorded ex parte meetings created that appearance, and recusal motions are timely if the movants lacked actual knowledge of the conflict.
• In re Kensington Intern. Ltd. (2003). Mandamus will not issue to force recusal while a recusal motion is still pending before the district judge, since other adequate means of relief exist. The appellate court directed discovery and a ruling because it needed a developed record on whether a reasonable person would question the judge's impartiality under 28 U.S.C. § 455(a).
• In re Federal-Mogul Global, Inc. (2002). Under 28 U.S.C. §§ 1447(d) and 1452(b), orders remanding removed cases to state court for lack of "related to" bankruptcy jurisdiction are not reviewable by appeal or mandamus. Denial of a transfer is reviewable only by mandamus, which requires a clear and indisputable right, and under Pacor claims whose indemnification claims have not yet accrued are not "related to" the bankruptcy.
• Stonewall Ins. Co. v. Asbestos Claims Management (1995). Under New York and Texas law, occurrence-based liability policies are triggered throughout a progressive disease process when the evidence shows injury-in-fact recurring at each point; the insured bears pro rata responsibility for years it chose to go uninsured but not for years after 1985 when asbestos insurance was unavailable, and each installation of asbestos building products is a separate occurrence for per-occurrence deductibles.
• Matter of Unr Industries, Inc. (1994). A substantially consummated plan of reorganization should be disturbed only for compelling reasons, and a bankruptcy plan may treat persons whose asbestos injuries are not yet manifest as holders of 'claims' paid from a trust. The court rejected the label 'equitable mootness' and asked instead whether it is prudent to upset the plan.
• In re Joint E. & SO. Dist. Asbestos Lit. (1993). A complaint that asks only for a court-assisted class settlement and states no substantive claim of right against the defendants presents no Article III case or controversy, and a request for a declaratory judgment does not supply one. A debtor may not use a mandatory limited-fund class action to evade the Bankruptcy Code.
• Sealover v. Carey Canada Inc. (1993). A claimant who has merely a claim against the Manville Trust, and has not settled with or released it, does not have a settled defendant for molding a verdict. Under Pennsylvania Rule 238, a continuance requested by plaintiff's counsel counts as plaintiff-caused delay and is excluded from delay damages.
• Feldman v. Owens-Illinois (In re Brooklyn Navy Yard Asbestos Litigation) (1992). Plaintiffs could prove causation in the Brooklyn Navy Yard cases without identifying the exact product that injured each person, and the Navy's failure to warn did not relieve manufacturers of their own duty to warn. Under New York law, the settlement set-off and the cap on non-economic damages operate independently, each calculated from the original verdict, and a settlement occurs only when the plaintiff gives a release.
• In re Joint E. & So. Dist. Asbestos Litigation (1992). A mandatory non-opt-out Rule 23(b)(1)(B) class settlement that readjusts creditors' rights against an insolvent entity requires proper subclasses, and co-defendant manufacturers cannot be in the same class as health claimants. Bankruptcy jurisdiction cannot be used to modify a confirmed and substantially consummated plan in violation of section 1127(b).
• Ocasek v. Manville Corp. Asbestos Comp. Fund (1992). Under Johns-Manville's confirmed reorganization plan, which binds claimants under 11 U.S.C. § 1141(a), the ban on interest for Class Four asbestos claimants applies to post-filing judgments, and the narrow exception covers only claims disposed of by an order before the Filing Date. The plan's terms control over state and federal post-judgment interest statutes.