A federal judge ruled 31 March 2005 that the potential liabilities for asbestos damages to which building materials maker Owens Corning is exposed amount to USD 7 billion.
The ruling by US District J…
A federal judge ruled 31 March 2005 that the potential liabilities for asbestos damages to which building materials maker Owens Corning is exposed amount to USD 7 billion. The ruling by US District Judge John Fullam is an important action in Owens Corning“s long-running bankruptcy. Financial creditors of the Ohio company argued that the company“s asbestos liabilities should be set at between USD 2 billion and USD 3 billion. Lawyers for asbestos claimants asked for an estimate of USD 11 billion from the judge, who took extensive evidence on the matter. The asbestos estimation proceedings before Fullam were keenly contested, as the liability amount set by the judge establishes a baseline for negotiations on the firm“s Chapter 11 reorganization plan. Owens Corning expects to placate both financial and personal injury creditors with shares of equity in its still successful business operations. The higher the amount estimated for asbestos liability, the more equity Owens Corning will allocate for people with claims for asbestos-related health problems. The company remained neutral on the question of how much it should allocate to a trust to be created under its Chapter 11 plan to pay present and future asbestos claims, although it pressed Fullam for a decision to ease its emergence from Chapter 11. In an 11-page opinion, the judge acknowledged a number of factors put forward by Credit Suisse First Boston in favor of a low liability estimate, including venue-shopping by lawyers for asbestos claimants hopeful of winning verdicts from generous juries. He also lowered his liability estimate on the grounds that punitive damage awards are unlikely, since Owens Corning and other companies stopped making asbestos products 20 years ago. He was, however, critical of an expert witness for Owens Corning“s banks, who testified that only about 17,000 of the 128,000 claims now filed against the company are worthy of compensation. Fullam also disagreed with one of the experts for the asbestos claimants who said high rates of asbestos damages claims are likely to continue in the future.