Corporations will continue to face the specter of expensive asbestos litigation and debilitating damage awards unless the Fairness in Asbestos Injury Resolution (FAIR) Act is enacted, according to an article in Corporate Secretary written by Partner Daniel R. Murray and Associate Andrew J. Olejnik.
The FAIR Act, currently under consideration by Congress, would require plaintiffs in asbestos lawsuits to collect damages from a privately funded $140 billion trust fund rather than by suing individual businesses. “If [the legislation] is not enacted this year, the U.S. economy can expect to suffer another wave of asbestos-precipitated corporate bankruptcies,” the authors wrote.
According to the authors, asbestos liabilities have already caused 74 corporations to collapse and have burdened more than 8,400 companies.
The proposed national trust would be funded by insurers and companies that have made more than $1 million in revenue from “settlement, judgment, defense or indemnity” in asbestos-related personal injury claims. Those companies would be required to make annual payments to the trust for up to 30 years, according to the article.
Messrs. Murray and Olejnik recommend that corporate executives monitor the Act’s developments in Congress, as well as review their annual payment obligations in light of the proposed legislation. Executives should also investigate whether the legislation suggests that their company keep at least some of their general liability insurance, the authors added.
Mr. Murray, Chair of the Firm’s Bankruptcy, Workout and Corporate Reorganization Practice, has extensive knowledge of asbestos-related bankruptcy proceedings. For instance, he has played a leading role in The Babcock & Wilcox Company Chapter 11 reorganization, which arose from asbestos-related claims brought against The Babcock & Wilcox Company. Babcock parent company McDermott International Inc. has stated that it will consider developments in the FAIR Act legislation before approving the reorganization plan for Babcock & Wilcox.