News
January 25, 2006

The Babcock & Wilcox Company is one step closer to ending its six-year asbestos-related bankruptcy proceeding after a Louisiana district court confirmed the company’s Chapter 11 Joint Plan of Reorganization on January 17, 2006. 

The Plan provides that Babcock & Wilcox will remain a wholly-owned subsidiary of Jenner & Block client McDermott, Inc., and will create a trust to settle as many as 300,000 asbestos injury claims. McDermott will pay $350 million to the trust, which will also include $1.1 billion in insurance payments. A complete description of the Plan can be found at http://www.babcock.com/pgg/pr/SDSprinted.pdf

Babcock & Wilcox’s fund will be a separate entity from a national trust fund currently being contemplated by Congress. That fund would require plaintiffs in asbestos lawsuits to collect damages from a privately funded $140 billion trust fund rather than by suing individual businesses. 

"This is an important day for McDermott, our shareholders, B&W’s customers and the asbestos-related claimants," said McDermott Chairman and CEO Bruce W. Wilkinson in a statement. "After close to six years in the courts, it appears that the resolution of B&W’s bankruptcy is imminent. There is still work to be accomplished in this process, but I am looking forward to soon having the B&W business back for shareholders as part of McDermott’s reported financial results."

Representing McDermott Incorporated and Babcock & Wilcox Investment Company, the parent of the debtor, The Babcock & Wilcox Company, in B&W's Chapter 11 proceedings are Jenner & Block Partners Daniel R. Murray, Barry Sullivan and Jacob I. Corré and Associate Andrew J. Olejnik.

Industrial boiler maker Babcock & Wilcox, which once used asbestos to insulate its boilers, filed for bankruptcy protection in 2000 after the potential cost of asbestos-related claims skyrocketed. McDermott subsequently put Babcock & Wilcox under bankruptcy protection and deconsolidated the company from its financial statements. 

For asbestos-related cases, a district court shares jurisdiction with a bankruptcy court, and both courts need to approve the plan for it to be confirmed. In this case, a New Orleans bankruptcy court approved the plan in December 2005. 

McDermott International, Inc. is a leading worldwide energy services company. McDermott's subsidiaries provide engineering, fabrication, installation, procurement, research, manufacturing, environmental systems, project management and facility management services to a variety of customers in the energy and power industries, including the U.S. Department of Energy.

Please click here to view a Jenner & Block case study for more information on this reorganization.