Specialty Products Holding Corp. (Specialty) opted for Chapter 11 bankruptcy protection in 2010 even though the company was profitable at the time. The strategy appeared to be an attempt to buy some time as personal injury claims mounted.
Mesothelioma is a form of asbestos cancer that attacks the membrane linings of the lungs and abdomen. The only known cause is exposure to asbestos fibers, and while relatively rare, there are no fewer than 3,000 cases diagnosed each year in the US, according to the Dover Post (Delaware, 11/19/14). There is no known cure.
Two affiliates of Specialty, Republic Powdered Metals Inc. and NMBFiL Inc. were, as Chapter 11 debtors and together with Specialty, assessed a $1.1 billion liability in May 2013.
The companies’ portfolio of products include patching plaster, joint cement, roof coatings and various other household products within the Bondex brand, and are highly popular. The trouble began, however, when the products were linked to asbestos cancer and asbestosis - as well as mesothelioma - and the asbestos claims started to roll in.
Specialty’s parent company, RPM International Inc. (RPM), agreed to a plan that will infuse the trust with $797.5 million over a four-year period. The plan, as approved and confirmed by US Bankruptcy Judge Peter J. Walsh, will see RPM fund the trust with $450 million in cash once the plan becomes effective, with additional contributions in cash, stock or both to reach the pre-tax level of $797.5 million. The after-tax figure realistically sits at $485 million, according to sources.
The asbestos mesothelioma compensation fund falls under Section 524(g) of the US Bankruptcy Code.
“We are pleased to bring finality to our legacy Bondex asbestos liability and welcome back into the RPM family an outstanding group of SPHC operating companies that are generating more than $400 million in sales on an annualized basis,” said RPM CEO Frank C. Sullivan in a statement, when the funding agreement was announced.
READ MORE ASBESTOS MESOTHELIOMA LEGAL NEWS
Asbestos cancer and mesothelioma is unique in that it can incubate in the body for upwards of 30 years or more following exposure, before suddenly emerging. Plaintiffs in an asbestos lawsuit usually seek asbestos compensation for medical bills, and for help looking after their families after they are gone. Mesothelioma usually equates to a death sentence, and many plaintiffs do not survive long enough to see their trial through, let alone begin.
The case is In re: Specialty Products Holding Corp., case number 1:10-bk-11780, in the US Bankruptcy Court for the District of Delaware.