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PROPOSED MANVILLE AMENDMENT LIMITS ASBESTOS LIABILITY AT EXPENSE OF CO-DEFENDANTS AND PLAINTIFFS

 PROPOSED MANVILLE AMENDMENT LIMITS ASBESTOS LIABILITY
 AT EXPENSE OF CO-DEFENDANTS AND PLAINTIFFS
 Industry Calls For Protection Against Double Jeopardy
 WASHINGTON, April 1 /PRNewswire/ -- Although intended to protect the value of trust funds established by bankrupt companies to compensate asbestos claimants, an amendment to the Bankruptcy Code proposed by the Manville Trust will sap available resources, a House subcommittee was told today.
 Roger E. Podesta, a leading defense attorney in asbestos litigation, testified that H.R. 4610, introduced by Rep. Patricia Schroeder (D-Colo.) unfairly shifts the burden of personal injury liability from bankrupt companies to solvent co-defendants. As a result, the amendment would lead to yet more bankruptcies and the depletion of resources available to compensate plaintiffs with asbestos-related injuries.
 Podesta called for the reinstatement of Subsection 524(g)(10), which deemed trusts to be settling and paying defendants. This section, contained in the original Senate version of the bill (S. 1985), protected co-defendants from unwarranted liability for bankrupt companies' shares of settled claims, in accordance with existing state law.
 "Without this provision, the bill represents unsound public policy and should be defeated," Podesta testified. Podesta, whose law firm is national counsel for Owens-Corning Fiberglas Corporation, was joined in his opposition to the current formulation of H.R. 4610 by the Center for Claims Resolution and the Committee for Equitable Compensation.
 H.R. 4610 is an attempt by its sponsors to bolster stock prices of reorganized companies by allowing courts to grant permanent injunctions against future liability not covered under established plans of reorganization. All claims are instead channeled to personal injury settlement trusts formed during Chapter 11 proceedings. To qualify for such an injunction, the trust must be a majority owner of the debtor's stock. Thus, the funds necessary to compensate claimants are dependent on the stock's market value and the ability to attract investors.
 Podesta argued, however, that the legislation as currently drafted works against plaintiffs and co-defendants by:
 -- creating a perverse incentive for companies to enter bankruptcy to resolve their tort liability, dissipating resources that would otherwise be available to compensate future claimants;
 -- encouraging plaintiffs to seek double recovery -- first from solvent co-defendants and then again from the trust;
 -- impeding the settlement process -- due to wrangling over the legal status of the trust and co-defendants' reluctance to assume a debtor's share of potential settlements; and
 -- reducing the funds available for payment of claims by providing disincentives to good management of a trust.
 "It has been decades since these remaining solvent companies have sold the products giving rise to their liability, for which, in all, hundreds of millions -- if not billions -- of dollars have already been paid," Podesta said. "As introduced, H.R. 4610 would unfairly increase the burden against these parties, ultimately reducing the funds available in the future to compensate plaintiffs."
 Podesta is a partner in the law firm of Debovise & Plimpton, New York City. He presented testimony at a hearing of the House Judiciary Subcommittee on Economic and Commercial Law.
 The Center for Claims Resolution (CCR) is an association of 20 companies that are defendants in asbestos bodily injury litigation throughout the United States. The CCR represents its members in all of these claims and is dedicated to the expeditious resolution of meritorious cases. To date, the CCR has successfully resolved more than 60,000 claims against its members.
 The Committee for Equitable Compensation (CEC) is composed of four asbestos defendant companies: Armstrong World Industries, Inc.; W.R. Grace; Owens-Illinois, Inc.; and Pittsburgh-Corning.
 Owens-Corning Fiberglas Corporation is a defendant, along with many other companies, in asbestos personal injury actions in state and federal courts.
 -0- 4/1/92
 /CONTACT: Michael Kehs for The Center for Claims Resolution, The Committee for Equitable Compensation and Owens-Corning Fiberglas Corporation, 202-833-4296/ CO: The Center for Claims Resolution; The Committee for Equitable
 Compensation; Owens-Corning Fiberglas Corporation; Manville
 Trust ST: District of Columbia IN: SU: LEG


MH-TW -- DC018 -- 3865 04/01/92 12:41 EST
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Date:Apr 1, 1992
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