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In re Johns-Manville Corp.

In re Johns-Manville Corp.

United States Bankruptcy Court for the Southern District of New York

January 23, 1984

Case Nos. 82 B 11656, 82 B 11657, 82 B 11658, 82 B 11659, 82 B 11660, 82 B 11661, 82 B 11662, 82 B 11663, 82 B 11664, 82 B 11665, 82 B 11666, 82 B 11667, 82 B 11668, 82 B 11669, 82 B 11670, 82 B 11671, 82 B 11672, 82 B 11673, 82 B 11674, 82 B 11675, 82 B 11676, In Proceedings for Reorganization Under Chapter 11

Opinion

 [*729]  DECISION AND ORDER ON MOTIONS TO DISMISS MANVILLE'S CHAPTER 11 PETITION

DECISION NO. 1 ON CORRELATED MANVILLE MATTERS

I. Background and Issues Presented

Whether an industrial enterprise in the United States is highly successful is often gauged by its "membership" in what has come to be known as the "Fortune 500". Having attained this measure of financial achievement, Johns-Manville Corp. and its affiliated companies (collectively referred to as "Manville") were deemed a paradigm of success [**3]  in corporate America by the financial community. Thus, Manville's filing for protection under Chapter 11 of Title 11 of the United States Code ("the Code or the Bankruptcy Code") on August 26, 1982 ("the filing date") was greeted with great surprise and consternation on the part of some of its creditors and other corporations that were being sued along with Manville for injuries caused by asbestos exposure. As discussed at length herein, Manville submits that the sole factor necessitating its filing is the mammoth problem of uncontrolled proliferation of asbestos health suits brought against it because of its substantial use for many years of products containing asbestos which injured those who came into contact with the dust of this lethal substance. According to Manville, this current problem of approximately 16,000 lawsuits pending as of the filing date is compounded by the crushing economic burden to be suffered by Manville over the next 20-30 years by the filing of an even more staggering number of suits by those who had been exposed but who will not manifest the asbestos-related diseases until some time during this future period ("the future asbestos claimants"). Indeed,  [**4]  approximately 6,000 asbestos health claims are estimated to have arisen in only the first 16 months since the filing date. This burden is further compounded by the insurance industry's general disavowal of liability to Manville on policies written for this very purpose. Indeed, the issue of coverage has been pending for years before a state court in California ("the California Coordinated Litigation"). See discussion of trigger to insurance coverage in Correlated Decision No. 2 ("Decision No. 2") issued synchronously.

It is the propriety of the filing by Manville which is the subject of the instant decision. Four separate motions to dismiss the petition pursuant to Section 1112(b) of the Code have been lodged before this Court by: (1) The Committee of Asbestos-Related Litigants and/or Creditors ("the Asbestos Committee"); (2) M.J. Whitman & Co. ("Whitman"); (3) GAF Corporation; and (4) Armstrong World Industries, Inc., Acands, Inc., Brinco Mining, Ltd., Cummings Insulation Co., Inc., Delaware Insulation Co., Eagle-Picher Industries, Inc., Fibreboard Corp., Keene Corp., The McCormick Asbestos Co., Metalclad Insulation Corp., North Bros. Co., Owens-Illinois, Inc., Pacor, Inc.,  [**5]  Pittsburgh Corning Corp., Rock Wool Manufacturing Co., Shook & Fletcher Insulation Co., and W.R. Grace & Co. ("the Co-defendants"). In addition, Keene Corporation has filed a motion for the Appointment of a Legal Representative for Manville's Future Asbestos Claimants which is  [*730]  the subject of Decision No. 2. 1 Oral argument on all of these motions was heard on January 5, 1984.

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36 B.R. 727 *; 1984 Bankr. LEXIS 6384 **; Bankr. L. Rep. (CCH) P69,615; 9 Collier Bankr. Cas. 2d (MB) 1179; 11 Bankr. Ct. Dec. 453

In re: JOHNS-MANVILLE CORPORATION, et al., Debtors

CORE TERMS

Asbestos, reorganization, claimants, motion to dismiss, liquidation, good faith, co-defendants, confirmation, bankruptcy court, proceedings, rehabilitation, insolvency, declaring, tort claim, eligibility, cognizable, estimation, projected, emerges, motions, cases, reorganization plan, future claim, predicate, holders, courts, filing date, appointment, contingent, movants

Bankruptcy Law, Bankruptcy, Debtor Benefits & Duties, Eligibility, Municipality Bankruptcy, Reorganizations, Commencement of Case, Involuntary Cases, Grounds for Relief, Civil Procedure, Judgments, Relief From Judgments, General Overview, Voluntary Cases, Order for Relief, Case Administration, Conversion & Dismissal, Reorganizations, Plan Confirmation, Prerequisites, Good Faith Requirement, Lack of Good Faith, Plans, Estate Property, Contents of Estate, Real Property Law, Sales, Tax Law, State & Local Taxes, Sales Taxes, Claims, Allowance of Claims, Estimation of Claims, Torts, Procedural Matters, Settlements, Administrative Powers, Automatic Stay