A court-appointed counsel for vast numbers of women who claim to have been injured by the Dalkon Shield birth-control device today endorsed the government's plea for immediate appointment of a trustee to run the bankrupt A. H. Robins Co.
"Robins' stewardship of the estate has been woefully incompetent, dishonest and fraudulent," the counsel, Washington lawyer Murray Drabkin, told U.S. District Judge Robert R. Merhige Jr. on the eve of a hearing on the government motion asking Merhige to name a trustee and hold Robins in contempt. Drabkin filed a 32-page report based on the government investigation into the estimated $20 million in improper payments that Robins made after filing for voluntary bankruptcy last Aug. 21.
The assistant U.S. attorneys who led the investigation, S. David Schiller and Robert W. Jaspen, said in a court paper yesterday that payments of nearly $3 million to present and retired executives was "a raid on the corporate treasury by insiders . . . "
Drabkin said that "Robins' management has breached its fiduciary duty to treat all its creditors with loyalty and evenhandedness. Robins has instead utilized the protection of the bankruptcy court as a license to continue business as usual free of Dalkon Shield lawsuits" filed before Aug. 21.
The "payments to insiders violate both the bankruptcy code and the orders of the court," Drabkin said. "Indeed, the investigation has uncovered a pervasive pattern of conduct under which the debtor [Robins] chose to honor nearly all categories of [pre-Chapter 11] obligations to its creditors with one exception: the Dalkon Shield claimants."
Merhige selected Drabkin's law firm, Cadwalder, Wickersham & Taft, as counsel to the Dalkon Shield Claimants' Committee. It represents the interests of the more than 5,100 U.S. women who had sued Robins before the bankruptcy, as well as those women among more than 300,000 worldwide who subsequently filed potential claims and are found to have suffered Shield-caused harm.
Drabkin's numerous examples of prohibited payments included the routing of more than $1.9 million through subsidiaries that are not in bankruptcy. He also protested the refusal of Robins executives to so much as consider transfering $8 million to $11 million of excess funds in a pension plan to other creditors.
"Robins simply cannot be trusted to protect the interests of the estate," Drabkin wrote.