A.H. Robins Co. has brought the Dalkon Shield liability dispute one step closer to resolution by filing the latest version of its reorganization plan, which covers a proposed takeover of the company by American Home Products Corp.
Under the plan, its fourth, the Richmond health products company formally accepts a takeover via the $700 million stock swap offer made last month by American Home Products. As part of that offer the New York pharmaceutical company will also assume responsibility for the nearly 200,000 active Dalkon Shield claims by setting up a court-mandated $2.475 billion fund to pay users of the intrauterine contraceptive device.
The filing, in U.S. bankruptcy court in Richmond, follows two weeks of negotiations among the interested parties in the dispute -- including Robins officials and stockholders, American Home Products and the committee representing Dalkon Shield claimants. It does not differ substantially from last month's American Home Products proposal, a plan that offered more than previous bids from that company and others that wanted to take over Robins. The plan was endorsed by committees representing claimants and Robins shareholders.
A hearing on the plan and an accompanying disclosure statement providing financial data on the terms of the settlement has been scheduled for March 10 in the U.S. district court in Richmond. At that time, the proposal will be considered by Robins shareholders, claimants and creditors. Three previous Robins reorganization efforts -- stretching back to the company's filing for protection from creditors under Chapter 11 of the bankruptcy code in August 1985 -- were unacceptable to the claimants' committee.
Key elements of the plan call for Aetna Casualty and Surety Co. to provide insurance policies to cover potential shortages in the Dalkon Shield trust fund, and to pay $100 million to settle all outstanding insurance obligations with Robins.