A Cincinnati company that once made asbestos filed yesterday for protection from creditors under federal bankruptcy laws, ending its struggle to settle about 70,000 personal injury cases and scotching the plans of a federal judge to consolidate the cases.
Eagle-Picher Industries Inc., which now makes specialty chemicals, automobile parts and machinery, will continue to operate and reorganize under bankruptcy laws, according to a company spokesman. The company filed for bankruptcy after its bid to raise money by selling a division for $16 million fell through because the buyer was unable to get financing.
U.S. District Court Judge Jack B. Weinstein had been attempting to resolve the company's asbestos cases, which were being heard in courts across the country, by consolidating them into one class-action lawsuit in his Brooklyn, N.Y., courtroom.
The company had asked Weinstein to take the action in July, saying it had limited funds to settle the outstanding cases.
Weinstein is one of a number of federal judges who have been trying to deal with an overwhelming backlog of lawsuits brought on behalf of workers who breathed asbestos fibers and later contracted often-fatal lung diseases.
The bankruptcy filing will transfer the claims of asbestos victims to the bankruptcy court, where the reorganization of the company could take from two to six years, the company spokesman said.
Eagle-Picher listed $416 million in assets and $583 million in liabilities, including $375 million for asbestos claims. The company already has settled 65,000 asbestos claims for about $600 million, a spokesman said.
Plaintiffs' attorneys, who had opposed Weinstein's efforts to consolidate the cases, yesterday greeted the news of Eagle-Picher's decision with jubilation.
"The victims will be very much better off than they would have been on the plan Weinstein advocated," said Peter G. Angelos, a plaintiffs' attorney in Baltimore. "Victims will get much more."
"Ninety-nine percent of the victims were opposed to an Eagle-Picher class action," said Ron Motley, a plaintiffs' attorney in Charleston, S.C. "There's no question that this is better for the victims. They'll get millions more."
Those advocating a class-action lawsuit have said that the real beneficiaries of a bankruptcy vs. a class action are the attorneys -- who will reap millions more in legal fees. Weinstein has criticized the high legal fees in other asbestos cases, including those involving Manville Corp., once the largest maker of asbestos in the country.
The trust set up by Manville to pay asbestos claims said last year that it was virtually broke and could not pay more than 130,000 asbestos victims or their survivors. Weinstein is holding hearings around the country on a proposed settlement in the Manville cases and is supervising a restructuring of the trust.