UNR Industries, a Chicago-based steel products firm, is seeking a new and unprecedented form of relief from the flood of lawsuits directed at companies that manufactured asbestos insulation. By filing for court protection under Chapter 11 of the federal bankrupcty law Thursday, UNR Industries has temporarily blocked 12,000 lawsuits against it by workers who say they contracted cancer and lung disease from exposure to asbestos.
With the filing, all lawsuits and other claims against the company are consolidated under the jurisdiction of the Chicago bankruptcy judge handling the UNR case.
Because such complex bankrupcty reorganizations typically take several years to conclude, the company conceivably could gain a crucial respite from the asbestos suits, according to attorneys involved in the issue.
UNR, whose business has suffered in the recession, reported a loss of $8.9 million for the first half of 1982, compared with a profit of $973,000 for the same period last year.
Chairman David Leavitt said that UNR has spent about $30 million paying for damages to cancer and asbestosis victims and legal fees at 78 law firms.
Lawyers who handle asbestos injury suits said yesterday, however, that UNR's action is likely to result in only a short delay in proceeding with the suits against it. Cleveland attorney Robert Sweeney predicted that the stay would be lifted soon by the bankruptcy judge, an action that would return the cases to their original jurisdictions.
The UNR bankruptcy filing is the most striking evidence so far of the financial costs to the absestos industry from damage awards and legal costs of the asbestos liability suits.
Accountants have qualified recent financial statements of three other companies, Johns-Manville Products Corp., Raymark Corp., and Eagle-Picher Corp., because of the growing number of liability suits filed against them.
UNR has been named as a codefendant in about 12,000 lawsuits. Johns-Manville and Eagle-Picher both face 11,000 cases while Raymark is involved in 10,000 suits. In addition to these four firms, 11 other asbestos manufacturers or distributors are commonly named as codefendants in the estimated 15,000 asbestos liability suits pending in the United States.
At least one of the 11, Amatex, a small asbestos firm in Radnor, Pa., is on the verge of bankruptcy if it loses an asbestos case, according to Esther Foer, a representative of the Asbestos Compensation Coalition, a group representing nine asbestos manufacturers.
Johns-Manville, based in Denver, reported a six-month loss of $37 million compared with a $16 million profit for the first six months of 1981. Johns-Manville spent $13 million on asbestos litigation last year and $8.6 million in the first half of this year.
Neither Cincinnati-based Eagle-Picher nor Raymark Corp., based in Trumbell, Conn., lost money in the second quarter. Nevertheless, both reported litigation costs relating to asbestos running at a $12 million-a-year pace.
Meanwhile, the courts have recently taken action that is likely to expand the liability of asbestos manufacturers in this area.
The U.S. District Court of Appeals for Washington, D.C., ruled yesterday that victims with one asbestos-related disease do not "start the clock" on their rights to sue for damages relating to subsequent illnesses traced to the same asbestos exposure.
The case involved Henry J. Wilson, who had worked at construction sites in the Washington, D.C., area.
Wilson was diagnosed as having mild asbestosis in 1973, then died in February, 1978, of malignant mesothelioma, a lethal cell cancer.
The defendant, Johns-Manville, had argued that the 1973 diagnosis started the three-year statute of limitations and that Wilson's widow had no right to sue for wrongful death in 1979. The court's ruling allows Wilson's widow to proceed with her suit.
The New Jersey Supreme Court on July 7 also expanded the liability of asbestos companies.