Bloomberg News

Pfizer’s Quigley Still Seeks to Reorganize, Lawyer Says

May 10, 2012

Pfizer Inc. (PFE:US)’s bankrupt Quigley Co. unit will continue its eight-year bankruptcy, and seeks to challenge a federal appeals court ruling, a Pfizer lawyer said.

Jay Goffman told U.S. Bankruptcy Judge Stuart Bernstein in Manhattan court today that Pfizer may challenge a higher court’s ruling in April that found Pfizer isn’t entitled to protection from some asbestos claims related to Quigley.

Pfizer also plans to proceed with Quigley’s bankruptcy, and seeks to have it exit court protection in September.

“We think they got it wrong,” Goffman said of the April appeals court ruling, adding that Pfizer may bring a challenge to the U.S. Supreme Court.

Quigley, founded in 1916, made three products for the steel industry from the 1940s to the 1970s that contained asbestos. Pfizer bought Quigley in 1968, and the company stopped most operations in 1992, filing for bankruptcy in 2004. Pfizer has said it never made or sold any Quigley products, and some claimants hadn’t released Pfizer from alleged “derivative liability.”

Bernstein had ruled in bankruptcy court that Quigley’s Chapter 11 case barred certain lawsuits against Pfizer. A May 2011 decision in district court reversed the order, and Pfizer had appealed that ruling.

“We affirm the district court,” three judges said in April’s ruling that upheld the May decision. In doing so, they found that the law firm Peter G. Angelos can sue Pfizer based on manufacturer liability under Pennsylvania law.

1999 Lawsuits

Angelos began bringing lawsuits against Pfizer in 1999, saying that because the drug company’s logo appeared on Quigley products, it should have liability for the asbestos-containing products.

Goffman also told Bernstein today that Quigley plans to file a Chapter 11 plan by the end of the month that is based on terms with creditors it has already negotiated.

Lawyers for creditors as well as the U.S. Trustee, an arm of the Justice Department that oversees bankruptcies, said they would object to any plan that was the same as the old one.

“We don’t want a do-over of what happened last time,” said Greg Zipes, a lawyer for the U.S. Trustee.

The U.S. Trustee, an arm of the Justice Department, had asked the bankruptcy court to end Quigley’s Chapter 11, citing the fact that creditors alleging asbestos-related health issues have been unable to sue New York-based Pfizer during the case, and many of them have died.

Manipulated Process

Bernstein had said that Pfizer had manipulated the bankruptcy process, and refused to allow Quigley to exit Chapter 11 court protection under a deal with Pfizer.

During Quigley’s bankruptcy, a committee of creditors known as the “Ad Hoc Committee of Tort Victims” also asked in October 2010 to have Quigley’s bankruptcy dismissed so it could bring tort claims, which are otherwise blocked by bankruptcy law.

Asbestos claims against Quigley may total $4.45 billion during the next 42 years, according to testimony cited by Bernstein in September. In November, Pfizer reported a $701 million third-quarter charge for asbestos litigation related to Quigley.

The case is In re Quigley Co., 04-15739, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The appeals case is 11-2635, 11-2767, 2nd U.S. Circuit Court of Appeals (Manhattan).

To contact the reporter on this story: Tiffany Kary in New York at tkary@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net


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