Pfizer Inc. (PFE:US)’s non-operating Quigley Co. unit filed a new plan to exit bankruptcy that bars all asbestos claims against the two companies, except some made against Pfizer under Pennsylvania law.
Quigley, in bankruptcy since 2004, filed the sixth version of its plan June 29. The new plan addresses an April appeals court ruling on how Pfizer can use Quigley’s bankruptcy to protect itself from asbestos claims. The court found that law firm Peter G. Angelos PC can sue Pfizer based on manufacturer liability under Pennsylvania law.
The new plan’s exception for claims under Pennsylvania law would be “null and void” if the Second Circuit’s decision is modified upon rehearing or on appeal to the U.S. Supreme Court, Quigley said in the plan, filed in U.S. Bankruptcy Court in Manhattan. The company will seek plan approval from U.S. Bankruptcy Judge Stuart Bernstein at a hearing set for Aug. 15.
The plan builds on a fifth version, under which New York- based Pfizer increased contributions to a proposed trust into which all future asbestos lawsuits against the two companies would be channeled. Such “channeling injunctions” allow companies with ongoing liabilities to exit bankruptcy.
“We are pleased that the Quigley bankruptcy proceeding is moving forward,” Pfizer spokesman Christopher Loder said in an e-mailed statement.
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. The unit stopped most operations in 1992 and filed for bankruptcy in 2004.
Pfizer, the world’s largest drugmaker (PFE:US), has said it never made or sold any Quigley products. Some claimants haven’t released Pfizer from alleged “derivative liability,” according to the company.
Under the sixth amended plan, Pfizer will contribute $260 million in cash to a trust that will pay most future asbestos claims brought against it and Quigley. Pfizer will also forgive a secured claim of $95 million against Quigley, a loan of $19 million to Quigley, and an unsecured claim of $33 million. It will also contribute insurance benefits that cover asbestos personal injury claims.
Pfizer will also contribute a property leased to a distributor of Anheuser-Busch in Orange County, California, to pay future asbestos claims. The property has an estimated value of $43.6 million and produced cash flow of $1.9 million in the first 12 months since Pfizer acquired it, according to court papers.
The April ruling from an appeals court had come after Pfizer had appealed a ruling that found the bankruptcy didn’t bar certain lawsuits against the drug company.
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.
During Quigley’s bankruptcy, Bernstein has said that Pfizer manipulated the bankruptcy process, and refused to allow Quigley to exit Chapter 11 court protection under a deal with Pfizer. The company has also been at odds with a committee of creditors known as the “Ad Hoc Committee of Tort Victims,” which asked in October 2010 to have Quigley’s bankruptcy dismissed so it could bring tort claims, which are otherwise blocked by bankruptcy law.
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.
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, U.S. Court of Appeals for the Second Circuit (Manhattan).
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