Pfizer Inc. (PFE:US)’s non-operating Quigley Co. can end almost nine years in bankruptcy under a plan that will resolve most asbestos claims against the world’s largest drugmaker (PFE:US) and its former maker of insulation products.
U.S. Bankruptcy Judge Stuart Bernstein in Manhattan today approved a Chapter 11 plan under which Pfizer will contribute assets worth $964 million. He rejected a prior plan almost three years ago, saying Pfizer was improperly using Quigley’s bankruptcy to shield itself from asbestos claims.
Bernstein found in September 2010 that Pfizer’s proposed $216.2 million contribution to a prior plan wasn’t enough considering court testimony that Quigley may face $4.45 billion in claims over 42 years, and that asbestos claimants could have fared better by suing the company under civil tort law. A company reorganizing in bankruptcy is shielded from lawsuits, including tort, or wrongful-injury claims. Once it emerges, it is a new legal entity, and often can no longer be sued.
Quigley, which made asbestos-containing products from the 1940s to the 1970s, including Insulag, a powdered insulation, was bought by Pfizer in 1968. It stopped most operations in 1992 and filed for bankruptcy in 2004, facing 160,000 lawsuits. Many also named Pfizer, whose name appeared on Insulag packaging.
Pfizer has said throughout the case that it never made or sold Quigley’s products and it doesn’t have liability for them. Asbestos, once widely used as an insulator, was later shown to cause cancer.
The U.S. Trustee, a bankruptcy watchdog for the Justice Department, sought to have the case thrown out in 2010, saying that while it’s pending, creditors with alleged asbestos-related health problems have been unable to sue New York-based Pfizer, and many have died.
Wilentz, Goldman & Spitzer was the sole objector to the current plan. The Woodbridge, New Jersey-based law firm called it yet another flawed plan after “nine years of afflicted deals” in which Pfizer has tried to buy votes.
The case is In re Quigley Co., 04-bk-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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