Asbestos Trust Fund a Business Windfall?

July 9, 2003, 10:15PM

Deal would save $15 billion, study says

Bloomberg Business News

http://www.chron.com/cs/CDA/ssistory.mpl/business/1987847

Halliburton Co., Honeywell International and nine other companies seeking to resolve asbestos-exposure claims would save about $15 billion if Congress enacts a nationwide trust fund, according to a study by lawyers advising victims in negotiated settlements.

The companies would pay almost $21 billion under proposed bankruptcy reorganization plans and settlements with victims, compared with about $6.1 billion under the congressional proposal, the study says.

Opponents of the bill released the study to buttress their argument that the legislation would let companies escape obligations of settlements to victims, who would now have to stand in line with other claimants for lesser compensation.

"To do that to these victims and at the same time to give a bailout and such a windfall to companies like Honeywell and Halliburton" is "just outrageous," said Perry Weitz, a New York lawyer who represents asbestos exposure victims and isn't involved in the study.

The Senate Judiciary Committee, headed by Republican Orrin Hatch of Utah, is scheduled to resume deliberations today on a bill designed to end litigation that has bankrupted more than 60 U.S. companies in the last two decades. Workers who show evidence their asbestos exposure caused cancer or other diseases would be compensated under a formula being debated by the panel.

The proposed legislation calls for manufacturers and insurance companies with asbestos liability to pay $90 billion over 27 years, equally divided between the two industries.

The bill would also authorize the trust's administrator to raise an additional $45 billion over 27 years if claims exceed the cash on hand to pay them.

Shares of companies with asbestos liability have soared as Congress has made progress toward enacting the trust fund. Opponents of the proposed fund argue it would strip victims of the right to sue without paying them enough for their suffering.

Mark Peterson, an asbestos-liability consultant who helped produce the study, commissioned by the law firm of Caplan and Drysdale, predicted the proposed fund would delay compensation for victims already scheduled to receive money under settlements. It might take eight years for the estimated 300,000 victims who file claims in the first year to get any money, Peterson said.

Halliburton has announced plans to set up a $4.2 billion trust by putting its DII Industries and KBR, formerly known as Kellog Brown & Root, into bankruptcy protection. Under the legislation, the company would pay $675 million over 27 years, the study said. Halliburton, while seeking court approval of its bankruptcy plan, is a member of the Asbestos Study Group, a coalition of companies lobbying Congress to enact the trust fund.

*** POSTED JULY 10, 2003 ***