In re WR Grace & Co., et al.

In re WR Grace & Co., 2013 WL 4734074 (3d Cir. Sept. 4, 2013).
The United States Court of Appeals for the Third Circuit affirmed the holding of the United States District Court for the District of Delaware, finding that: a) the Plan meets the requirements of § 524(g); b) personal injury and property damage trusts are necessary to protect the interests of future asbestos claimants; c) the Plan was proposed in good faith; and d) the Plan was feasible.
Procedural context:
Appeal from the United States District Court for the District of Delaware’s decision, which affirmed the United States Bankruptcy Court, District of Delaware’s Confirmation Order of the Chapter 11 Plan of Reorganization and approved a trust and channeling injunction under 11 U.S.C. § 524(g). The Court of Appeals reviewed the District Court’s conclusions of law de novo, its factual findings for clear error, and its exercise of discretion for abuse thereof.
Anderson Memorial Hospital (“AMH”) filed a class-action suit in a South Carolina state court against W.R. Grace and its affiliates (“Grace”) in 1992, for the manufacturing of asbestos-containing products. In 2001, Grace filed for Chapter 11 protection in the United States Bankruptcy Court for the District of Delaware. By 2010, Grace settled most of its property damage claims, contingent on the approval of a trust under 11 U.S.C. § 524(g), and an injunction channeling property damage claims to the trust for payment. AMH did not settle, however, and the Bankruptcy Court confirmed the Plan of Reorganization (the “Plan”), including the trust and channeling injunction, over AMH’s objections. The Court’s reasons for affirming the holdings of the District Court were: a) there is still a significant chance that future property damage claims will be asserted against Grace; b) the trusts provide a level of certainty calculated to position Grace to compensate future claimants; c) Grace demonstrated the Plan was fair; and c) the scale of related claims satisfies that $1.6 billion in possible funding has a reasonable likelihood of providing for all claims.
Honorable Judge Thomas L. Ambro, Honorable Judge D. Michael Fisher and Honorable Judge Kent A. Jordan

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