ThenNow

https://restructuring.weil.com/claims/mass-tort-bankruptcies-and-valuation-considerations-in-the-claims-estimation-process/ How Have Courts Estimated Mass Tort Liabilities in Chapter 11 Cases?Despite this lack of explicit statutory guidance, the Garlock court found useful precedent in the various estimation decisions of other large chapter 11 cases involving asbestos liabilities, specifically those of Eagle-Picher Industries, USG Corporation, G-1 Holdings, Owens Corning, Federal-Mogul, W.R. Grace, Armstrong Industries, and Specialty Products. In fact, the court boiled these asbestos-related claims estimation proceedings down to four general principles. First, the court observed that each court endeavored to reach a fair estimate based on the particular facts and circumstances of the case before it, recognizing the validity of the competing concerns of the various litigants in attempting to reach a proper resolution. Indeed, even when valuation is not in dispute, the Garlock court recognized the general prudence of reaching its “own estimates of liability.” Second, the court noted that the debtor’s role in estimation can vary from case to case. At times, litigants reach a consensual resolution in order to propose a plan of reorganization. At other times, the debtor is agnostic to the value of the claims because it has no financial exposure. In other cases, the debtor, like Garlock, hotly contested claimants’ liability estimates. The level of a debtor’s participation can also inform the court as to its acknowledgement of — or challenge to — liability. Third, the court observed that the type of asbestos product at issue can be relevant in determining the extent of a particular debtor’s liability. Garlock argued that its products produced a small dose of a less potent form of asbestos in contrast to the products of comparable debtors, and the claimants failed to produce persuasive evidence to the contrary. Accordingly, the court concluded that historical asbestos estimations from those other cases were inapplicable to Garlock. Fourth, the court recognized that a debtor’s claims resolution history (i.e., its prepetition litigation settlements) could be a useful — if not even the best — data point in estimating a debtor’s acknowledged liability. However, it is neither the exclusive nor controlling means to estimate liability, particularly where a bankruptcy court has discretion to determine the appropriate method of estimation in light of the particular facts and circumstances of the case before it. The Garlock ConclusionNoting that it had conducted a seventeen-day plus trial, with 29 witnesses and hundreds of exhibits, the Garlock court reached its estimation of present and future mesothelioma claims with these principles in mind. The present and future claimants’ representatives argued for a “settlement” based approach to estimation by way of statistical extrapolation from Garlock’s history of resolution of mesothelioma claims, a methodology employed in other asbestos-related bankruptcy cases. In contrast, the debtors argued for a “legal liability” approach that focused on the merits of the claims, reduced further by claimants’ prospects for recovery from other sources, to develop a projected estimate of value. Recognizing that the settlement approach was generally useful in an estimation analysis because a defendant’s “own history of valuing claims in the tort system” may serve as a reliable benchmark of acknowledged liability, the court concluded that its application to Garlock was of limited use where (1) there was evidence of substantial malfeasance by plaintiffs’ attorneys in the underlying litigations (including, among other things, withholding exposure evidence and purporting to not have filed claims in other debtors’ chapter 11 cases so they could inflate their clients’ claims against Garlock), and (2) significant evidence suggested that Garlock’s settlement data represented a strategy of “cost avoidance” rather than actual liability. Accordingly, the court rejected the entirety of the claimants’ experts’ estimation data and relied entirely on the “reasonable and reliable estimate” of Garlock and the work of its experts. Garlock’s estimate was “based on econometric analysis of current data produced in discovery by the representatives of a sizeable sample of the current claimants,” with “applied parameters based on observation and accepted measures.” Specifically, Garlock had created an analytical database from questionnaires that it had sent to the current claimants’ law firms as part of its discovery efforts. The data produced included job histories, asbestos exposure information relating to Garlock’s and third-parties’ products, claims and recoveries made in the tort system, and claims made to other asbestos plaintiffs’ trusts. The court observed that Garlock’s efforts resulted in the “most extensive database about asbestos claims and claimants” that had been “produced to date” and, unlike historical information, was the “only data” that accurately reflected the pool of claims against Garlock. From this “reasonable and representative” sample, Garlock’s experts extrapolated estimates of Garlock’s liability for current claimants ($25 million) and for future claimants ($100 million). Although the estimate was a “‘projection,’” the court concluded that it was accurate and reliable. As a result, the court held that Garlock’s aggregate liability for present and future mesothelioma claims was $125 million — in contrast to the claimants’ estimation of $1-1.3 billion. The TakeawayClaims estimation can be important for many reasons when it arises in the context of plan confirmation, particularly as a court examines feasibility and fairness. Accordingly, practitioners and experts alike should be aware of its potential impact on total enterprise value at exit and ensure that their presentation is both reasonable and reliable in order to win claims estimation litigation.

I was reading "Beetle Bailey" and "Blondie" and avoided that. (Old guys...for you.) I admittedly skimmed. I signed up for CynicalScouter's Cliff Notes Day After Parties so I can eat bonbons and sip champagne while reading the "juicy parts." Sorry. I am curious, though, to get more detail. I want to know about the power to call claimants and, effectively adjudicate their claims as an exemplar for creating an aggregate estimate. That's the sort of in the weeds stuff I meant.

Do you have a case reference as an example? Any documentation on how these go down? Trial as in, corroborating witnesses, questioning the accused and the whole nine? I can't imagine the latter, since that is typically not part of vetting these tort claims, but in District Court...?

As people would say today, "I didn't spend $250M, just $150M! I saved $100M Yay me!" I told my kids, "If it ain't in the bank or an investment, you didn't save squat. Not spending does not = saving." Ha.

Was it a serious calculator with legit and accurate input fields, multipliers and all, or "you pick em" averages for claims, etc.? Of course, no one had any idea of the number of claims then. I'd be interested to see it run on some of the LCs now.

Therein lies the rub. They haven't "included" the LCs other than by reference and an, "I promise to ask them if they would contribute $X...pretty please?" No solid agreement from the LCs or COs, forget all the other gaping holes. This made everyone but the BSA and apparently the LCs and OCs uber unhappy. The trebuchets were thus uncorked. But, per many here, LCs have been repeatedly assured, "All is well. Don't worry your pretty heads. Back to the campfire, knots, j strokes, signaling and lashing. The adult table is full up." Now, the jig is up and the scramble is on.

NB: I am not saying it is what he's doing or thinking. I'm just trying to cipher out the angle. If he was my attorney, given my closed state status, I'd be screaming for him to "show me your work," as in a math exam. And, if he came back with the classic, "This is the right answer. I just did the calculations in my head...you'll have to trust me" or my fear was confirmed, I'd be on the horn to every national bankruptcy beat reporter screaming some more.

I know, but how is HIS pot the whole pot and what happens to his ethical duty? He's not the only player attorney with a goodly number of claims, lots of firms and guys I know have cases teed up in BIG $$ open states (as in already filed), and not all of the Coalition crew's claims are in open states, if even all valid. Effectively, you're saying he'll screw some (a lot) of his clients out of something to get the BIG YUGE something for others (and himself) in open state. That's the crux of my inquiry. "Yea, verily, or that guy (me) is so stupid?"

As the lead plaintiff, this is how she brought me to an eventual number, though I still pushed above their "last and final." She gave me her sense of the odds of getting less, combined with the legal fee burn rate estimate, and that's what ushered in the proverbial ceremonial pens. I think it's too many reticent parties and too much denial.

Of course. Asking for your analysis, since it makes no sense to me whatsoever and seems to flaunt his ethical responsibility. It seem like blind hatred at all cost, but he's too smart to go there...maybe?

Question not a joust (getting tired of that): Unless all or most of their 16,000-25,000+/- clients are in open states, how is liquidation in the best interest of his/their clients if the pension fund goes to first chair? Is his passion to "Hulk SMASH!!" overriding his duty to his clients? Is he just hot to get as many cases into state court as possible? Again, what about their closed state clients. Messa confused.

I don't think I said they were similar, just stated my puzzlement and the chasm between the two contexts and approaches. The defendant corporation most assuredly thought they should have been back at corporate counting their billions.

In my experience, which is vastly different than this context, it's mind boggling. The last time I was involved in a decent sized negotiation, which was on a class action case 2+ years ago, this is how it worked when the frustration stage hit: 1) We had flung pleadings, negotiated and made some progress, but not enough; 2) We were mandated to go to settlement conference with the judge's appointed mediator, committing up to two days; 3) Our side sat in the main courtroom and the other in a separate one; 4) We went back and forth all day, with the mediator relaying offer/counter offer and leaning on each party as she went; 5) No lunch, no coffee allowed, few bathroom breaks; and 6) We settled after about nine hours. No one was "happy," but everyone could live with the deal. Admittedly, this has a lot more parties a lot more moving parts and a whole glob of attorneys. Again, I am biased, but I feel like the BSA, LCs, insurers and (now) COs have been the ones laying back waiting for who knows what. They seem to be the dragging anchors.

I was never a litigator nor a bankruptcy attorney, so someone else will be better to give technical thoughts. My general understanding is that bankruptcy judges are more moderators of the business process and noodge it along, as needed. She was going to allow limited discovery, but deferred because it would happen, to some degree, in the estimation. I have to believe she was nearly as surprised as the rest of the universe at the state of the proposed Plan. It revealed little progress and I doubt she realized just how little had been made. As to "legal pressure," I don't know. The estimation motion was a curveball (so it seemed) and it appears it's not headed toward her plate. She can't control it. I think the only real pressure is BSA's need to move toward resolve to avoid going belly up. They and the LCs have to get serious quickly. Perhaps the mediation meeting will show a new posture. The other players, not so much pressure. PS - For the insurers? Almost none imho, other than the desire for certainty in the form of a definitive amount of liability. The longer it goes the more interest they can earn on their reserves, etc.

How so?

I suppose. I would love to analyze the data to discover if there are discernible pockets where abuse did not occur (Troops, towns, etc.) and see what can be learned from the patterns that emerge, if any.

I believe the estimate is that a total of $150M in fees will be spent through July. $10M per month'ish. (Just saved $100M. Now, they have plenty of money and time to burn it. Jk.)

Appears to be: " By this Motion, the Movants respectfully ask that the reference be withdrawn so that estimation can proceed in the District Court, as we believe it must. Here, the estimation will bear the hallmarks of a “trial”: The parties will take fact discovery, offer experts, call witnesses, and try to judgment the aggregate value of the Abuse Claims. The District Court may well make case-dispositive legal rulings, and the estimation will culminate in a binding judgment setting a de facto cap on the value of Abuse Claims for distribution purposes. See supra at 8-9. Estimation of these personal injury claims therefore must proceed in the District Court.

Huh. Not a single one. Given the aggregate total, I suppose I shouldn’t be surprised. I kind of am, though.

Q: Are there any LCs that have zero claims?

As you have articulated multiple times, how does he propose to do that if BSA is unwilling? He seems to be speaking to some power in the judge's hand, which I understood isn't there. Just persist in refusing to approve revised Plans?

And, the assumption is the TK brings all of them because Andrew Van Arsdale is a key member of AIS? I know he (TK) was a founder, but is he still the controlling voice?

From whence cometh this ciphering? Officially, the Coalition has 16,000 clients. I'm asking, not poking. I don't know the answer...

If it hasn't happened in 18 similar sexual abuse bankruptcy cases, I doubt any judge will be sticking their neck into that chipper. Not with 83,000+ sexual abuse survivors standing in her courtroom.

Setting aside my vested personal interest, I don't get this at all from a pure deal making standpoint. I know lip service to a two-part mutual goal doesn't equate to commitment, but a deal seems there to be made.