Quigley filing aimed to tackle as much Pfizer exposure 'as possible'

By Alice Popovici

New York, Sept. 24 - Quigley Co., Inc. filed for Chapter 11 as part of an effort to deal with the maximum number of parent Pfizer, Inc.'s asbestos claims, a former claim litigation attorney for Pfizer testified Thursday.

Sanford Berland, who was in charge of asbestos litigation for Pfizer's insurance group from 1990 to 2004, was examined and cross-examined by attorneys in regard to claims litigation, settlement and financial transactions at Quigley, a Pfizer unit.

He was in court to speak about his work handling asbestos claims, as part of Quigley's plan of reorganization confirmation hearing in the U.S. Bankruptcy Court for the Southern District of New York.

"The goal was to take out, to [resolve] Quigley liabilities through Chapter 11, and as much of the Pfizer exposure as possible," Berland told the court. "The idea was to take out as many of the pending claims as possible."

His remarks came in response to questions from tort victims' attorney James Stoll, with law firm Brown Rudnick.

Stoll asked Berland if "[the] liability that Pfizer was [interested] in resolving globally" was related to the sale of Quigley products.

Berland said that the combination of high costs Pfizer was incurring "was rapidly diminishing the remaining insurance assets."

Berland also told the court that: "Originally, our intention was to uses CCR's [Center for Claims Resolution's] administrative capabilities."

But, he said, after this unit stopped operations Pfizer decided to form its own claim handling unit, modeled in large part on CCR's.

Cross-examination of Berland will continue Friday, the last expected day of the confirmation hearing, which began Wednesday.

As previously reported, in March Quigley obtained court approval for its fifth-amended disclosure statement for its plan of reorganization.

The plan includes an asbestos personal injury fund that will be funded with assets of Pfizer and Quigley, as well as $50 million in cash.

Specifically, the trust will also be funded with $24 million in cash from a joint insurance trust account; $4.6 million in excess cash; $101.9 million of insurance that includes no restrictions of payment of asbestos personal injury claims and $191 million of insurance that does include restrictions of payment of asbestos personal injury claims; stock; a $405 million annuity and a $45.1 million annuity, both payable over 40 years; $23.8 million of receivables owed by insurance companies to Quigley, and dividends from Quigley's post-effective date business operations.

Treatment of creditors will include:

• Holders of priority claims will recover 100% in cash;

• Holders of Pfizer secured claims will recover 54% total through a cash payment equal to 100% of the claim, minus a $30 million contribution to the asbestos personal injury trust;

• Holders of the Reaud, Hatchett and Sherry secured claims, as well as secured bond claims, will recover 100%. Those claimants will proceed with appeals of their respective bond rulings. If the appeals court rules that the claimants do have a deficiency claim, the claim will proceed against the asbestos personal injury claim. If the final ruling reverses the initial judgment against Quigley, any remaining asbestos personal injury claim will be channeled to the trust;

• Holders of unsecured claims will recover 7.5% in cash;

• Holders of asbestos personal injury claims will have their claims channeled to the trust for an unknown recovery percentage; and

• Pfizer, as the sole holder of Quigley's equity interests, will transfer the common stock of reorganized Quigley to the asbestos personal injury trust.

The plan also includes a condition to the plan confirmation that at least 75% of the asbestos personal injury claimants who vote on the plan must vote to approve it.

On March 6, Quigley received court approval to extend its debtor-in-possession financing facility for six months to Aug. 18, 2008.

Quigley, a unit of Pfizer Inc., filed for bankruptcy on Sept. 3, 2004. Its Chapter 11 case number is 04-157-39.

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