Judge estimates Specialty Products asbestos liability at $1.17 billion

By Jim Witters

Wilmington, Del., May 20 - Specialty Products Holding Corp. and Bondex International Inc. face potential liability for asbestos-related mesothelioma and non-mesothelioma claims, present and future, of $1,166,000,000, judge Judith K. Fitzgerald wrote in an opinion filed May 20 with the U.S Bankruptcy Court with the District of Delaware.

The opinion and subsequent order from the judge sets the value of the mesothelioma claims at $1.1 billion of net present value and the non-mesothelioma asbestos personal injury claims at $66 million of net present value.

The claims stem from mesothelioma patients who claim their exposure to asbestos in the debtors' products caused their disease.

As previously reported, the official committee of asbestos personal injury claimants and the future claimants' representative estimated the value of the claims at $1.6 billion to $1.8 billion.

The companies' estimate was $160 million.

The claims estimation is an essential element in the case, because the debtors' joint plan of reorganization calls for an asbestos trust to be established and to be funded with enough cash to pay in full all present and future asbestos-related claims and all expenses incurred by the asbestos trust, including professional fees.

Nature of the claims

The debtors acquired the Reardon Co. in 1966. Reardon manufactured joint compound for the do-it-yourself market.

Bondex sold more than 10 million bags of the joint compound, which contained chrysotile asbestos, between 1960 and 1978 when distribution to retail outlets halted, according to court documents.

More than 40 million people could have been exposed to the Bondex joint compound, according to estimates.

Specialty Products and Bondex and their parent RPM International Inc. will provide the funding for the trust.

The court heard expert testimony from each side during a weeklong January trial in the U.S. Bankruptcy Court for the District of Western Pennsylvania.

The parties filed post-trial briefs on Feb. 6 and made final arguments on March 4.

According to court documents, evidence obtained during previous asbestos cases show that the debtors:

• Failed to disclose that their products contained asbestos;

• Never tested their products to determine whether they fell within acceptable levels of asbestos content;

• Continued to encourage the sale of its asbestos-containing products in advance of an anticipated ban;

• Initially elected not to reformulate the products to be asbestos-free; and

• Eliminated asbestos from the products "in just eight months as the ban was bearing down on the company."

Specialty Products is a subsidiary of RMP International, a Medina, Ohio-based producer of specialty chemicals. The subsidiary filed for bankruptcy on May 31, 2010 under Chapter 11 case number 10-11780.

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