Whittaker’s assets ‘melting ice cube’ in face of lawsuits, CRO says

By Sarah Lizee

Olympia, Wash., April 27 – Whittaker, Clark & Daniels, Inc. detailed the events leading up to its Chapter 11 bankruptcy in court documents filed Thursday with the U.S. Bankruptcy Court for the District of New Jersey.

Chief restructuring officer Mohsin Meghji said that since the late-2000s, the debtors have been litigating claims stemming from talc, asbestos- and other chemical compound-related liabilities.

In recent years, the claims have engulfed the debtors in litigation, with over 1,000 pending cases naming the debtors as defendants or co-defendants that allege exposure to asbestos or talc, Meghji said.

Those lawsuits are in addition to potentially tens of millions in costs related to environmental claims.

“The debtors have been managing an active docket of cases across the United States for close to 40 years – a task that has recently become increasingly cumbersome to manage absent a centralized forum to achieve global resolution for the benefit of all tort claimants,” the CRO said in a declaration.

“Dispositions of historical asbestos claims have varied significantly, from outright dismissal to judgments in excess of $76 million.

“Continued prosecution of the asbestos lawsuits will burden the debtors with substantial defense and litigation costs, depleting resources and delaying or limiting recoveries to any legitimate claimants for years to come.”

On March 10, following a recent jury verdict returned against the debtor of more than $29 million, a state court in South Carolina appointed a receiver over the company.

On April 18, in a bench ruling the state court denied the company’s motion to reconsider. The company had argued that it doesn’t have any assets in South Carolina.

The next day, the receiver demanded privileged documents from attorneys representing the company and filed a complaint in the South Carolina state court.

The company disputes the validity and enforceability of the receivership order.

“In light of these recent developments, and the fact that the debtors are currently defendants in lawsuits across more than 30 different jurisdictions, the benefits of Chapter 11 and the court as a centralized federal forum cannot be overstated,” Meghji said.

The company intends to work with claimants’ counsel through a tort claimants committee and future claims representative appointed in the Chapter 11 cases, and engage in “rapid” good faith negotiations, the CRO stated.

“The debtors’ assets are truly a melting ice cube from which all claimants – both current and future – must recover fairly and equitably,” Meghji said.

The debtors intend to use the breathing spell and other tools afforded by Chapter 11 to establish a claims trust and ultimately seek approval of a settlement as part of a Chapter 11 plan.

Whittaker, Clark & Daniels is a talc supplier based in Stamford, Conn. The company filed Chapter 11 bankruptcy on April 26 under case number 23-13575.

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