Halliburton Asbestos Bankruptcy Deal Opposed by Insurers
By Gary Mogel
NU Online News Service, Dec. 22, 12:58 p.m. EST?Insurers that may potentially be on the hook for about half of Halliburton Co.’s proposed $4 billion asbestos settlement have accused the Houston, Texas-based energy services company of misusing Chapter 11 bankruptcy proceedings to resolve its asbestos problems.[@@]
In court papers filed in federal Bankruptcy Court in Pittsburgh, insurers, led by ACE U.S.A., based in Philadelphia, and Hartford Accident and Indemnity Co., a subsidiary of Hartford, Conn.-based The Hartford Financial Services Group, argue that “a financially healthy company which admittedly is able to pay all of its existing and projected debts may not file bankruptcy to boost its stock price or gain a tactical advantage in litigation.”
The bankruptcy applies to the several Halliburton units against which asbestos claims have been filed, including Kellogg Brown & Root and Dresser Industries, but not to Halliburton, the parent company.
In court papers, insurers accused Halliburton of “misusing the bankruptcy laws” because the company allegedly has more than enough funds to pay all its asbestos claims. The insurers also claim that Halliburton agreed to pay too much for more than 400,000 pending claims covered by the settlement and that the overpayments would “drain the trust fund and shortchange future plaintiffs.”
Attorneys for Halliburton, in their reply brief, noted that the insurers should not have a voice in the bankruptcy proceedings because they did not put up any of the $4 billion used to fund the asbestos settlement.
The insurers pointed out that Halliburton has indicated that it expects to obtain insurance company reimbursement for approximately half the amount in the fund, a point Halliburton does not dispute.
Halliburton’s attorneys labeled the insurers’ objections to the settlement and bankruptcy as a “delay tactic.” The brief noted that Halliburton has obtained the consent of more than 98 percent of the asbestos and silica claimants to the settlement.
“Setting aside the legally deficient arguments made by the Certain Insurers, the Certain Insurers lack standing to even file their merit-less briefs,” the brief noted.
The bankruptcy judge must now decide whether the insurers have standing in the case and should therefore be allowed to participate in the proceedings.