Kaiser Gypsum Files for Bankruptcy Due to Mesothelioma and Asbestos Lawsuits
Last Friday, Kaiser Gypsum, Inc. – a manufacturer of construction and
remodeling materials such as wallboard, joint compound, textured paint,
and various related products – filed for bankruptcy in the United
States District Court for the Western District of North Carolina. The
primary reason, according to the documents submitted by Kaiser Gypsum,
is the number of asbestos and mesothelioma lawsuits that have been
levied against the company over the last four decades.
In one
motion, the company acknowledged that it had been named as a defendant
in more than 38,000 asbestos-related lawsuits since the late 1970s. As
of a month before the bankruptcy petition, the company still had around
14,000 pending lawsuits related to its liability for the asbestos
products that it had created in the 1950s through the 1970s, according
to the court records reviewed by the Mesothelioma Cancer Alliance.
Kaiser Gypsum and Asbestos
Started
in 1952 by Henry J. Kaiser, Kaiser Gypsum is mainly known for the
production of gypsum wallboard (also known as drywall), as well as
related materials including plaster, lath, fiberboard, and an assortment
of construction accessories such as joint compound and textured paints.
Right from the its inception, the company knowingly used chrysotile asbestos in some of its products.
Although
asbestos was linked to a variety of medical problems for many years,
scientific proof of the connection between asbestos and diseases like mesothelioma
was not obtained until the 1960s. Companies like Kaiser Gypsum would
use asbestos in their products due to its inexpensiveness as well as to
take advantage of some of the fire- and heat-resistant properties of the
naturally occurring mineral.
In the 1970s, Kaiser Gypsum’s use of
asbestos in joint compounds and other products opened it up to
liability litigation. Lawsuits were filed by those who had developed
mesothelioma or other asbestos-related diseases – or their families –
and for many years the company fought the allegations of liability. Over
the decades, the company has had to pay hundreds of millions of
dollars, if not more, to victims of asbestos exposure through
settlements and verdicts as a result of these lawsuits.
Creating an Asbestos Trust Fund
Given
the thousands of asbestos lawsuits still pending against the company,
Kaiser Gypsum (along with its parent company, Hanson Permanente Cement,
Inc.) is now attempting to seek an end to its liability. According to
documents filed in the Western District of North Carolina, the company
wants to establish a new asbestos trust fund that would pay existing and future claims due to the company’s exposure of asbestos to employees, customers, and others.
In
most cases, asbestos trust funds require a relatively simple claims
process to be completed by the mesothelioma patient or the patient’s
family. Upon meeting eligibility requirements, patients receive money
from the trust fund to help pay for things like medical bills, travel
costs associated with care, and lost income due to time taken out of
work to receive care.
Asbestos
trust funds are legal entities authorized by section 524(g) of the U.S.
Bankruptcy Code. Essentially, as part of the Chapter 11 reorganization,
Kaiser Gypsum would create an independently operated trust and fund it
with enough money to pay out pending claims, as well as expected future
claims, due to the company’s asbestos liability. In exchange, the
company itself would no longer be legally liable for the asbestos
exposure it caused when making and distributing asbestos-containing materials in the 1950s – 1970s.
The
first asbestos trust fund was set up in the 1980s by the Johns-Manville
Corporation, after that company went bankrupt due to the large number
of asbestos lawsuits brought against it. Since then, many other trust
funds have been established in similar bankruptcy proceedings. Today,
there are approximately 60 trust funds still actively paying asbestos
claims.
Concerns About Kaiser Gypsum’s Bankruptcy
Given Kaiser Gypsum’s recent bankruptcy filing, there are a number of concerns to watch out for.
First
of all, the initiation of bankruptcy proceedings on September 30 is the
first action in what will likely be a long series of legal actions.
Ultimately, these actions will lead to the reorganization of the company
and the development of an asbestos trust fund, if the company’s
bankruptcy plan is approved by the government. However, this process
could potentially take years, during which time individuals who have
mesothelioma due to asbestos exposure caused by Kaiser Gypsum products
could pass away, given the disease’s poor prognosis and low rate of
survival.
Another concern is that any trust fund established by
the company during its reorganization should contain enough money to pay
out the approximately 14,000 pending lawsuits against it. It should
also be funded with enough money to pay future claims, so that it does
not run out of money designated for mesothelioma victims, as other
asbestos trust funds have in the past.
