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NC Company’s Bankruptcy Shows Need for Legal Reform

| Tort Reform & Legal Climate

Last month, Bestwall LLC, a Georgia-Pacific affiliate, filed for bankruptcy to establish a trust to resolve current and future asbestos lawsuits. This, after spending approximately $2.9 billion fighting more than 430,000 lawsuits over the course of the last 40 years. While the company accounted for less than 1% of the total asbestos used in more than 3,000 asbestos-containing products manufactured last century, it has been named a defendant in roughly 70-80% of all mesothelioma lawsuits filed annually in the U.S. An attorney for Bestwall LLC said the “breadth and magnitude of the asbestos litigation pending against Bestwall are wildly disproportionate to any legal liability Bestwall could possibly have” and a press release on the bankruptcy noted that, “Bestwall believes that the substantial settlement amounts that have been paid are, at least in part, the product of the same litigation abuses, including suppression of alternative exposure evidence, that were exposed in the recent Garlock bankruptcy case.”

In 2010, Garlock Sealing Technologies LLC filed for bankruptcy in the same Western District Court of North Carolina as Bestwall LLC. During the Garlock legal proceedings, it was revealed that personal injury attorneys were employing unethical legal practices, including hiding evidence of exposure, to gain more damages. Bestwall LLC is just the latest business to fall due to egregious abuses of our legal system. What’s worse is North Carolina has failed to institute protections that would establish transparency and fairness in North Carolina’s costly civil liability and bankruptcy trust system.

As this map from Shook, Hardy & Bacon L.L.P. indicates, 12 other states have already passed legislation to establish transparency in bankruptcy trust claims. Bad acting personal injury attorneys have gamed our legal system for long enough and now, it’s time for North Carolina to take action. Last legislative session, the General Assembly had the opportunity to pass legislation that would have required trust claims to be filed prior to trial instead of after, allowing juries to consider all evidence of claimed asbestos exposures in suit proceedings – a critical component to conducting a fair trial. Unfortunately, the Senate passed Senate Bill 470: Personal Injury Bankruptcy Trust Claims but it failed to advance in the House. Despite this roadblock, the NC Chamber is committed to advancing reforms that foster predictability and transparency in North Carolina’s bankruptcy trust claims system. Our team won’t stop pushing for reform in bankruptcy trust claims until it is achieved, ensuring personal injury attorneys no longer take advantage of vulnerabilities in our legal system.

Gary J. Salamido
Vice President, Government Affairs
North Carolina Chamber