Attorneys for asbestos liability claimants have challenged the General Motors bankruptcy plan, claiming their exclusion from the process is unconstitutional. Attorneys representing current sufferers from asbestosis and mesothelioma argued that future claimants who may not yet have been diagnosed with an asbestos related disease have been excluded from the proceedings and require representation.
From 2002 to 2008 the asbestos liability claims against GM jumped from $32 million to $648 million. The apparent reasoning behind the argument presented to the bankruptcy court is that this increase in claims warrants consideration because it reflects the rise in asbstos related illnesses that are now coming upon workers who were employed by GM over the last three decades. The attorneys filing the action claimed that due process limits the court’s ability to “enter an order affecting the rights of unknown future claimants absent appointment of a legal representative to protect their interests.”
In other words, asbestos attorney(s) should be permitted to represent potential future creditors of GM based on diseases as yet undiagnosed. The arm of the Justice Department that handles bankruptcy matters, the Office of the U.S. Trustee, last week appointed an official committee of GM’s unsecured creditors, which included two current asbestos liability claimants. Asbestos attorneys have become necessary advocates for the thousands of people affected by workplace asbestos exposure over the last thirty years.
Former workers with asbestos claims also joined with other creditors to oppose the Chrysler transaction with Fiat. Their protests were overruled, and the transfer of assets to Fiat went forward, as did the establishment of a new legal entity holding Chrysler’s domestic assets. In General Motors’ case, there is the option to establish a trust fund for the retirement of asbestos liability claims as they are currently in Chapter 11 bankruptcy. For many asbestos product companies part of their bankruptcy plans approved by the court included trust funds to pay off claims for health damage from asbestos; the trust funds – some over $1 billion – capped the company’s liability for asbestos claims.
Whether GM pursues that course with the United States Government and the Canadian Government included in the bankruptcy plan as major stockholders remains to be seen. Now that saving GM has become a government priority, the rights of asbestos victims and other unsecured creditors regarding the development of a bankruptcy emergence are substantially reduced. The issue could become highly politicized with asbestos attorneys, mesothelioma victims and asbestosis sufferers right in the middle.
