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Asbestos Claims May Result in Billions to Be Paid From GM Bankruptcy Estate

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On: Wed, Aug 11, 2010 at 5:33PM | By: Sherry Christiansen


Asbestos Claims May Result in Billions to Be Paid From GM Bankruptcy Estate

Asbestos claims may possibly be in the billions for creditors of the GM bankruptcy estate, according to the Bloomberg News. United States Bankruptcy Judge Robert Gerber granted permission to unsecured creditors to seek information from third parties regarding the asbestos claims so that an estimate of cost could be calculated.

Motors Liquidation Co. (formerly General Motors) has planned to create a trust that will allow the company to put aside funds for the future payment of tort claims related to workers who claim they had asbestos exposure when employed by General Motors. The current claims are around $648 million, according to the Bloomberg News, and some experts say that future claims could reach as high as 5 to 10 times that amount.

In the past General Motors utilized asbestos in their brake linings. Workers inhaled the asbestos while working directly with the substance or repairing something that was originally manufactured with the material. The body is unable to break down the fibers of the asbestos material inhaled into the lungs and the material can remain there for 10-50 years and then manifest into a type of cancer called Mesothelioma. The life expectancy of an individual who has contracted the disease is only a few months.

According to Judge Gerber, “This isn’t like the formula for Coke or nuclear launch codes,” referring to testimony about the risks that the information could be misused if disclosed. Being able to calculate the liabilities is an important factor in order for GM to exit bankruptcy, and the future asbestos claims are a significant liability.

Objection raised by holders of the asbestos claims were related to sensitive confidential material being released, such as social security numbers and medical records for 7,000 claimants. The creditors argued that they needed more information regarding details such as age, work history, and diagnoses in order to come up with an informed calculation on the extent of liability claims for Mesothelioma. Gerber said the creditors’ request is legitimate because it seeks “macroeconomic information.” According to the Bloomberg News report: “He directed lawyers for asbestos claimholders and creditors to reach an agreement on a method for keeping information confidential.”

According to Bloomberg News: “Under GM’s transfer of its assets to new General Motors, the debtor received 10 percent of stock in the new company and 15 percent of the warrants. Unsecured creditors say they expect the stock and warrants will be distributed to them.”





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