Asbestos Legislation II: Section 524(g) Without Bankruptcy

Abstract

Legislation is in season for asbestos litigation. Judges,' lawyers, and legislators all share a belief that asbestos litigation is a national tragedy-a tragedy for victims and defendants alike-which deserves a national statutory solution. The dilemma is: which solution? There are at least five models for legislative reform being considered: (1) a criteria bill, (2) a defined contribution system, (3) a defined distribution system, (4) a hybrid involving all three of the above, and (5) the subject of this discussion, a statute proposing a bankruptcy-type end game without the necessity of filing for bankruptcy.

The purpose of this article is not to support any single alternative, but to provide sufficient background and detail concerning the fifth option so that it can become part of the national conversation on asbestos litigation. This article first reviews the basic issues and historic outcomes in traditional asbestos bankruptcies. Next, it analyzes the intricacies of prepackaged bankruptcies involving asbestos companies. Finally, it outlines a statute that would allow asbestos companies the same protections from asbestos litigation found in bankruptcy without the necessity of these companies actually filing for bankruptcy.