A North Carolina bankruptcy judge, Judge Laura T. Beyer, took a rare step this week, sanctioning nearly 500 asbestos claimants involved in the Chapter 11 case of Georgia-Pacific’s unit, Bestwall LLC. The fines were imposed to compel the completion of critical forms necessary for the debtor’s claim estimation process.
Unusual Measures in Bankruptcy Proceedings
During a hearing held in Charlotte on Wednesday, Judge Beyer of the U.S. Bankruptcy Court for the Western District of North Carolina announced sanctions against 493 claimants who had failed to complete sections of a personal injury questionnaire. These sections sought information regarding their claims against other asbestos-related defendants. The judge ruled that those who remained non-compliant would face daily fines of $100, effective in two weeks.
Expressing frustration, Judge Beyer highlighted that the majority of non-compliant claimants were represented by specific plaintiffs’ law firms, suggesting a coordinated effort to withhold information. She criticized this noncompliance as a direct challenge to the court’s authority.
Representatives for Bestwall, the debtor, argued that the imposition of fines had already prompted compliance from a significant number of mesothelioma claimants. They hoped the threat of sanctions would motivate the remaining claimants to fulfill their obligations.
Bestwall sought a $500 daily fine for non-compliant claimants, while attorneys for the claimants proposed a $100-per-day penalty. They contended that the court’s order compelling completion of the forms lacked legal merit, and claimants were not adequately notified of the requirement.
Bestwall LLC, a Georgia-Pacific subsidiary burdened with legacy asbestos liabilities, filed for bankruptcy in 2017. The company aims to establish an asbestos claims trust through Section 524(g) of the U.S. Bankruptcy Code, necessitating an analytical estimation procedure to ascertain the trust’s value.
The ongoing legal battle underscores the complexities and challenges inherent in managing asbestos-related bankruptcies. The judge’s actions signal a commitment to ensuring compliance and advancing the bankruptcy proceedings fairly and transparently.
