- Intertwined talc-related bankruptcies reach crossroads
- Disputes over insurance obligations remain
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(Reuters) – Calls for mediation in two intertwined talc-related bankruptcies are growing as disputes over insurance policies have bogged down efforts to resolve litigation alleging exposure to talc products caused cancer through the Chapter 11 process.
Former Johnson & Johnson talc supplier Imerys, former talc miner Cyprus Mines Corp, two sets of insurers and a lawyer representing future claimants in both cases say mediation is critical to determine how best to move forward in the two cases.
Imerys and Cyprus filed for bankruptcy separately, but are connected as a result of Imerys’s purchase of certain talc-related assets from Cyprus in 1992.
The requests for mediation, filed on Tuesday and Wednesday in Delaware bankruptcy court, came a couple of weeks after U.S. Bankruptcy Judge Laurie Selber Silverstein axed certain votes in favor of Imerys’s proposed reorganization plan, leaving it just shy of the votes it needed to move ahead with the proposal.
Complicating Imerys’s situation is its connection to the Cyprus bankruptcy, which is also the result of talc-related litigation. Cyprus, represented by Reed Smith, filed for bankruptcy in February. Before it filed for Chapter 11 protection, Cyprus struck a deal with Imerys to contribute $130 million to a trust to compensate victims who are suing Imerys, which picked up talc-related liabilities in addition to assets through the 1992 transaction.
The deal also calls on Cyprus to contribute to the trust rights under historical insurance policies it obtained in the decades preceding the 1992 sale. One of the insurers, Century Indemnity Company, says in court papers that its request for a release of future claims that Cyprus could assert under those policies has caused delays.
Both cases are now at a “critical juncture” and need to “break the proverbial logjam,” Cyprus said in its motion for mediation.
Imerys, represented by Latham & Watkins, filed for bankruptcy in 2019 to resolve widespread litigation alleging its talc caused mesothelioma and ovarian cancer. J&J – which recently placed its own talc liabilities into a new entity that then filed for bankruptcy but has maintained that its consumer talc products are safe – has opposed Imerys’s reorganization plan, saying it’s designed to encourage cancer victims to sue J&J instead of Imerys.
The key component of the plan that failed to secure the votes necessary to move forward would have essentially required personal injury claims in the bankruptcy to be handled exclusively through a trust and blocked claimants from suing insurance carriers and other related parties in the future.
In addition to Century, other historical Cyprus insurers, including Columbia Casualty Company and Berkshire Hathaway Specialty Insurance company, have also sought mediation.
While the parties appear to agree that mediation is needed, they do not agree on who should be selected as the mediator, with each constituency proposing a different candidate.
A hearing on the motions is scheduled to occur before Silverstein on Nov. 15.
Imerys, once the U.S.-based arm of French group Imerys SA, was sold for $223 million in 2020. Those proceeds will go to the trust to pay personal injury claims.
The cases are In re Imerys Talc America Inc., U.S. Bankruptcy Court, District of Delaware, No. 19-10289 and In re Cyprus Mines Corp, U.S. Bankruptcy Court, District of Delaware, No. 21-10398.
For Imerys: Jeffrey Bjork, Kimberly Posin, Helena Tseregounis and Richard Levy of Latham & Watkins; and Mark Collins, Michael Merchant, Amanda Steele and Brett Haywood of Richards, Layton & Finger
For Cyprus: Kurt Gwynne, Jason Angelo, Paul Singer and Luke Sizemore of Reed Smith
For Century: Mark Plevin and Tacie Yoon of Crowell & Moring and Marc Casarino of White and Williams
For the other Cyprus insurers: Tancred Schiavoni and Janine Panchok-Berry of O’Melveny & Myers; and Stamatios Stamoulis of Stamoulis & Weinblatt