Clapper, Patti, Schweizer and Mason

Quigley Company for many years made asbestos-containing products. Pfizer bought Quigley in 1968. People exposed to the asbestos in Quigley’s products developed asbestos related diseases, including mesothelioma and lung cancer.  Lawyers representing clients with mesothelioma and lung cancer began filing claims against Quigley and Pfizer in the 1980s.

In 1992 Quigley sold its assets and began concentrating on resolving its asbestos liabilities. Then in September of 2004 Quigley sought Chapter 11 bankruptcy protection.  Shortly before Quigley sought Chapter 11 protection, Pfizer agreed to pay those claimants who agreed to settle, who totaled more than 80 percent of the personal-injury claimants, a total of $430 million.  Pfizer paid half of that settlement in 2005 and agreed to pay the rest when Quigley's plan is confirmed.

Judge Stuart M. Bernstein of the U.S. Bankruptcy Court recently ruled that Quigley's current plan to repay creditors and compensate asbestos claimants can go forward to a vote. An earlier version of Quigley's plan failed when a judge ruled that Pfizer's pre-bankruptcy arrangements with asbestos claimants unfairly tainted the balloting. Under the new plan, Pfizer agreed to kick in an extra $100 million - in addition to the $550 million it had already set aside - to fund the payments to asbestos victims.

A group of asbestos personal-injury claimants who had opposed the current plan called it an attempt to avoid responding to "countless dying cancer victims." The committee argued that the proposed plan treats creditors who settled with Quigley and Pfizer before the bankruptcy filing more favorably. The group argued that Quigley's plan lumps both settling and non-settling asbestos claimants into the same class, even though the settling claimants will get money from both Pfizer and the Quigley trust.

Bernstein agreed that the plan raises questions about the treatment of asbestos creditors, but said that its disclosure statement does provide creditors with enough information to make informed decisions. Bernstein added that Quigley's classifying the settling and non-settling asbestos claimants together doesn't mean the plan is unconfirmable. "The fact that some members of the class may also look to third parties for payment, while others in the class do not have the same right, does not mandate separate classification," he said. Also, the non-settling creditors can still pursue claims against Pfizer for damage inflicted by Pfizer’s own asbestos products, while those who settled with the drug maker are barred from pursuing any claims against Pfizer in the future, according to the judge. Those asbestos claimants who settled with Pfizer prior to Quigley filing for Chapter 11 "assumed a risk" the non-settling claimants avoided. The settling claimants "surrendered their rights to pursue any claims against Pfizer."

Bernstein's ruling means Quigley can send the plan to creditors for a vote.

Jack K Clapper
Clapper, Patti, Schweizer & Mason
415-332-4262
800-440-4262
jkc@clapperlaw.com