A New York bankruptcy judge yesterday denied a motion that would have created a separate creditors' committee for asbestos-injury claimants, a move that could have bogged down the Chapter 11 restructuring of Dana Corp.
U.S. Bankruptcy Judge Burton Lifland dismissed the request, saying, "This is not an asbestos-driven case."
Lawyers who said they represent more than 50,000 people with asbestos injuries had claimed that the Toledo auto parts maker would be liable for far more than $200 million Dana estimated for asbestos liability.
However, the existing committee of unsecured creditors had resisted the proposal of a separate committee, contending such a separate panel would drain Dana's resources and that the projected asbestos liabilities are too low to justify an additional committee.
Debtors, such as Dana, pay the costs of such committees, which have access to confidential corporate information.
"This is a small piece of this case," Thomas Moers Mayer, a lawyer for the creditors committee, told the judge. "We would prefer not making it into a large piece of the case."
But Sander Esserman, a lawyer for asbestos claimants, said, "Two-hundred million dollars is fantasy You will have a concession [later] by Dana that their liability is a multiple of $200 million."
Asbestos is a fire-resistant substance that was used widely until the 1970s. It has been linked to cancer and respiratory diseases. Claims by people who claim to have been sickened by exposure for the substance have prompted many firms to file for bankruptcy protection, such as Owens Corning, a Toledo maker of roofing materials, insulation, and other building products.
Dana, a Fortune 500 company and Toledo's largest, filed its Chapter 11 March 3 in the Southern District of New York, claiming assets of $7.9 billion and debts totaling $6.8 billion.