Manville to put more money into asbestos fund

NEW YORK — Manville Corp. agreed Friday to inject up to $520 million over seven years into an asbestos trust fund to reverse a cash shortfall jeopardizing compensation payments to tens of thousands of victims.

The agreement is the first step toward meeting more than 130,000 pending and untold future claims by people who contracted lung cancer and other respiratory ailments inhaling fibers from Manville-made asbestos.

The cash infusion, which would not begin until late 1991 at the earliest, is part of an overhaul ordered by a federal judge after the trust ran out of cash and said it would not meet new claims until well into the 21st century.

Asbestos is a mineral that can cause cancer when its fibers are inhaled. Compensating asbestos disease victims and their families is the biggest product liability issue in U.S. history, with cases clogging courts nationwide. Many victims have died before receiving payment.

U.S. District Judge Jack B. Weinstein, who ordered the Manville trust restructuring, in August froze all payouts except in emergency health cases. Attorneys involved in the negotiations said they expected some form of a payment freeze to remain until the trust receives the new Manville money.

That would delay even longer payments to many victims or their families, some of whom have waited more than a decade for compensation from Denver-based Manville and other asbestos manufacturers.

The Manville Personal Injury Settlement Trust was created as part of Manville’s 1988 bankruptcy court reorganization. The trust faces a $30 million deficit by March 31, 1991, and officials have blamed the drain on more claims and bigger settlements than expected.

Attorneys said negotiations are continuing on a plan expected to result in paying Manville trust claimants based on the severity of illness and financial need rather than the date of filing. A group of judges also is trying to fashion a nationwide solution to 90,000 pending lawsuits involving the trust and dozens of companies that made asbestos.

The new payments by Manville will be made as special distributions to all common stockholders. Manville will turn the trust’s convertible stock into common stock, giving the trust about 80 percent of the company’s 120 million outstanding common shares, compared with about 50 percent today.

The trust then would receive 80 percent of a maximum total of $650 million in special distributions to be made over the next seven years, or $520 million.

The first $100 million payment would be made on Dec. 1, 1991, or after the final payment plan is approved by Weinstein, whichever is later. Another $100 million would be pumped into the trust one year later, with $40 million infusions in each of the following two years.

In the fourth through seventh years, the trust will receive an annual distribution based on Manville’s performance, up to a maximum $240 million.

But Manville cautioned that all payments after the initial $100 million would depend on the company’s ability to secure financing through bonds and other sources in the financial markets.