General Motors continues to face financial difficulties as hundreds of new asbestos claims accumulate each year. With ever increasing awareness of asbestos’s dangerous health effects in both the medical community and the general public, diagnoses of asbestos diseases like mesothelioma are steadily climbing. Companies like General Motors who negligently exposed some of their employees to the dangerous substance are now working to get out from under the thumb of bankruptcy.
With the dramatic rise of mesothelioma diagnoses and subsequent asbestos litigation, its no wonder that many companies which manufactured, distributed, or consumed asbestos products are under drastically increasing pressure from asbestos related lawsuits. General Motors, for example, processed just $2 million worth of mesothelioma claims throughout the 1990′s, a number which rose to an average of $30 million in the years beyond 2000.
In General Motor Corp.’s case, the claims originate from GM employees who were exposed to asbestos containing brake pads in the latter years of the twentieth century. Some of these employees went on to develop mesothelioma, an aggressive and terminal cancer caused by asbestos, and have sued the company for both medical and other damages.
The relentless accumulation of liability has forced many large companies, including General Motors Corp., into bankruptcy. For many corporations which have become tangled in asbestos litigation, the path out of bankruptcy and back into profitable business operations lies in establishing a trust. A trust, in this case, is a separate financial entity funded by the business in question which is responsible for paying all asbestos related claims. Establishing a trust separates liability away from the company’s normal operations and allows it to emerge from bankruptcy. The complication lies in the fact that all of the companies asbestos related liabilities must first be identified and recorded in order to establish the size of the trust.
U.S. Bankruptcy Judge Robert Gerber granted unsecured creditors permission to request hitherto unreleased information from GM in order to estimate the total amount of asbestos claims the company will be facing. Records covering the age, medical history, employment history and other information of GM’s claimants will help their creditors to establish a total cost for asbestos litigation, which in turn will expedite the formation of a trust.
General Motor Corp.’s representatives protested that the private information wasn’t necessary to estimate total damages, and that it could be misused to the detriment of the GM’s claimants or the company itself. Judge Robert Gerber didn’t agree, and held that the creditors will be granted access to the information they need.
While GM had previously held that its total liability could amount to some $650 million, the committee of creditors estimating their debts says the figure could be more like $3 billion.
