Bankruptcy deal may help Libby victims

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Libby asbestos victims got some long-awaited good news on Tuesday with the announcement of a proposed $19.5 million settlement of bankruptcy court litigation between W.R. Grace & Co. and those sickened by exposure from Grace’s former vermiculite plant near Libby.

The legal wrangling has dragged on since Grace, bogged down by asbestos-related claims, filed for Chapter 11 bankruptcy in April 2001.

Under the proposed agreement, Grace will fund the Libby Medical Program with $19.5 million and transfer it to a local Libby Medical Plan Trust that will accept all current members of the program, according to Kalispell attorney Jon Heberling, joint counsel for Libby claimants.

Grace began its Libby Medical Program in 2000, not long after The Daily Inter Lake and other news media exposed the widespread disease and death linked to asbestos exposure from the now defunct vermiculite mine. The program continued to operate while bankruptcy proceedings stretched more than a decade.

While Grace has maintained the medical program, it still is a voluntary plan that can be terminated whenever Graces chooses, Heberling point out.

“This settlement agreement removes that uncertainty,” he said. “When final settlement documents are approved by the bankruptcy court, all objections to the plan of reorganization from the Libby claimants will be settled and their appeals will be withdrawn.” 

Heberling, who met with claimants in Libby on Tuesday, said that separate from the transfer of the Libby Medical Program to the trust, claimants will be eligible to receive distributions from the Asbestos Personal Injury Trust to be established through the Grace plan of reorganization.

Grace announced Tuesday morning its reorganization plan has been approved by the U.S. District Court of Delaware.

The reorganization plan calls for setting up two asbestos trusts to compensate personal injury claimants and property owners, Grace said in a press statement.

The trusts are designed to cover all current and future asbestos claims. At the time Grace filed for bankruptcy protection, the company said it had been named in 110,000 asbestos personal injury claims, according to a Bloomberg Businessweek report.

Grace said money for the trust will come from a variety of sources including cash, rights to purchase common stock, insurance proceeds, payments from third parties and deferred payment obligations.

The timing of Grace’s emergence from bankruptcy depends on several factors, including whether there are further appeals to the reorganization plan.

 Heberling also announced on Tuesday that proposed settlements have been reached with the BNSF Railway Co. and certain insurance companies to provide substantial additional compensation to the Libby claimants.

All settlements are subject to approval of the Libby claimants represented by the firms of McGarvey, Heberling, Sullivan & McGarvey of Kalispell and Lewis, Slovak, Kovacich, & Marr of Great Falls.

Tuesday’s announcements came on the heels of news that hundreds of Libby claimants are  receiving their settlement checks from the state of Montana’s $43 million settlement to compensate asbestos victims.

Individual settlements were expected to range from $30,000 to $52,000, but in many cases Medicare liens are taking a portion of the payments.

While 1,128 claimants are part of the state settlement, the Center for Asbestos Related Diseases in Libby has a caseload of more than 2,800 patients with asbestos disease and has continued to add new patients.

Features editor Lynnette Hintze may be reached at 758-4421 or by e-mail at

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