In re Grace

563 B.R. 150, 2016 Bankr. LEXIS 4478, 63 Bankr. Ct. Dec. (CRR) 141
CourtUnited States Bankruptcy Court, D. Delaware
DecidedDecember 28, 2016
DocketCase No. 01-1139 (KG)
StatusPublished

This text of 563 B.R. 150 (In re Grace) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Grace, 563 B.R. 150, 2016 Bankr. LEXIS 4478, 63 Bankr. Ct. Dec. (CRR) 141 (Del. 2016).

Opinion

OPINION RE MOTION OF THE REORGANIZED DEBTORS TO ENFORCE DISCHARGE & INJUNCTION OF PLUM CREEK TIMBER CO.’S CLAIM

KEVIN GROSS, United States Bankruptcy Judge

INTRODUCTION

W.R. Grace & Co. and its affiliated reorganized debtors (collectively, “Grace” or the “Debtors”) confirmed and consummated a Plan of Reorganization (the “Plan”) (D.I. 26868) on January 31, 2011 (D.I. 26155), effective on February 3, 2014 (D.I. 31700). The Plan provides for a general discharge, a specific discharge of asbestos property damage liabilities and for a related discharge injunction. The Debtors have moved (the “Motion”) to enforce the discharge and injunction provisions of the Plan against the claim of Plum Creek Timber Co. (“Plum Creek”).

Federal Rule of Bankruptcy Procedure 3003(c)(3) requires proofs of claim to be filed prior to a bar date established by the bankruptcy court. After this bar date, a claimant cannot participate in the reorganization unless they establish sufficient grounds for the failure timely to file a proof of claim. Chemetron Corp. v. Jones, 72 F.3d 341, 346 (3d Cir. 1995).

The notice Grace provided (the “Bar Date Notice”) stated “any creditor having a claim against the Debtors, no matter how remote or contingent, must file a proof of claim before the Bar Date.” D.I. 1926-3, ¶ 9. The Bar Date Notice further defined asbestos property damage claims (“Asbestos PD Claims”) very broadly and inclusively as:

Claims as of the time immediately preceding the Bar Date that relate, for example to the cost of removal, diminution of property value or economic loss caused by asbestos in products manufactured by the Debtors or from vermiculite mined, milled, or processed by the Debtors. More specifically, Asbestos Property Damage Claims are those claims against, or any debt, obligation or liability of, one of more of the Debtors, whether in the nature of or sounding in tort, contract, warrant or any other theory of law or equity for, relating to or arising by reason of, directly or indirectly, property damage, including, but not limited to, diminution in the value thereof, or environmental damage or economic loss caused or allegedly caused, directly or indirectly, by asbestos in products or materials, manufactured, sold, supplied, produced, specified, selected, distributed or in any way marketed by one or more of the Debtors or from vermiculite mined, milled, or processed by the Debtors arising or allegedly arising, directly, or indirectly, from acts or omission of one of more of the Debtors, including, but not limited to, all claims, debtors, obligations or liabilities for compensatory and punitive damages.

D.1.1926-3 (emphasis original).

The Court approved and entered the Bar Date Notice and Bar Date Order on April 22, 2002. These covered all pre-Petition claims relating to asbestos property damage, as well as non-asbestos claims and medical monitoring claims. D.I. 1960 and 1961.

[153]*153The Bar Date Notice clearly informed recipients that they were responsible for filing a proof of claim even if the claim was remote and contingent. The Bar Date Notice provided that:

1. WHO MUST FILE A PROOF OF CLAIM.
You MUST file a Proof of Claim if you have a CLAIM against the Debtors including but not limited to any pre-petition Non-Asbestos Claim or any present Asbestos Property Damage Claim
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* * *
Therefore, any creditor having a claim against the Debtors, no matter how remote or contingent, must file a proof of claim before the Bar Date.
(Capitalization and bold in original).
The Notice also described the consequences for not filing a proof of claim:
9. EFFECT OF NOT FILING A CLAIM.
ANY HOLDER OF A ... ASBESTOS PROPERTY DAMAGE CLAIM ... WHO FAILS TO FILE A PROOF OF CLAIM ON OR BEFORE THE BAR DATE FOR ANY CLAIMS SUCH CLAIMANT HOLDS AGAINST ANY OF THE DEBTORS ... SHALL BE FOREVER BARRED, ESTOPPED AND ENJOINED FROM ASSERTING ANY SUCH CLAIMS ...

1926-2, p. 3, ¶¶ 1 and 9. (Capitalization and bold in original.).

Thus, the definition of Asbestos PD Claims was broad and the consequences of not filing a proof of claim severe. The definition included claims for the cost of removing asbestos containing material as well as indirect claims for economic loss and loss in property value. D.I. No. 1926-2. The Court will grant the Motion • to enforce the discharge and injunction of Plum Creek’s claim as explained in this Opinion.

JURISDICTION

The Court has jurisdiction over this matter and the judicial authority to issue a final order pursuant to 28 U.S.C. §§ 157 and 1384. This is a core proceeding pursuant to 28 U.S.C. 157(b).

FACTS

Plum Creek is one of the largest private landowners in the United States, managing more than 6 million acres in 19 states.1 From 1963 until 1990, Grace owned and operated a mine in Libby, Montana.2 There, miners extracted vermiculite, a natural, lightweight mineral which is fire-resistant and serves as a good insulation product.3 Vermiculite is non-asbestos but there was also a deposit of asbestos at the mine.4 The vermiculite from Libby was contaminated with asbestos and when processed the vermiculite generated asbestos infected airborne dust.5

The Libby asbestos matters were highly publicized, both nationally and locally, since the early 2000s. Libby was the subject among others of a PBS documentary and reports by NBC’s Dateline, CBS’s 48 hours, and ABC’s 20/20. When Grace filed for bankruptcy, there was heavy publicizing, including a number of Libby-related lawsuits. One of the lawsuits was a class action which included Plum Creek in the [154]*154class.6 The lawsuit was for environmental contamination and loss of property rights arising from Grace’s vermiculite mining. The suit sought remediation and damages.

Beginning in 1999, the Environmental Protection Agency (“EPA”) sampled air and dust around Libby and investigated asbestos levels.7 The testing was publicized and thoroughly covered by local and national news.8 In March 2001, the EPA filed a lawsuit in the Montana federal district court seeking recovery of costs incurred in response to asbestos issues relating to Grace.9 On April 2, 2001, the Debtors filed voluntary Chapter 11 petitions and continued to operate as debtors in possession. On April 22, 2002, the Court entered an Order setting March 31, 2003, as the bar date (the “Bar Date”) in Grace’s Chapter 11 case. D.1.1963.

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Cite This Page — Counsel Stack

Bluebook (online)
563 B.R. 150, 2016 Bankr. LEXIS 4478, 63 Bankr. Ct. Dec. (CRR) 141, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-grace-deb-2016.