Kane v. Johns-Manville Corp.

Facts

Johns-Manville Corporation was the world’s largest asbestos miner and major manufacturer of asbestos-containing insulating materials and products prior to filing Chapter 11 bankruptcy in August 1982. Beginning in the 1960s, scientific studies confirmed that exposure to asbestos fibers could cause various respiratory diseases including lung cancer, with an unusually long latency period of up to forty years between exposure and development of clinically observable symptoms. By the early 1980s, Manville faced approximately 12,500 lawsuits from over 16,000 claimants, with new suits filed at 425 per month. Epidemiological studies revealed that approximately 50,000 to 100,000 additional suits could be expected from persons already exposed to Manville asbestos, leading to estimated potential liability of $2 billion. The reorganization plan created an Asbestos Health Trust funded with insurance settlements, cash, receivables, stock, long-term notes, and rights to up to 20% of Manville’s yearly profits to satisfy all health claims. A channeling injunction directed all asbestos-related claims to the Trust, prohibiting suits against Manville and related entities. Special voting procedures allowed 52,440 Class-4 present claimants to vote with each claim temporarily valued at one dollar, resulting in 95.8% approval. Lawrence Kane, representing 765 Class-4 creditors with present asbestos disease, challenged the plan’s treatment of future claimants, voting procedures, and compliance with confirmation requirements.