🏆New Chapter 11 Bankruptcy Filing - ON Marine Services Company LLC🏆
ON Marine Services Company LLC
January 2, 2020
Pittsburgh-based ON Marine Services Company LLC gets the prize: it marks the first sizable chapter 11 bankruptcy case of 2020. This probably wasn’t the “victory” that Pittsburgh residents wanted after the Steelers crapped out at the end of the regular NFL season. Its reward? A plan of liquidation.
Let’s be clear: by “sizable,” we are not referring to operations, employees, or some other definitive metric. Rather, we’re referring to approximately 6,000 asbestos-related personal injury claimants and, by extension, the massive continent liabilities that comes with them. 😬
The debtor dates back to 1929 and has a legacy in manufacturing and selling products used exclusively in steelmaking. The products — called insulated “hot tops” — were single-use products into which molten steel was poured. While that might seem fairly innocuous, “[b]y the mid-1940s, certain of the … “hot top” products contained asbestos as an intentionally included ingredient.” This ceased to be the case after 1978.
The company previously filed for bankruptcy in 2004 which, we guess(?), means this is a Chapter 22. Like, maybe? (We really need a set statute of limitations for using that term). For whatever reason, the company did not address its asbestos-related liabilities in the prior bankruptcy and has subsequently enjoyed a jolly good time of defending cases for the past 14 years. Over 182,000 claims have been asserted against the company: we suppose someone deserves some sort of endurance award because, as noted above, only 6,000 remain on the books. Clearly, though, folks have had enough of this sh*t.
Interestingly, there’s a commentary here about the US tort system. While the 182,000 claims tout horrific injuries, e.g., mesothelioma, lung cancer, esophageal or colon cancer, the debtor highlights that 95% of the claims asserted against it have been dismissed without payment. Nevertheless, a decade+ of defending claims has depleted the debtor of critical insurance/reserves to fund defense and indemnity costs. “[T]he Debtor has reached the point at which its traditional method of dealing with Asbestos Claims is no longer economically feasible.” Said another way, this zombie is finally being put out of its misery.
The debtor filed for bankruptcy with an insurance settlement in hand. The proceeds from that settlement with fund the bankruptcy case and feed a liquidating trust that will be available to claimants as cases proceed.
Jurisdiction: W.D. of Pennsylvania (Judge Bohm)
Professionals:
Legal: Reed Smith LLP (Paul Singer, Andrew Muha, Luke Sizemore)
Claims Agent: Epiq Corporate Restructuring LLC (*click on the link above for free docket access)
