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July 21, 2004
Lester Brickman's testimony today on asbestos litigation
Today, Point of Law contributor and Cardozo Law School professor Lester Brickman testified before the House Judiciary Committee Subcommittee on Commercial and Administrative Law on asbestos bankruptcy reorganizations. His written testimony, "Administration and Large Bankruptcy Reorganizations: Has Competition for Big Cases Corrupted the Bankruptcy System?" can be found in its entirety here.
The short answer to his titular question? Yes. Those desiring a more thorough summary of the asbestos litigation scams should consult Professor Brickman's more recent law review article on the subject, On the Theory Class's Theories of Asbestos Litigation: The Disconnect Between Scholarship and Reality.
"In my prepared testimony I present a overview of asbestos litigation (§ IV) which is taken from my treatise-like article on asbestos litigation published earlier this year; a summary of my main conclusions in that article (§ V); and a discussion of the asbestos bankruptcy process (§ VI).
In § VI, which is the core of my statement, I describe practices in asbestos bankruptcies that have become prevalent which, in my judgment, constitute an unprecedented assault on the integrity of the bankruptcy process. I also indicate that bankruptcy courts in asbestos cases have ceded unbridled power to plaintiff attorneys to shape the plan of reorganization and allow plaintiff lawyers to create trusts for the payment of claims that are, in effect, "piggy banks" that the lawyers can tap almost at will irrespective of whether claimants have any asbestos-related disease or exposure to the debtor's products.
I argue that a necessary first step to restore the integrity of the bankruptcy process is to identify and expose the practices and implementations of the bankruptcy code that are having the most egregious effects. I conclude that it is incumbent on the courts to undertake an investigation of what appear to be a number of corrupt practices and actions that I identify in my statement. Failing that, I urge the Judiciary Committee to undertake its own investigation. Finally, I urge the Committee to amend the bankruptcy code to modify certain provisions relating to asbestos bankruptcies that promote bogus claiming and repose near unbridled power in the hands of plaintiff lawyers, resulting in the
Posted by James R. Copland at 02:34 PM
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corruption of the bankruptcy process."