A bankruptcy judge allowed a Hess Corp. subsidiary to stay in chapter 11 to resolve mass asbestos injury claims stemming from an oil refinery the company previously owned in the U.S. Virgin Islands, WSJ Pro Bankruptcy reported. Judge Marvin Isgur of the U.S. Bankruptcy Court in Houston ruled against asbestos-injury claimants who had challenged the chapter 11 filing by Honx Inc., a defunct Hess unit that once operated the company’s oil refinery on the island of St. Croix. The judge said in his ruling that Honx didn’t file for bankruptcy in bad faith, and that the use of chapter 11 as a way to settle mass asbestos liabilities is “a forward-looking solution meant to treat fairly all parties in interest.” In September, lawyers for hundreds of injury claimants had petitioned to throw out the chapter 11 case, arguing that it was filed in bad faith because Honx has no business and no real prospect of reorganization. The bankruptcy was only filed to shield Hess from pending and future asbestos litigation by placing a defunct, nonoperating subsidiary in chapter 11, they said. Honx’s lawyers said that as a responsible corporate parent, Hess is funding the subsidiary’s bankruptcy process to resolve mass asbestos claims, as dozens of other businesses have done since the 1980s. Hess and its affiliates have faced asbestos litigation for decades from contractors and employees who worked at the St. Croix refinery. Between 1995 and 2018, the business settled about 1,100 claims, according to Honx, which changed its name from Hess Oil Virgin Islands Corp., shortly before entering bankruptcy in April.
