%1

Three California communities are appealing a bankruptcy judge’s recent decision that said Peabody Energy Corp.’s bankruptcy plan protects it from global-warming lawsuits, WSJ Pro Bankruptcy reported. The counties of San Mateo and Marin, and the city of Imperial Beach filed an appeal in the U.S. Bankruptcy Court in St. Louis on Sunday, roughly a month after Judge Barry Schermer ruled that discharge and injunction provisions included in the coal-mining company’s reorganization plan extinguish the lawsuits. The lawsuits, which were filed in the months after Peabody’s exit from bankruptcy protection in April, look to hold more than three dozen oil, gas and coal companies liable for greenhouse-gas emissions produced over the decades. In the lawsuits, the California communities connect these emissions to global climate change and rising sea levels, which they say has made them more vulnerable to flooding and other dangers. The lawsuits claim that Peabody, for decades, exported substantial amounts of coal from California. Court papers also show the communities believe the company has been linked to groups that sought to undermine climate science and the connection between emissions and global warming and rising sea levels.

A U.S. bankruptcy judge yesterday granted formal recognition to Takata Corp.’s Japanese court restructuring proceeding, a step forward for the company as it works to address massive damage claims tied to defective air-bag parts, WSJ Pro Bankruptcy reported. The auto-parts maker filed for court protection from creditors in the U.S. and in Japan in June after being swamped with litigation over air-bags that deployed with explosive, sometimes deadly, force. As of the bankruptcy filing, at least 16 deaths and more than 180 injuries were linked to the defect. Yesterday’s hearing in the U.S. Bankruptcy Court in Wilmington, Del., was a pivotal moment for the Japanese company, which is selling much of its business to appease creditors. A lot of the money from the $1.58 billion sale will be routed to the Japanese parent, and then to the U.S. Justice Department to pay $850 million owed on a settlement of a criminal case. That cash will go to car makers that have been footing the bill for the largest recall effort in U.S. automotive history.

Creditors of bankrupt Takata Corp say that the parts maker owes them more than $30 billion after the automotive industry’s biggest recall over its faulty air bags — many times more than the company can repay, Reuters reported yesterday. In the biggest bankruptcy of a Japanese manufacturer, Takata sought court protection from creditors in June as costs and liabilities mounted from almost a decade of recalls and lawsuits. Its air bag inflators have been linked to at least 18 deaths and 180 injuries around the world because they can rupture and shoot metal fragments into vehicles. Takata’s creditors, including automakers such as Honda Motor Co., banks and bondholders, are seeking 3.77 trillion yen ($33.3 billion) from the supplier, mostly to cover recall costs, according to the filing outlining the company’s debt obligations, which hasn’t been made public. Takata had cash and securities worth just 78 billion yen at end-March - equivalent to just 2 percent of the sum creditors are seeking. It also had tangible assets such as buildings and machinery worth 93 billion yen, but much of these went to the company’s purchaser and the rest is needed to make replacement inflators to supply the recalls.

A Georgia-Pacific LLC unit is blaming “abuses in the tort system” for the skyrocketing number of lawsuits that forced it to file for chapter 11 protection on Thursday, Texas Lawyer reported today. Bestwall LLC, which was created in July to manage Georgia-Pacific’s asbestos docket, is the latest firm to file for bankruptcy due to rising numbers of lawsuits brought by plaintiffs who claim they or their family members got mesothelioma from exposure to asbestos in their products. But, in a refrain popular among tort reformers, Bestwall alleges that plaintiffs lawyers aren’t being truthful about all the products their clients were exposed to that might have contained asbestos. “The breadth and magnitude of the asbestos litigation pending against Bestwall are wildly disproportionate to any legal liability Bestwall could possibly have,” wrote Garland Cassada, an attorney for Bestwall, in an information brief filed in bankruptcy court. Cassada, of Robinson, Bradshaw & Hinson, is working alongside Bestwall’s lead bankruptcy counsel, Greg Gordon, a partner in Jones Day’s Dallas office. “The massive increase in the number of claims against, and the size of the plaintiffs’ settlement demands to, Bestwall have been driven by various interrelated shortcomings of and abuses in the tort system.”

Proposed Wyoming rules for coal mining may fill a void in the Cowboy State created by the Trump administration’s push for deregulation within the industry, the Casper Star Tribune reported. The federal agency that oversees mining and reclamation is poised to change its position on self-bonding — a practice allowing firms to post IOU’s based on the strength of their balance sheets in lieu of cash or insurance for post-mining cleanup costs. The administration is considering whether to halt proposed Obama-era rules that discourage self-bonding. Meanwhile, the state’s Department of Environmental Quality is nearly finished with a preliminary update to state regulations, including self-bonding, said Keith Guille, spokesman for the department. Those rules have not been released, but a draft for public input is expected next week, he said. “From our standpoint, self-bonding still has a place, but what that will look like, that is what we are working on,” he said. “Self-bonding is not the only one we are looking at. We need to look at all the financial rules and see what needs to be changed.” A Department of the Interior report released last week stated limiting self-bonding is an overly burdensome rule on the industry, one that could make it difficult for coal companies to continue operating. Whether coal companies should be self-bonded became a key point of contention during the coal bankruptcy period of 2015 and 2016, when Wyoming’s largest coal companies filed for chapter 11, laid off workers and reduced production. Environmental groups argued that companies in a weakening coal sector might eventually walk out on reclamation obligations in Wyoming and the tab could fall on the taxpayer.

Bestwall LLC, an affiliate of Georgia-Pacific LLC, has sought bankruptcy protection after years of asbestos-related costs have piled up, the Wall Street Journal reported today. Bestwall, which once made building products that contained asbestos, sought chapter 11 protection today in the U.S. Bankruptcy Court in Charlotte, N.C. The bankruptcy filing comes as Bestwall looks to survive an onslaught of claims for asbestos damage that date back to the 1970s. While the asbestos litigation dates back nearly 40 years, Bestwall has decided to seek bankruptcy protection as litigation-costs have exponentially increased since 2000, according to data provided by Bestwall representatives. Between 1979 and 1999, the litigation costs averaged about $6 million per year. However, by 2000 the costs began to spike, and since then have cost the company about $2.8 billion.

A trust set up to handle asbestos litigation against Pittsburgh Corning Corp. has reached a $178 million settlement with a group of 2,000 claimants who have been seeking relief since the 1990s, the Pittsburgh Post-Gazette reported yesterday. In a deal disclosed in U.S. Bankruptcy Court in Pittsburgh, the $4 billion trust agreed to pay initially $38 million to the group, called the Cimino claims, which filed its cases against Pittsburgh Corning in Texas in the 1990s. They will receive another $140 million if an arbitration panel decides in their favor. The trust had resisted paying the claims saying some of them never went to trial or their verdicts were overturned. The trust was created to handle claims when Pittsburgh Corning emerged from bankruptcy in 2016. Thousands of people filed claims saying the company’s insulation products caused illnesses. The trust is funded by PPG and Corning Inc. which were original joint venture partners in the company. Earlier this year, Plum-based Pittsburgh Corning was acquired by Owens Corning of Toledo, Ohio.

A judge has ruled Peabody Energy Corp. is protected by its recent bankruptcy from global-warming lawsuits brought by California coastal communities against fossil-fuel companies, the Wall Street Journal reported today. Judge Barry Schermer of the U.S. Bankruptcy Court for the Eastern District of Missouri ruled on Tuesday that discharge and injunction provisions included in Peabody’s chapter 11 plan of reorganization extinguish the lawsuits that were filed months after the coal-mining company left bankruptcy in early April. The litigation was brought by the counties of San Mateo and Marin and the city of Imperial Beach and seeks damages tied to greenhouse-gas emissions between 1965 and 2015. Peabody sought bankruptcy in 2016. The ruling doesn’t affect other companies that are named in the lawsuits, filed in July. The lawsuits say that Peabody for decades has exported substantial amounts of coal from California and claim the company has been linked to groups that have sought to undermine climate science and the connection between emissions and global warming and rising sea levels. Peabody has said the lawsuits lack merit. Judge Schermer said that the California communities were required to bring claims against Peabody during the bankruptcy but, instead, chose not to participate in the chapter 11. Initiating the lawsuits after Peabody left chapter 11 was intended to give these communities an advantage over other company creditors who went through the bankruptcy process, the judge said.

A new report released yesterday from the U.S. Treasury Department said that the Consumer Financial Protection Bureau’s (CFPB) rule banning banks and credit card companies’ ability to prevent customers from banding together to sue them relies on insufficient research and is misguided, Reuters reported. The CFPB rule abolishing “mandatory arbitration clauses” was released on July 10, and was immediately threatened by Republicans in Congress and President Donald Trump’s administration. In its report, the Treasury said that the CFPB failed to meet its statutory requirements in analyzing the need for the ban and in drafting the rule. “The bureau failed to meaningfully evaluate whether prohibiting mandatory arbitration clauses in consumer financial contracts would serve either consumer protection or the public interest,” the Treasury said in its report.