Committee Hosts ASM Meeting With Ethics, Mass Torts Committees

On April 17, 2004, the Professional Compensation Committee conducted a joint educational program with the Ethics and Mass Torts Committees. This was the first tri-committee meeting at ABI that encompassed back-to-back time slots. Short business meetings for each committee followed the program. The program consisted of a panel discussion of a variety of substantive, compensation and ethics issues in mass tort cases, some of which are peculiar to these types of cases. We were fortunate to have three experienced panelists, each of whom has had intensive exposure to the issues in these types of cases.

The panelists included: Hon. Leslie J. Tchaikovsky, U.S. Bankruptcy Judge for the Northern District of California; Theodore L. "Ted" Freedman, Kirkland & Ellis, New York; and Robert M. "Bob" Fishman, Shaw, Gussis, Fishman, Glantz & Wolfson LLC, Chicago. The panel discussion was moderated by Richard P. Carmody, Adams and Reese/Lange Simpson LLP of Birmingham, Ala. Also participating were the committee co-chairs: Richard "Rick" Meth, Pitney, Hardin LLP of Morristown, N.J. (Ethics); and James D. Sweet, Murphy & Desmond of Madison, Wis. and C. R. "Chip" Bowles Jr., Greenebaum, Doll & McDonald PLLC of Louisville, Ky. (Professional Compensation). Ted Freedman is one of the co-chairs of the Mass Torts Committee. Unfortunately, Hon. Judith K. Fitzgerald, Chief Bankruptcy Judge for the Western District of Pennsylvania, was unable to attend because of family illness (though she was instrumental in planning the program).

The panelists discussed the following issues.

• The status of the Asbestos Bill (S. 2290), its prospects for passage and the constitutionality of "rolling up" trusts established since 1993.
• When a case is "ripe" for filing so that it is not dismissed as a "bad-faith" filing. (SGL Carbon, 3d. Cir.)
• The cast of professionals usually appearing during a mass tort case, with elaboration on the roles and duties of special insurance counsel for the debtor and the future claimants' representative and his/her counsel, who have duties of due diligence in valuing the debtor and establishing the parameters of the trust established under §524(g) of the Code.
• Whether insurance companies, particularly non-settling companies, have standing as claimants or parties-in-interest.
• The payment of "facilitation fees" by the debtor, its affiliates or the settling insurers to claimants' attorneys who can influence the acceptance of a consensual plan of reorganization, and the potential conflicts that can result (Combustion Engineering and Western MacArthur).
• The retention of special counsel, particularly insurance counsel on a contingent-fee basis, under §328, the criteria for approval and the ability of the court to re-visit the fee arrangement as "improvident" (Matter of Barron - 5th Cir.).
• Payment of fees to counsel for committee members in addition to committee counsel (First Merchants Acceptance Corp. - 3d. Cir.) and payment of fees to those creditors making a "substantial contribution." Contribution by the settling insurers to the payment of the debtor's administrative expenses as part of a consensual plan of reorganization.