Wilmington, Delaware - Georgia-Pacific affiliate Bestwall LLC is filing U.S. Chapter 11 bankruptcy for costs due to asbestos lawsuits brought against the company.
In 1965, Georgia-Pacific acquired a joint compound maker that contained asbestos. Georgia-Pacific discontinued manufacturing the compound with asbestos in 1977, but the asbestos-containing product had already been in use for decades, and it was used in the construction of many homes, schools, and other buildings over the years.
Asbestos filler was used in joint compound for its flame-, moisture- and insect-resistant properties. Plus, it’s thixotropic properties give the compound a smooth, easily spreadable consistency without changing the product’s basic nature.
Tapers and other tradespeople were exposed to airborne asbestos fibers when mixing joint compound paste from powdered product and water. Factory workers who handled bags of raw asbestos fiber when mixing and packaging the joint compound for retail sales were also at risk.
Workers who manufactured and packaged joint compound, freight haulers transporting shipments of it, and sales people in hardware stores were at risk of asbestos exposure, too.
Today, demolition workers and tradespeople working in a room where demolition is being done could become exposed to the deadly fibers.
Since 1977, the company has spent $2.9 billion on legal costs to defend itself in asbestos cases. In 1999, Bestwall’s legal costs were $6 million. Now costs are at approximately $160 million a year.
About 62,000 cases naming Bestwall as a defendant have been filed to date. The company estimates that it has been named in 80% of mesothelioma cases filed annually.
Bestwall is of course not the first company to file for bankruptcy due to asbestos. Nearly another 100 manufacturers in America have gone bankrupt due to asbestos litigation, and many of these have established asbestos trust funds to compensate victims for exposure to the deadly material. Combined legal fees have cost over $50 billion.
Asbestos trusts are often set up to finance future mesothelioma claims. They also protect the defendants from future claims by diverting those claims to the trust funds, rather than the companies themselves. It is unclear at this point whether Bestwall will be required to set up a trust fund for future claims as part of its Chapter 11 proceedings.
As for now, Bestwall will continue business as usual, and its parent companies Georgia-Pacific and Koch Industries will be unaffected by the bankruptcy filing.