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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (14254)	4/10/2002 6:47:22 AM
From: Bob Rudd	Read Replies (1) \| Respond to of 78700

Asbestos: There have been several discussions on companies hit [& bankrupted] by asbestos. An inflection point may be at hand...or not, too early to tell: Following is an excerpt from David Faber's report on a deal in the works on FMO Full article: online.wsj.com <<While there are many factors unique to Federal Mogul's situation that have allowed it to forge a potentially quick emergence from bankruptcy, the agreement could, nonetheless, become the blueprint by which other bankrupt companies that face massive asbestos lawsuits, forge a way out of bankruptcy quickly. Those companies, such as W.R. Grace (GRA), Owens Corning (OWC), Armstrong World Industries (ACK), Sealed Air (SEE) and many others, were forced into bankruptcy after lawsuits seeking damages for alleged asbestos related injuries piled up. In many of the bankruptcies, the asbestos plaintiffs have laid claim to all of the equity of a reorganized company. The willingness of asbestos plaintiffs to accept 50.1% in the case of Federal Mogul may open the door for future settlements based on the same formula. The alternative is for the bankruptcies themselves to drag on for years, while the companies languish.>> There was also a peice in the NYT: A Surge in Asbestos Suits, Many by Healthy Plaintiffs nytimes.com The companies that file for bankruptcy protection are automatically excused from lawsuits against them. (By filing for bankruptcy, the companies essentially agree to pledge most or all of their equity — their assets, less their debts — to a trust that will be used to pay off asbestos claims. Though the companies continue to operate, they often have trouble getting loans or expanding and some have had to cut their work force to save cash. Their current shareholders are left with little or nothing. In return, the companies receive permanent protection from asbestos lawsuits.)