Bankruptcy filing can disrupt products liability claims

Metex Manufacturing (formerly known as Kentile Floors, Inc.) which manages two industrial facilities in New Jersey, have filed for bankruptcy for a second time since 1992. The reason that they had given both times during bankruptcy filings was the large expenses they would face from asbestos-related products liability claims.

The company claimed in 1992 that they were facing approximately 20,000 asbestos-related claims. Currently, they claim to still be facing around 6,000 products liability claims.

The company came into business during the late 1800s when it began manufacturing cork tile, and the company continually used asbestos while producing the tiles until well into the 1980s. Asbestos has long been tied to a number of diseases affecting the lungs including lung cancer, mesothelioma and asbestosis.

In the Chapter 11 bankruptcy filings, the company has listed assets and debts exceeding $100 million. However, if the company’s bankruptcy filing is approved by the court, it is still difficult to know how it will affect the products liability claims that have been filed against it. As the company reorganizes under Chapter 11, the injured party may have to line up with a number of other creditors in hopes of collecting any sort of settlement or verdict whatsoever.

Companies filing bankruptcy while being sued for products liability claims can be a common problem for attorneys representing clients in such matters. Though clients have legitimate claims against the company for manufacturing defective products that have caused injury, the filing of bankruptcy complicates the matter because it may make it difficult for the injured client to collect.

It’s unfortunate that this has all becomes a part of the negotiation process, but seasoned personal injury attorneys have learned to deal with these companies as well.

Source: Bloomberg, “Metex Manufacturing Files for Bankruptcy for Second Time,” by Dawn McCarty, Nov. 9, 2012