Opinion ID: 152730
Heading Depth: 2
Heading Rank: 1

Heading: Establishment of the Trust

Text: Lawsuits based on exposure to asbestos led Celotex Corporation, and its then wholly-owned subsidiary Carey Canada Inc., (collectively Debtors) to file for protection under Chapter 11 of the Bankruptcy Code. In re Celotex Corp., 204 B.R. 586, 589-90 (Bankr.M.D.Fla.1996). In December 1996, after years of negotiations between the Debtors and other interested parties and multiple proposed reorganization plans, the bankruptcy court entered an order confirming the Debtor's reorganization plan. Id. at 616. A principal feature of the Plan was the creation of the Trust. The Trust was established in accordance with section 524(g) of the Bankruptcy Code, a provision specifically applicable to Chapter 11 reorganizations involving asbestos tort liabilities, to resolve and pay asbestos-related claims. See 11 U.S.C. § 524(g)(2)(B)(i). The Plan Documents [2] establish the process by which claims are determined and paid by the Trust. Under the Plan Documents, property damage claims (PD claims) are administered by a Property Damage Claims Administrator (the Administrator). Plan art. 4.2(a)(8), (b)(8); Trust Agreement arts. 1.2, 3.3(c); APDCRP § IV(A)(34). If the Administrator allows a PD claim, the allowed claim is then submitted to the Trustees for payment to the claimant. Because the Trust's current and future liabilities for asbestos claims exceed the Trust assets, the Trust operates as a limited fund that pays PD claimants a fraction of the value of their allowed claims. The Plan directs the Trustees to pay all allowed PD claims according to a payment percentage, which the Trustees may adjust from time to time to ensure substantially equal treatment of all present and future claims. See Plan art 5.1; Trust Agreement arts. 3.3(c), 3.4(a). In the event of a dispute under the Plan, the bankruptcy court has jurisdiction to enforce and interpret the provisions of the Plan Documents. Plan art. 13.3(c)-(e); accord Trust Agreement arts. 9.13-9.14.