GM's asbestos liability could rise to billions of dollars
A federal judge has granted creditors of General Motors Corp. access to documents that could show the bankrupt automaker will face billions of dollars in claims from victims of mesothelioma, a deadly disease caused by exposure to asbestos.
Bloomberg Business Week reports that while GM estimates it is liable for $648 million in asbestos-related claims, a committee of creditors said the estate may face claims for five to 10 times as much. A ruling by U.S. Bankruptcy Judge Robert Gerber in New York allows unsecured creditors to request documents on GM's liability.
Creditors want more information, such as the age, work history and diagnosis of more than 7,000 claimants in order to estimate the scope of liability claims. Holders of the asbestos claims had objected to the release of the data, claiming it could be misused.
But Gerber ruled that the creditors’ request is legitimate and ordered lawyers for claimholders and creditors to reach an agreement on a method for keeping information confidential, Bloomberg said.
“This isn’t like the formula for Coke or nuclear launch codes,” Gerber said.
For decades, GM and other carmakers used encapsulated asbestos to make brake linings and clutches. The parts wear down after regular use, releasing asbestos-laden dust. According the Environmental Protection Agency, servicing brake linings and clutch facings can release as many as 7 million asbestos fibers per cubic meter, exposing mechanics and customers alike. The fibers can also be transported on work clothing, putting family members of garage workers at risk of asbestos-related diseases, including mesothelioma.
Creditors said they need the claims information to determine the scope of future liability.
In the 1990s, GM saw fewer than 40 mesothelioma claims per year, with average indemnity costs of less than $2 million. Those costs rose to an average of $30 million, with 850 claims submitted per year from 2000 to 2008.
Lawyers for creditors say GM’s liability increased because “all of the traditional asbestos defendants that had not previously filed for bankruptcy did so in the years 2000 through 2003,” turning GM into a “target” defendant, according to Bloomberg.