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5/30/2017 By Kathrin Hashemi

Kaiser Gypsum Bankruptcy
Since Kaiser Gypsum (“KG”) filed for bankruptcy in September 2016, KCIC has been monitoring the impact on filing patterns. During 2015, KG was named as a major defendant on 37% of all complaints filed in the U.S. In 2016, we saw this figure drop to 24%. Through KCIC’s Claims Administration work, we estimate that we process at least 90% of all asbestos-related complaints filed in the U.S. This gives us a unique opportunity to report on various statistics from the data we collect. As we have blogged about previously, the plaintiffs’ bar has a strong incentive to keep evidence of exposure to the products of bankrupt companies out of evidence. We were interested to see what more we might find when digging into the statistics and trends of KG filings.

As the remaining complaints of 2016 staggered in, we refreshed our analysis of the impact of the KG bankruptcy. As anticipated, we found a conspicuous shift in the frequency that KG was named on complaints. We chose to analyze the filing statistics by quarter and looked at some of the jurisdictions with the highest overall filings. Across the board, we saw the same trend — after they filed for bankruptcy at the end of Q3 2016, KG was named significantly fewer times, and in some instances, not at all. Meanwhile, filing trends in each jurisdiction remained constant for the overall population of filings.

In Jonathan Terrell’s blog post where he revealed the cozy relationship between plaintiff firms and the KG bankruptcy, he focused on the fact that a committee of plaintiffs’ counsel was formed and consulted on the reorganization months before the bankruptcy filing. We thought it would be interesting to focus on the filing trends of this committee. The first noticeable and significant drop in filing rates was in Q2 2016.

The steady decline of KG filings continued and finally plummeted as the bankruptcy was made public on September 30, 2016. And while KG is protected by Chapter 11 from actual litigation, there is nothing preventing plaintiffs’ counsel from continuing to name them on complaints. If KG was named so frequently in the past, why the sudden change? Suspicious minds could be forgiven for thinking of the self-interest of the plaintiffs’ bar.

This is one of the many questions we intend to pursue. In conjunction with our Bankruptcy Evidence Verification (BEV) tool, we want to help defendants keep bankrupt companies in evidence. As we continue to monitor KG’s filing statistics, we anticipate that KG will continue to be missing from complaints. Based on the experience with other bankrupt asbestos defendants, we expect that exposure evidence from interrogatories and depositions will also gradually evaporate from the record. Stay tuned. We will continue to report developments with KG.

Kathrin Hashemi

Kathrin Hashemi