Bestwall LLC, an affiliate of Georgia-Pacific LLC, has sought bankruptcy protection after years of asbestos-related costs have piled up.
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Bestwall, which once made building products that contained asbestos, sought chapter 11 protection on Thursday in the U.S. Bankruptcy Court in Charlotte, N.C.
The bankruptcy filing comes as Bestwall looks to survive an onslaught of claims for asbestos damage that date back to the 1970s. A part of the bankruptcy code allows companies to set up trust funds to pay claims, protecting their future operating funds from potential liabilities.
Nearly 100 companies, including units of Halliburton Co., Garlock Sealing Technologies LLC and most recently Kaiser Gypsum Inc., have sought bankruptcy protection in order resolve asbestos claims, according to Bestwall data provided to The Wall Street Journal. As these companies reorganized and funded billions into asbestos trusts, those like Bestwall were put under the spotlight and became "subject to sharply higher settlement demands," according to Bestwall data.
While the asbestos litigation dates back nearly 40 years, Bestwall has decided to seek bankruptcy protection as litigation-costs have exponentially increased since 2000, according to data provided by Bestwall representatives. Between 1979 and 1999, the litigation costs averaged about $6 million per year. However, by 2000 the costs began to spike, and since then have cost the company about $2.8 billion.
Earlier this year, Georgia-Pacific Holdings reorganized its corporate structure, separating its Georgia-Pacific unit -- known for consumer products such as Brawny paper towels and Quilted Northern toilet paper, as well as building and construction products -- and its Bestwall unit.
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Georgia-Pacific, as well as Bestwall's GP Industrial Plasters LLC subsidiary, aren't part of the chapter 11 filing. Bestwall solely contains the asbestos claims, which stem from asbestos-containing building products in the 1970s.
Georgia-Pacific acquired Bestwall Gypsum in 1965, which makes a compound used in building products, which it stopped manufacturing in 1977, according to a Bestwall representative. By 1979 the former Georgia-Pacific began dealing with asbestos litigation, which has continued through today.
According to information provided by Bestwall, the company's asbestos-containing products represented less than 1% of the total asbestos-containing products made in the U.S. during the 20th century. Still, Bestwall and its predecessor have been named as a defendant in nearly 80% of all mesothelioma, a diseases associated with asbestos exposure, cases in the U.S. each year, according to the data.
Write to Lillian Rizzo at Lillian.Rizzo@wsj.com
Corrections & Amplifications
This article was corrected at 9:11 a.m. ET because it incorrectly stated that GP Industrial Plasters is a unit of Georgia-Pacific in the seventh paragraph. It is a unit of Bestwall.
"Georgia-Pacific's Bestwall Seeks Bankruptcy Protection Over Asbestos Litigation," at 8:00 a.m. ET, incorrectly stated that GP Industrial Plasters is a unit of Georgia-Pacific in the seventh paragraph. It is a unit of Bestwall. (Nov. 2)
(END) Dow Jones Newswires
November 02, 2017 09:21 ET (13:21 GMT)