Bankruptcy Bonus: Peabody Shielded From California Lawsuits On Climate Damages
Handy, huh?
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But he may have a tough task bringing Peabody back into the lawsuits, bankruptcy experts say. That’s because most of the damage the cases lay at Peabody’s feet stems from activities prior to its bankruptcy filing. As a result, Schermer ruled, the company’s liability for those activities was extinguished by the bankruptcy.
“Does bankruptcy shield them from torts committed in the past? The answer is yes,” says Lynn LoPucki, a bankruptcy expert at UCLA law school.
Nor is it unusual for a business to use bankruptcy court as a shield against historic misdeeds. In perhaps the most notable case, Johns Manville filed for bankruptcy in 1982 as it faced a torrent of lawsuits from people who claimed they experienced lung disease from inhaling asbestos the company manufactured. As part of its bankruptcy reorganization, the company established a $2.5-billion trust to compensate victims, and emerged from bankruptcy in 1988.
A closer case involves the 2009 bankruptcy of General Motors, a fast-track process that was completed in only 40 days. In May, the Supreme Court refused to block lawsuits over a faulty ignition switch in GM cars that led to sudden stalls and at least 124 deaths, even though the casualties stemmed from pre-bankruptcy actions. The court upheld a lower court ruling that although the faulty cars were manufactured prior to 2009, GM had concealed the defect and taken insufficient steps to inform people they might have a claim to bring to bankruptcy court.
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http://www.latimes.com/business/hiltzik/la-fi-hiltzik-peabody-coal-lawsuits-20171128-story.html