Asbestos Attorney: Fairness in Asbestos Injury Resolution Act of 2005

Your Asbestos Attorney provides you with House Resolution 1390: Fairness in Asbestos Injury Resolution Act of 2005. If you have been injured by Asbestos, this document may help you understand your Asbestos lawsuit. To find out if you have a claim, use our class=ParentLinkShaded>FREE Asbestos Case Evaluator.

SEC. 402. EFFECT ON BANKRUPTCY LAWS.

(a) No Automatic Stay- Section 362(b) of title 11, United States Code, is amended--

(1) in paragraph (17), by striking `or' at the end;

(2) in paragraph (18), by striking the period at the end and inserting `; or'; and

(3) by inserting after paragraph (18) the following:

(19) under subsection (a) of this section of the enforcement of any payment obligations under section 204 of the Fairness in Asbestos Injury Resolution Act of 2005, against a debtor, or the property of the estate of a debtor, that is a participant (as that term is defined in section 3 of that Act).'.

(b) Assumption of Executory Contract- Section 365 of title 11, United States Code, is amended by adding at the end the following:

(p) If a debtor is a participant (as that term is defined in section 3 of the Fairness in Asbestos Injury Resolution Act of 2005), the trustee shall be deemed to have assumed all executory contracts entered into by the participant under section 204 of that Act. The trustee may not reject any such executory contract.'.

(c) Allowed Administrative Expenses- Section 503 of title 11, United States Code, is amended by adding at the end the following:

(c)(1) Claims or expenses of the United States, the Attorney General, or the Administrator (as that term is defined in section 3 of the Fairness in Asbestos Injury Resolution Act of 2005) based upon the asbestos payment obligations of a debtor that is a Participant (as that term is defined in section 3 of that Act), shall be paid as an allowed administrative expense. The debtor shall not be entitled to either notice or a hearing with respect to such claims.

(2) For purposes of paragraph (1), the term `asbestos payment obligation' means any payment obligation under title II of the Fairness in Asbestos Injury Resolution Act of 2005.'.

(d) No Discharge- Section 523 of title 11, United States Code, is amended by adding at the end the following:

(f) A discharge under section 727, 1141, 1228, or 1328 of this title does not discharge any debtor that is a participant (as that term is defined in section 3 of the Fairness in Asbestos Injury Resolution Act of 2005) of the debtor's payment obligations assessed against the participant under title II of that Act.'.

(e) Payment- Section 524 of title 11, United States Code, is amended by adding at the end the following:

(i) Participant Debtors-

(1) IN GENERAL- Paragraphs (2) and (3) shall apply to a debtor who--

(A) is a participant that has made prior asbestos expenditures (as such terms are defined in the Fairness in Asbestos Injury Resolution Act of 2005); and

(B) is subject to a case under this title that is pending--

(i) on the date of enactment of the Fairness in Asbestos Injury Resolution Act of 2005; or

(ii) at any time during the 1-year period preceding the date of enactment of that Act.

(2) TIER I DEBTORS- A debtor that has been assigned to Tier I under section 202 of the Fairness in Asbestos Injury Resolution Act of 2005 shall make payments in accordance with sections 202 and 203 of that Act.

(3) TREATMENT OF PAYMENT OBLIGATIONS- All payment obligations of a debtor under sections 202 and 203 of the Fairness in Asbestos Injury Resolution Act of 2005 shall--

(A) constitute costs and expenses of administration of a case under section 503 of this title;

(B) notwithstanding any case pending under this title, be payable in accordance with section 202 of that Act;

(D) not be affected as to enforcement or collection by any stay or injunction of any court; and

(E) not be impaired or discharged in any current or future case under this title.'.

(f) Treatment of Trusts- Section 524 of title 11, United States Code, as amended by this Act, is amended by adding at the end the following:

(j) Asbestos Trusts-

(1) IN GENERAL- A trust shall assign a portion of the corpus of the trust to the Asbestos Injury Claims Resolution Fund (referred to in this subsection as the `Fund') as established under the Fairness in Asbestos Injury Resolution Act of 2005 if the trust qualifies as a `trust' under section 201 of that Act.

(2) TRANSFER OF TRUST ASSETS-

(A) IN GENERAL-

(i) Except as provided under subparagraphs (B), (C), and (E), the assets in any trust established to provide compensation for asbestos claims (as defined in section 3 of the Fairness in Asbestos Injury Resolution Act of 2005) shall be transferred to the Fund not later than 6 months after the date of enactment of the Fairness in Asbestos Injury Resolution Act of 2005 or 30 days following funding of a trust established under a reorganization plan subject to section 202(c) of that Act. Except as provided under subparagraph (B), the Administrator of the Fund shall accept such assets and utilize them for any purposes of the Fund under section 221 of such Act, including the payment of claims for awards under such Act to beneficiaries of the trust from which the assets were transferred.

(ii) Notwithstanding any other provision of Federal or State law, no liability of any kind may be imposed on a trustee of a trust for transferring assets to the Fund in accordance with clause (i).

(B) AUTHORITY TO REFUSE ASSETS- The Administrator of the Fund may refuse to accept any asset that the Administrator determines may create liability for the Fund in excess of the value of the asset.

(C) ALLOCATION OF TRUST ASSETS- If a trust under subparagraph (A) has beneficiaries with claims that are not asbestos claims, the assets transferred to the Fund under subparagraph (A) shall not include assets allocable to such beneficiaries. The trustees of any such trust shall determine the amount of such trust assets to be reserved for the continuing operation of the trust in processing and paying claims that are not asbestos claims. The trustees shall demonstrate to the satisfaction of the Administrator, or by clear and convincing evidence in a proceeding brought before the United States District Court for the District of Columbia in accordance with paragraph (4), that the amount reserved is properly allocable to claims other than asbestos claims.

(D) SALE OF FUND ASSETS- The investment requirements under section 222 of the Fairness in Asbestos Injury Resolution Act of 2005 shall not be construed to require the Administrator of the Fund to sell assets transferred to the Fund under subparagraph (A).

(E) LIQUIDATED CLAIMS- Except as specifically provided in this subparagraph, all asbestos claims against a trust are superseded and preempted as of the date of enactment of the Fairness in Asbestos Injury Resolution Act of 2005, and a trust shall not make any payment relating to asbestos claims after that date. If, in the ordinary course and the normal and usual administration of the trust consistent with past practices, a trust had before the date of enactment of the Fairness in Asbestos Injury Resolution Act of 2005, made all determinations necessary to entitle an individual claimant to a noncontingent cash payment from the trust, the trust shall (i) make any lump-sum cash payment due to that claimant, and (ii) make or provide for all remaining noncontingent payments on any award being paid or scheduled to be paid on an installment basis, in each case only to the same extent that the trust would have made such cash payments in the ordinary course and consistent with past practices before enactment of that Act. A trust shall not make any payment in respect of any alleged contingent right to recover any greater amount than the trust had already paid, or had completed all determinations necessary to pay, to a claimant in cash in accordance with its ordinary distribution procedures in effect as of June 1, 2003.

(3) INJUNCTION- Any injunction issued as part of the formation of a trust described in paragraph (1) shall remain in full force and effect. No court, Federal or State, may enjoin the transfer of assets by a trust to the Fund in accordance with this subsection pending resolution of any litigation challenging such transfer or the validity of this subsection or of any provision of the Fairness in Asbestos Injury Resolution Act of 2005, and an interlocutory order denying such relief shall not be subject to immediate appeal under section 1291(a) of title 28. Notwithstanding any other provision of law, once such a transfer has been made, the assets of the Fund shall be available to satisfy any final judgment entered in such an action and no longer subject to any appeal or review, (i) declaring that the transfer effected a taking of a right or property for which an individual is constitutionally entitled to just compensation, or (ii) requiring the transfer back to a trust of any or all assets transferred by that trust to the Fund.

(4) JURISDICTION- Solely for purposes of implementing this subsection, personal jurisdiction over every covered trust, the trustees thereof, and any other necessary party, and exclusive subject matter jurisdiction over every question arising out of or related to this subsection, shall be vested in the United States District Court for the District of Columbia. Notwithstanding any other provision of law, including section 1127 of this title, that court may make any order necessary and appropriate to facilitate prompt compliance with this subsection, including assuming jurisdiction over and modifying, to the extent necessary, any applicable confirmation order or other order with continuing and prospective application to a covered trust. The court may also resolve any related challenge to the constitutionality of this subsection or of its application to any trust, trustee, or individual claimant. The Administrator of the Fund may bring an action seeking such an order or modification, under the standards of rule 60(b) of the Federal Rules of Civil Procedure or otherwise, and shall be entitled to intervene as of right in any action brought by any other party seeking interpretation, application, or invalidation of this subsection. Any order denying relief that would facilitate prompt compliance with the transfer provisions of this subsection shall be subject to immediate appeal under section 1291(a) of title 28.'.

(g) No Avoidance of Transfer- Section 546 of title 11, United States Code, is amended by adding at the end the following:

(h) Notwithstanding the rights and powers of a trustee under sections 544, 545, 547, 548, 549, and 550 of this title, if a debtor is a participant (as that term is defined in section 3 of the Fairness in Asbestos Injury Resolution Act of 2005), the trustee may not avoid a transfer made by the debtor under its payment obligations under section 202 or 203 of that Act.'.

(h) Confirmation of Plan- Section 1129(a) of title 11, United States Code, is amended by adding at the end the following:

(14) If the debtor is a participant (as that term is defined in section 3 of the Fairness in Asbestos Injury Resolution Act of 2005), the plan provides for the continuation after its effective date of payment of all payment obligations under title II of that Act.'.

(i) Effect on Insurance Receivership Proceedings-

(1) LIEN- In an insurance receivership proceeding involving a direct insurer, reinsurer or runoff participant, there shall be a lien in favor of the Fund for the amount of any assessment and any such lien shall be given priority over all other claims against the participant in receivership, except for the expenses of administration of the receivership. Any State law that provides for priorities inconsistent with this provision is preempted by this Act.

(2) PAYMENT OF ASSESSMENT- Payment of any assessment required by this Act shall not be subject to any automatic or judicially entered stay in any insurance receivership proceeding. This Act shall preempt any State law requiring that payments by a direct insurer, reinsurer or runoff participant in an insurance receivership proceeding be approved by a court, receiver or other person. Payments of assessments by any direct insurer or reinsurer participant under this Act shall not be subject to the avoidance powers of a receiver or a court in or relating to an insurance receivership proceeding.