Trust fund is set up for asbestos victims

By Marylynne Pitz, Pittsburgh Post-Gazette

The contentious seven-year bankruptcy of Pittsburgh-based H.K. Porter Co. ended yesterday when a federal judge approved the establishment of a $104 million trust fund.

It will be applied toward $2 billion worth of claims from about 120,000 people who say they were harmed by asbestos exposure.

"We've gone from zero to $104 million. We created a fund for these people. Now the next stage is setting up a distribution scheme," said Douglas A. Campbell, an attorney for the committee of H.K. Porter's unsecured creditors.

By the time H.K. Porter Co. filed for bankruptcy in February 1991, the steam locomotive manufacturer faced 72,279 lawsuits from people seeking to recover for asbestos-related illnesses. The company declared that those claims, totaling $2 billion, overshadowed its assets of $40 million.

The lawsuits stemmed from Porter's ownership between 1959 and 1983 of a company that manufactured safety clothing and other articles from asbestos, which has been linked to cancers and lung diseases. Porter also owned companies in the steel and other businesses.

The central issue in the bankruptcy was how to deal with those claims. In 1992, Campbell sued Porter on behalf of the company's unsecured creditors - including the asbestos victims.

Campbell's lawsuit charged that Porter's owner, the late financier Thomas Mellon Evans, orchestrated a plan to prevent H.K. Porter from paying out millions of dollars in asbestos claims that began accruing in the 1970s and '80s.

Evans accomplished his goal, Campbell alleged, by siphoning $150 million in assets from the company over a five-year period. Evans, who died last July at age 86, was a fixture on Forbes magazine's annual list of the richest Americans.

After protracted litigation, Jeffrey S. Sabin of New York City, a lawyer for Evans and his businesses, agreed to provide $31 million to the asbestos trust.

The rest of the trust fund money will come from about $47 million in liquid assets held by H.K. Porter Co. and $25 million from the Pennsylvania Insurance Guaranty Association and additional insurance coverage held by H.K. Porter.

The H.K. Porter Asbestos Trust will be overseen by lawyer Mark Gleason of Pittsburgh.

Under the plan, claimants will receive about 5 to 6 cents for every dollar they claim.

The amount of payments will also be determined by the types of cancer or nonmalignant illnesses that victims contracted.

People with mesothelioma, a form of cancer caused only by asbestos, will receive $20,000. People who contracted lung cancer from asbestos exposure will receive $12,000. Victims with other forms of cancer will receive $7,500, and people who have less serious illnesses, such as asbestosis, will receive $3,750.

One provision of the settlement is that asbestos victims cannot sue H.K. Porter or the businesses owned by Evans or his relatives to recover additional funds.

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