Legal Case Summary

Good afternoon, your Honours. My name is Garland Casadam from North Carolina. I represent the first appellant you'll hear from from today Garlock ceiling technologies. Mr. Monaco and I have agreed to split the time 15 and 15. So Garlock will take 15 total minutes. Mr

. Monaco. That's fine. Yes. And we've split our time 12 minutes under reckon three minutes for for a bottle. That's fine as well. Thank you

. You're on a Garlock ceiling technologies was a long time code of an of graces before it filed for bankruptcy prior to graces bankruptcy. Garlock and Grace were named together in a continuous stream of thousands of cases in which plaintiffs alleged injuries under on the standing issue. What is the relevant injury that we should be looking at? The relevant injury is the injury to Garlock's rights to seek contribution and to to be able to identify its codifying it codependence and receive proper settle from payments made by the Grace Trust to joint defendants. So the injury in this case is that Garlock as a codependence could be held level and jointing several states jointly. It could be but in the record is no indication of any potential client either past, present or future potential claim against Grace. Is there? Well not at all you are we think before the bankruptcy case when Garlock and Grace were sued together in thousands of claims Garlock had rights to contribution in those cases now there's no evidence in the record that Garlock ever needed to assert those right

. Okay. But those rights existed in fact a right to contribution rising at the time of the the tort is committed. It's never never asserted though right. That's correct, John. It was never asserted. And how how long have you been dealing with these bestest liabilities at Garlock? Garlock has been dealing with as best as claims for for decades

. Okay. But yes. Decades of time never asserted a right and the contingencies would have to occur in order for there to be a future problem is somebody would have to sue you both then there'd have to be an assertion of joint several liability and a finding. So having never had it happen before and those things standing in the way you how is this not explain how this isn't so speculative as to warrant the district court's finding. Well first of all you're and I think you're defining down what Garlock's rights were actually they when Garlock is sued it's rights don't arise when it actually suffers a judgment pays graces share when Garlock is sued. You know I keep your voice up

. Yeah just yeah just move it. You're gonna have to move that up. That's it. Okay. Thank you. I take your point that there's perhaps in the abstract some rights exist but the question we have to deal with is has there been any injury in fact have you suffered some loss or you likely to suffer some loss if you say I have a right but that in Koei right is something you've never asserted it's never been determined to have any value at all and you've to date not done anything and there's guesswork about whether that'll happen in the future I'm trying to ask you if you'll wrestle with the district court's specific statement that that's just too speculative

. Well it's it's not I think the record is clear that these rights were very valuable to Garlock before the bankruptcy case when Garlock and Grace was sued Grace was paying the lion's share of the liability. Garlock was a nominal defendant and and really paid very small parts of the liability. In 2000 and 2001 there was a bankruptcy way and Grace and eight other top tier defendants went into bankruptcy and the the testimony in this case from the claims expert of the of the planned proponents was that when that bankruptcy occurred Garlock and other co-definance liabilities multiplied because the defendants were able to and did or plaintiffs excuse me were able to and did demand that co-definance pick up the missing shares. But let me just add to that I mean there's bankruptcy standing that statutory standing and then there's constitutional standing and for cons there to be constitutional standing you have to have an injury or possibility of injury that's sufficiently imminent and what Judge Jordan's getting at it if it was so sufficiently imminent about to occur and we've gone all this time without anything going to be occurring then at some point you don't have standing. Don't believe it's correct to assume that nothing has occurred there's a plan that's been done. What what injury have you actually had to to you it is there officially imminent

. Yeah upon entry upon entry of the injunction Garlock is prohibited in cases in which it's sued from joining Grace to have Grace held responsible for the bankruptcy which is now in excess of 10 years have you ever filed a proof of claim. No we have never filed a proof of claim but the case law is clear that Garlock that a proof of claim is not necessary. I understand that. So you can't point to a particular case where you paid more than you thought was your share and you felt that you should have filed a claim for contribution against Grace. That's right I cannot point to a specific case. Okay but Garlock still has that right

. Garlock has the right. Well once it gets named in a lawsuit Garlock has the right to join Grace to that lawsuit. Now when did Garlock file for protection for chapter? In June of 2010 after the confirmation trial and the Grace case. Now it's been let me spend just a moment more on standing just to make clear the court understands our position. Once Grace's plan is confirmed and the injunction is entered then Garlock is it's rights against Grace are permanently taken away. It cannot join Grace and its rights are replaced

. It's by being channeled to a trust and a trust that we intend operates under with a lack of transparency. With trust distribution procedures that appear to be designed to make it difficult if not been possible for for Garlock to actually identify cases in which Garlock and Grace are. But it seems that the only thing that you really have perhaps going for you is that there's a stipulation which says that it's likely that you will be subject to claims. And yet at some point likely diminishes when you haven't been subject to claims for such a lengthy period of time. Well all the reason we haven't been subject to claims genres because Grace is in bankruptcy for the last. Well I mean how about before 2010? And before 2010 we were constantly sued in cases in which Grace was a codependent and we constantly benefited from our rights against Grace because plaintiffs could not seek to recover from Garlock for amounts that they had recovered from Grace

. But that's been true for the decade right? I'm sorry for a decade. The bankruptcy has been in existence for a decade. My correct. Grace is bankrupt for about 12 years. Right okay. I take your argument to be we had some we were getting a benefit in negotiating with asbestos claimants and potential claimants because we had Grace in front of us. They were running interference and now because of the injunction and the protections of bankruptcy they're enjoying we're not getting that that harms us. Am I I understood the gist of the argument? Yes they were more than running so parents they were. If that's the if that's the nature of it. I the question I'm coming back to is this has been this this has been the case for over a decade and yet there's no proof of claim and there's nothing in the record you can't point this to anything that shows it that in that in that 10 12 years you've suffered any harm by somebody coming to you and suing you and you being facing the liability that should be shared by Grace and well let's be misunderstood the record please correct. No I think you have this understood the record and the stipulation says that the Grace and the plan propended stipulated that during the course of the bankruptcy gate a number of individuals who claim to hold asbestos P.I

. They were running interference and now because of the injunction and the protections of bankruptcy they're enjoying we're not getting that that harms us. Am I I understood the gist of the argument? Yes they were more than running so parents they were. If that's the if that's the nature of it. I the question I'm coming back to is this has been this this has been the case for over a decade and yet there's no proof of claim and there's nothing in the record you can't point this to anything that shows it that in that in that 10 12 years you've suffered any harm by somebody coming to you and suing you and you being facing the liability that should be shared by Grace and well let's be misunderstood the record please correct. No I think you have this understood the record and the stipulation says that the Grace and the plan propended stipulated that during the course of the bankruptcy gate a number of individuals who claim to hold asbestos P.I. claims against Grace have asserted claims against Gorillac alleging that Gorillac contributed to their entries as well. In addition to that you're on a we submitted numerous complaints that were filed by plaintiffs who alleged that if Grace had not been in bankruptcy they would have sued Grace as well in the cases they were serving against Gorillac. I'm still missing your I don't need to be a tooth but I'm missing your point the fact that you got to your assertion is I'm injured in fact because Grace is in bankruptcy and protected and the question that's being put to your repeatedly by people appears when have you ever asserted that you had some monetary injury against them either by way of proof of claim or it's a judgment that you can hold up to say this was what we would have served if it's in there you haven't pointed to us and that's what's making it difficult to imagine that well it's gonna happen in the future it hasn't happened for the last 12 years but trust us it's likely to happen now. No it has happened in the last 12 years John or if Gorillac if it hadn't been for the automatic stay then in each of those cases in which Gorillac was sued and Grace contributed to the injury Gorillac could have joined Grace to the lawsuit and started a claim against Grace to make sure that it was held responsible for and paid it's share of the injury instead Gorillac proceeded in those cases without Grace. This feels a little circular because it sounds to me as if you're saying we would have sued them and we would have had joint several liability and we would have made them contribute but for the automatic stay and the fact that we never filed a proof of claim we never showed up in court and said there is joint and several liability and pointed to what we were owed don't don't pay attention to that because there was the automatic stay. There would have been no basis for filing a proof of claim counter because the code is clear that a that a contingent contribution claim can't be allowed until it's actually come into fruition so there would not have been a basis for filing a proof of claim in that circumstances but we had rights and those rights are taken away by the injunct

. claims against Grace have asserted claims against Gorillac alleging that Gorillac contributed to their entries as well. In addition to that you're on a we submitted numerous complaints that were filed by plaintiffs who alleged that if Grace had not been in bankruptcy they would have sued Grace as well in the cases they were serving against Gorillac. I'm still missing your I don't need to be a tooth but I'm missing your point the fact that you got to your assertion is I'm injured in fact because Grace is in bankruptcy and protected and the question that's being put to your repeatedly by people appears when have you ever asserted that you had some monetary injury against them either by way of proof of claim or it's a judgment that you can hold up to say this was what we would have served if it's in there you haven't pointed to us and that's what's making it difficult to imagine that well it's gonna happen in the future it hasn't happened for the last 12 years but trust us it's likely to happen now. No it has happened in the last 12 years John or if Gorillac if it hadn't been for the automatic stay then in each of those cases in which Gorillac was sued and Grace contributed to the injury Gorillac could have joined Grace to the lawsuit and started a claim against Grace to make sure that it was held responsible for and paid it's share of the injury instead Gorillac proceeded in those cases without Grace. This feels a little circular because it sounds to me as if you're saying we would have sued them and we would have had joint several liability and we would have made them contribute but for the automatic stay and the fact that we never filed a proof of claim we never showed up in court and said there is joint and several liability and pointed to what we were owed don't don't pay attention to that because there was the automatic stay. There would have been no basis for filing a proof of claim counter because the code is clear that a that a contingent contribution claim can't be allowed until it's actually come into fruition so there would not have been a basis for filing a proof of claim in that circumstances but we had rights and those rights are taken away by the injunct. Okay you have rights but you don't have you apparently don't have any case where you had the pay plan FAB or C where you have a claim against Grace or you would have asserted it somewhere. We could not have asserted it in the last several years I keep in mind I understand you couldn't have asserted it since but you could have asserted it 19 other co-defendants filed proofs of claim in the Grace bankruptcy you did not you don't have to but I'm asking you to point to whether you pointed to it in front of the bankruptcy court or the district court is there a case where you paid out where you have a claim against Grace. Well it would be difficult to know that over the last 10 years your most cases are settled Garlock suffered a few judgments the claimants who've actually asserted or claims against Grace are unknown to Garlock there have been no claimants who have identified themselves as far as we know in the last 10 years and that's been a problem the case is operated. Okay you settled you're satisfied that case is that case is gone now you're trying to articulate that possibly you had a right to have joined Grace but you didn't join them how can that be an injury in fact because there's an injunction that says we could have I didn't ask it I didn't ask that question because that being in fact because if rice were in the case and potentially able to pay a share then the settlement Garlock entered into would have been less just like it was before the bankruptcy I mean you're you're actually here it seems to me that you're admitting that my question forces you to speculate how is that not how is the circumstances of that not forcing the court to speculate well there's no speculation about the actual injury and that is that Garlock is enjoying from ever filing a contribution claim against Grace Garlock is permanently enjoined and in future lawsuits when you can file an indirect claim you can file an indirect claim just like Montana or the Queen yeah under the trust I can only file an indirect claim when I actually suffer a judgment and pay Grace's share outside of the bankruptcy system outside of bankruptcy law I could file a suit against Grace the moment I understand that I was sued and that is a valuable right that is taken away under the plan and that gives a basis for standing you know I see that I'm out of time so put your back on your bottle thank you very much thank you the shamanica good afternoon your honors may I please the court for the record my name is Frank Monaco and I represent the state of Montana and her majesty the Queen in right of Canada you know today's arguments will be essentially the same for both clients unless I distinguish one from the other and I would like to leave some rebuttal time I don't think I'll need more than a minute or two that's fine I think the central issue in this case is whether Montana and the crowns right to payment which are based on contribution and demnification or subject to the plan section 524 g trust and the trust distribution procedure which I'll refer to as the TDP both both the Montana and the crown have property claims for only Canada has property damage claims which were subject of a separate resolution in the bankruptcy court but Canada does have a personal injury claim based on the Raven Thunder Sky action which was fall position so they are against each other will I failure to warn claims yeah yes shaman the concept at the state and provincial level were are basically the same a failure to warn in both instances in Canada they were providing military housing and housing to native Canadians and that's the Thunder Sky action resulted from a family that was living in the attic of one of those houses and you're what are you is your primary argument that you do not your clients don't have claims or demands subject to the channeling injunction of 524 g well you know on I think our argument is basically threefold the first argument is just based on section 524 g our claims are not discharged they're not subject to the trust and that we have the right to assert these rights to payment against reorganized we organized that because they're not discharged because they're not discharged because of the language of the statute given the legislative history and the mister Monaco if doesn't 5.4 g say specifically that the injunction bars claims that directly or indirectly seek that to recover and it also deals with future liability as well as current it says future demands and that which is a separate argument we have if I can address this stick with directly and indirectly why does why do the words or indirectly not undercut your argument well first of all your honor the term indirectly which is the one word in which Grace hangs its statutory argument pretty good though it is your honor but I don't know what it means exactly it's not to find in the statute and if I was to venture and educate a guess I would think that it relates to pre-petition claims that have been liquidated by third parties such as Montana which is not our case all of our claims arise precipitation well usually indirect means what contribution or indemnity or something like that right your honor that term is not specifically used in the statute it doesn't show up on the legislative history which term contribution and indemnification your honor let's go back to Judge Jordan's question because if it's not direct it's indirect is there anything else that occupies the field besides direct and indirect how much I'm in a words if you have claims or demands direct or indirect is there anything else besides direct or indirect is one or the other is it not your honor we would say that we do not presently have a claim with the exception of Montana's claim for your knowledge you don't have any direct claims we we do not your honor so you don't have any direct claims and you may have a future claim that's correct and the future claim would be based on what you have to pay out for suit for which alleges that either of your clients failed to warn about the danger of asbestos okay that that's correct and if you your claim will come in a nature of if you have to pay out something on those cases which in can which in Montana's case have all been settled correctly that's not entirely correct your honor the settlement for 43 million dollars which was settled and paid in September of 2011 encompassed the 210 lawsuits all but one were filed against my my client post petition there are still claims that are being brought well actions against okay most of which have been settled a few more may still be out there you're honor there may be more than just a few okay all right but notwithstanding the number and the settlement status of them these are cases in which you've had your client has either paid or we'll have to pay and your claim against grace will be for what you had to pay on those cases correct that's correct now how can that be anything other than indirect well your honor because I think you have to look towards state law and when a right to payment arises and that's where we get into the whole friend bill geldwin oh it's corning trilogy of decisions reached by this court before you get into that trilogy maybe you could drill down on this specific question that I think Judge Fisher is asking which is how could that be anything other than indirect under common understanding this is I think with the judge ambrose getting into it in the universe of stuff direct and indirect would seem to be the codes way of saying everything whether you call it direct or whether you call it indirect is there some kind of claim out there that's neither direct nor indirect that you think you folks your honor I think our future right to payment when we have to pay because we do not believe it falls within the technical definition of claim or demand that's that's precisely what we're trying to address mr. monoco is does it fit the technical definition when the claim when when 524g defines things as directly or indirectly being bar common parlance I think is an indirect claim encompasses contribution and indemnification claims do you have any claim any authority any case anything that runs counter to that I do not you're on what what then why would we in this setting say well indirect claims often typically people understand they mean contribution identification but it doesn't mean that here why would we take that time well you're on I think there's there's a couple reasons we we cited in our papers other language in 524 which relates to when the injunction is imposed and it says it must arise from a liability which the debtor is is a party to an action that involves property damage personal injury or wrongful death and we don't feel that our failure to warn claims do not technically come within that so then you look at the legislative history of if I if they're not a claim right 524g talks about channeling injunction with regard to direct or indirect claims or demands present or future that's a big universe I I understand where your honor is coming from and our position is that if you look at the legislative history it talks in terms of compensation to to victims of personal injury claimants as opposed to well such as that isn't the whole point of 524g to look at what the Johns manville folks did and say hey that's a good idea we want something we want a mechanism a procedural mechanism that will allow these companies facing crushing asbestos liability to get themselves washed completely clean and we're going to frame the statute in the broadest language we can think of direct indirect present future claims the man's you know you call it what you want to call it but whatever it is if it's got something to do with asbestos liability directly or indirectly it's going through this injunction and they're coming out the other side washed clean if that if if that's the intent of the statute how can carving out something with because you label it a failure to warn claim when it when it's all about asbestos liability in the end be consistent with that legislative history that's your point to well your honor again we think that if the statute isn't is at least ambiguous in that respect but to answer your question the debtors or the play and proponents emphasize the fresh start which you're proposing we look at the legislative history as the primary reason if you read the comments of Senator Heffel and Brown it was more about including the increasing the rest to compensate victims as much as they can if you take our claims out of the trust and we look at the reorganized debtor that increases the pie for the victims and we think being subjected to this process which was designed to maximize the value for direct claimants to use a term and is biased against our claims is is is further supports our theories about why we shouldn't include it was drafted by the claimant's attorneys without any input for us it seems like your argument itself got very close to categorizing your your clients claims as an indirect claim as opposed to direct claim well you're on to the extent Montana has liquidated its claim for 43 million dollars but we think we come with we come within the exception one of the exceptions which was found in the own its corning case so we think that the friend will analysis supplies to us even with respect to that because it was post petition prior to when the plan was confirmed so we think we fit within all I'm saying is your honor that the right to payment has been recognized by this court has due process concerns can you back up just a minute how are you still suffering from the shadow of friend bill as was put in Owens corning what can you be more specific what's what's the way in which you are similarly situated to the to the claim in the mad case well you're in Owens corning judge and broke found that friend will still had continuing by ability and in two situations and I don't have these committed to memory so I'm going to have to read these to the where the holding was with respect to parties that were exposed to conduct giving rise to claims pre petition wrote those was was a pre petition and friend bill was post petition but pre confirmation I always corning was post petition pre confirmation right and we're not saying that first exception applies us but we think that the second exception says with respect to parties exposed to conduct giving rise to their claims post petition but pre confirmation friend will would continue to apply to plans confirmed prior to May 15th but that was because specifically in Owens corning there was no channeling injunction there was no mechanism to provide due process for the claimant I mean I thought Owens corning was specific on that point I might be wrong about that but I'm sure the court was expressed in saying that the due process safeguards in 524 GR of no help to the claimants as Grossman's plan of reorganization did not provide the channeling and junction or trust under that provision in other words they didn't have that benefit and you folks do have that benefit so that addresses any due process concern that you would have had doesn't it? You're right I think you might be confused in the Geldwin decision with Owens corning had a channeling injunction I believe and that's the decision that we're really relying on so I I apologize every time I hear the word friend bill it friend bill to bankruptcy's like the word shank and golf you don't want to use it one time judge Adams who wrote friend bill was being introduced and they got a great introduction at a bankruptcy group luncheon and he stood up and he said you know I really do appreciate it but just remember I'm the guy that wrote friend bill and I understand it's been criticized even by this court and and reversed to a certain extent but it is still the wall in certain circumstances and we think we fall within that second exception in Owens corning right because our our right to payment didn't arise until we actually settled and made the payment I apologize if I got if I got the the names crossed Geldwin or Grossman's that's the one that says the issue about the channeling injunction should address the due process right correct and Owens corning made a shift from prepotition to pre-conformation so if the issue is due process let's stick with Geldwin slash Grossman's whatever you're comfortable calling it why aren't any due process concerns that you say exist in this shadow of friend bill addressed by the fact that there is a channeling injunction because your honor we don't want to be our right to payment we believe arises post petition even post confirmation we do not want to be relegated to a TDP process that we think is slanted and biased against this and it just doesn't work okay so indirect in direct claim isn't that there isn't the process it's that you don't like that process that's which is one of our arguments which is a significant difference from Grossman's right well one of our I was it if we are relegated to this process it is unfair to us and I cited a number of reasons so that's sort of our third final alternative argument when you get down to the merits before you sit down it it seems counterintuitive I guess that you're alleging that you may have a contribution or indemnity claim against Grace for matters that Grace may not have any underlying liability I mean a failure to warn isn't Grace's issue the failure to warn is Montana's and the crown's issue that is correct Your Honor but it still we still may have a claim for contribution demification it basis that they were the proximate cause of this failure to warn I think the lower courts made this in either or proposition and that will be a tough one that is that is correct or that is the wall with all due respect to the lower courts all right well we hear from Mr

. Okay you have rights but you don't have you apparently don't have any case where you had the pay plan FAB or C where you have a claim against Grace or you would have asserted it somewhere. We could not have asserted it in the last several years I keep in mind I understand you couldn't have asserted it since but you could have asserted it 19 other co-defendants filed proofs of claim in the Grace bankruptcy you did not you don't have to but I'm asking you to point to whether you pointed to it in front of the bankruptcy court or the district court is there a case where you paid out where you have a claim against Grace. Well it would be difficult to know that over the last 10 years your most cases are settled Garlock suffered a few judgments the claimants who've actually asserted or claims against Grace are unknown to Garlock there have been no claimants who have identified themselves as far as we know in the last 10 years and that's been a problem the case is operated. Okay you settled you're satisfied that case is that case is gone now you're trying to articulate that possibly you had a right to have joined Grace but you didn't join them how can that be an injury in fact because there's an injunction that says we could have I didn't ask it I didn't ask that question because that being in fact because if rice were in the case and potentially able to pay a share then the settlement Garlock entered into would have been less just like it was before the bankruptcy I mean you're you're actually here it seems to me that you're admitting that my question forces you to speculate how is that not how is the circumstances of that not forcing the court to speculate well there's no speculation about the actual injury and that is that Garlock is enjoying from ever filing a contribution claim against Grace Garlock is permanently enjoined and in future lawsuits when you can file an indirect claim you can file an indirect claim just like Montana or the Queen yeah under the trust I can only file an indirect claim when I actually suffer a judgment and pay Grace's share outside of the bankruptcy system outside of bankruptcy law I could file a suit against Grace the moment I understand that I was sued and that is a valuable right that is taken away under the plan and that gives a basis for standing you know I see that I'm out of time so put your back on your bottle thank you very much thank you the shamanica good afternoon your honors may I please the court for the record my name is Frank Monaco and I represent the state of Montana and her majesty the Queen in right of Canada you know today's arguments will be essentially the same for both clients unless I distinguish one from the other and I would like to leave some rebuttal time I don't think I'll need more than a minute or two that's fine I think the central issue in this case is whether Montana and the crowns right to payment which are based on contribution and demnification or subject to the plan section 524 g trust and the trust distribution procedure which I'll refer to as the TDP both both the Montana and the crown have property claims for only Canada has property damage claims which were subject of a separate resolution in the bankruptcy court but Canada does have a personal injury claim based on the Raven Thunder Sky action which was fall position so they are against each other will I failure to warn claims yeah yes shaman the concept at the state and provincial level were are basically the same a failure to warn in both instances in Canada they were providing military housing and housing to native Canadians and that's the Thunder Sky action resulted from a family that was living in the attic of one of those houses and you're what are you is your primary argument that you do not your clients don't have claims or demands subject to the channeling injunction of 524 g well you know on I think our argument is basically threefold the first argument is just based on section 524 g our claims are not discharged they're not subject to the trust and that we have the right to assert these rights to payment against reorganized we organized that because they're not discharged because they're not discharged because of the language of the statute given the legislative history and the mister Monaco if doesn't 5.4 g say specifically that the injunction bars claims that directly or indirectly seek that to recover and it also deals with future liability as well as current it says future demands and that which is a separate argument we have if I can address this stick with directly and indirectly why does why do the words or indirectly not undercut your argument well first of all your honor the term indirectly which is the one word in which Grace hangs its statutory argument pretty good though it is your honor but I don't know what it means exactly it's not to find in the statute and if I was to venture and educate a guess I would think that it relates to pre-petition claims that have been liquidated by third parties such as Montana which is not our case all of our claims arise precipitation well usually indirect means what contribution or indemnity or something like that right your honor that term is not specifically used in the statute it doesn't show up on the legislative history which term contribution and indemnification your honor let's go back to Judge Jordan's question because if it's not direct it's indirect is there anything else that occupies the field besides direct and indirect how much I'm in a words if you have claims or demands direct or indirect is there anything else besides direct or indirect is one or the other is it not your honor we would say that we do not presently have a claim with the exception of Montana's claim for your knowledge you don't have any direct claims we we do not your honor so you don't have any direct claims and you may have a future claim that's correct and the future claim would be based on what you have to pay out for suit for which alleges that either of your clients failed to warn about the danger of asbestos okay that that's correct and if you your claim will come in a nature of if you have to pay out something on those cases which in can which in Montana's case have all been settled correctly that's not entirely correct your honor the settlement for 43 million dollars which was settled and paid in September of 2011 encompassed the 210 lawsuits all but one were filed against my my client post petition there are still claims that are being brought well actions against okay most of which have been settled a few more may still be out there you're honor there may be more than just a few okay all right but notwithstanding the number and the settlement status of them these are cases in which you've had your client has either paid or we'll have to pay and your claim against grace will be for what you had to pay on those cases correct that's correct now how can that be anything other than indirect well your honor because I think you have to look towards state law and when a right to payment arises and that's where we get into the whole friend bill geldwin oh it's corning trilogy of decisions reached by this court before you get into that trilogy maybe you could drill down on this specific question that I think Judge Fisher is asking which is how could that be anything other than indirect under common understanding this is I think with the judge ambrose getting into it in the universe of stuff direct and indirect would seem to be the codes way of saying everything whether you call it direct or whether you call it indirect is there some kind of claim out there that's neither direct nor indirect that you think you folks your honor I think our future right to payment when we have to pay because we do not believe it falls within the technical definition of claim or demand that's that's precisely what we're trying to address mr. monoco is does it fit the technical definition when the claim when when 524g defines things as directly or indirectly being bar common parlance I think is an indirect claim encompasses contribution and indemnification claims do you have any claim any authority any case anything that runs counter to that I do not you're on what what then why would we in this setting say well indirect claims often typically people understand they mean contribution identification but it doesn't mean that here why would we take that time well you're on I think there's there's a couple reasons we we cited in our papers other language in 524 which relates to when the injunction is imposed and it says it must arise from a liability which the debtor is is a party to an action that involves property damage personal injury or wrongful death and we don't feel that our failure to warn claims do not technically come within that so then you look at the legislative history of if I if they're not a claim right 524g talks about channeling injunction with regard to direct or indirect claims or demands present or future that's a big universe I I understand where your honor is coming from and our position is that if you look at the legislative history it talks in terms of compensation to to victims of personal injury claimants as opposed to well such as that isn't the whole point of 524g to look at what the Johns manville folks did and say hey that's a good idea we want something we want a mechanism a procedural mechanism that will allow these companies facing crushing asbestos liability to get themselves washed completely clean and we're going to frame the statute in the broadest language we can think of direct indirect present future claims the man's you know you call it what you want to call it but whatever it is if it's got something to do with asbestos liability directly or indirectly it's going through this injunction and they're coming out the other side washed clean if that if if that's the intent of the statute how can carving out something with because you label it a failure to warn claim when it when it's all about asbestos liability in the end be consistent with that legislative history that's your point to well your honor again we think that if the statute isn't is at least ambiguous in that respect but to answer your question the debtors or the play and proponents emphasize the fresh start which you're proposing we look at the legislative history as the primary reason if you read the comments of Senator Heffel and Brown it was more about including the increasing the rest to compensate victims as much as they can if you take our claims out of the trust and we look at the reorganized debtor that increases the pie for the victims and we think being subjected to this process which was designed to maximize the value for direct claimants to use a term and is biased against our claims is is is further supports our theories about why we shouldn't include it was drafted by the claimant's attorneys without any input for us it seems like your argument itself got very close to categorizing your your clients claims as an indirect claim as opposed to direct claim well you're on to the extent Montana has liquidated its claim for 43 million dollars but we think we come with we come within the exception one of the exceptions which was found in the own its corning case so we think that the friend will analysis supplies to us even with respect to that because it was post petition prior to when the plan was confirmed so we think we fit within all I'm saying is your honor that the right to payment has been recognized by this court has due process concerns can you back up just a minute how are you still suffering from the shadow of friend bill as was put in Owens corning what can you be more specific what's what's the way in which you are similarly situated to the to the claim in the mad case well you're in Owens corning judge and broke found that friend will still had continuing by ability and in two situations and I don't have these committed to memory so I'm going to have to read these to the where the holding was with respect to parties that were exposed to conduct giving rise to claims pre petition wrote those was was a pre petition and friend bill was post petition but pre confirmation I always corning was post petition pre confirmation right and we're not saying that first exception applies us but we think that the second exception says with respect to parties exposed to conduct giving rise to their claims post petition but pre confirmation friend will would continue to apply to plans confirmed prior to May 15th but that was because specifically in Owens corning there was no channeling injunction there was no mechanism to provide due process for the claimant I mean I thought Owens corning was specific on that point I might be wrong about that but I'm sure the court was expressed in saying that the due process safeguards in 524 GR of no help to the claimants as Grossman's plan of reorganization did not provide the channeling and junction or trust under that provision in other words they didn't have that benefit and you folks do have that benefit so that addresses any due process concern that you would have had doesn't it? You're right I think you might be confused in the Geldwin decision with Owens corning had a channeling injunction I believe and that's the decision that we're really relying on so I I apologize every time I hear the word friend bill it friend bill to bankruptcy's like the word shank and golf you don't want to use it one time judge Adams who wrote friend bill was being introduced and they got a great introduction at a bankruptcy group luncheon and he stood up and he said you know I really do appreciate it but just remember I'm the guy that wrote friend bill and I understand it's been criticized even by this court and and reversed to a certain extent but it is still the wall in certain circumstances and we think we fall within that second exception in Owens corning right because our our right to payment didn't arise until we actually settled and made the payment I apologize if I got if I got the the names crossed Geldwin or Grossman's that's the one that says the issue about the channeling injunction should address the due process right correct and Owens corning made a shift from prepotition to pre-conformation so if the issue is due process let's stick with Geldwin slash Grossman's whatever you're comfortable calling it why aren't any due process concerns that you say exist in this shadow of friend bill addressed by the fact that there is a channeling injunction because your honor we don't want to be our right to payment we believe arises post petition even post confirmation we do not want to be relegated to a TDP process that we think is slanted and biased against this and it just doesn't work okay so indirect in direct claim isn't that there isn't the process it's that you don't like that process that's which is one of our arguments which is a significant difference from Grossman's right well one of our I was it if we are relegated to this process it is unfair to us and I cited a number of reasons so that's sort of our third final alternative argument when you get down to the merits before you sit down it it seems counterintuitive I guess that you're alleging that you may have a contribution or indemnity claim against Grace for matters that Grace may not have any underlying liability I mean a failure to warn isn't Grace's issue the failure to warn is Montana's and the crown's issue that is correct Your Honor but it still we still may have a claim for contribution demification it basis that they were the proximate cause of this failure to warn I think the lower courts made this in either or proposition and that will be a tough one that is that is correct or that is the wall with all due respect to the lower courts all right well we hear from Mr. Conley then we'll get you back on the floor thank you very much afternoon Your Honor I guess I'll start with Montana since he was just up first of all on the floor as well and also Montana and the crown were sued on lots of theories other than failure to warn failure to act failure to regulate if you look at the crown's proof of claim in fact they say they were sued only for non-failure to warn theories but the real point here on failure to warn is the legal theory doesn't matter it's not the nature of the claim it's the nature of the conduct is Owens Corning implicated here Owens Corning is not implicated Your Honor because if you look at different periods of time where Montana they had one pre petition claim they had 219 claims asserted during the chapter 11 case Owens Corning talked about due process and discharge issues relating to that time period they have been fully asserted they're not barred there's no due process issue if you speculate in the future for Montana is it possible they would have future claims those are covered by Your Honor's point that the discharge and the channeling in junk under 524g applies here and it really doesn't matter if it's a claim or a demand because Congress was comprehensive in this cleansing statute and channeled and joined arranged to be paid any type of claim or demand no matter what it is so the right versus Owens Corning only implicates an issue of an hypothetical future claimant who might have a due process or due process or discharge issue if there was a bar date that they missed perhaps that's that that's that case and it's not their case because they're here in court representing themselves so they have no due process issue and again it's the nature it's the 524g1 and 2 for a claim 524g5 for a demand say it's the nature of the conduct if the contribution or indemnity claim the indirect claim arises from conduct that gave rise to the injunction its channel and enjoying not the nature of the claim I'm sure we'll be hearing about this from others too but would you address the argument that the claim and demand are mutually exclusive terms yes sir that's that's what I think of I see what I call a hyperlateral reading of the statute in 524g5a that says that but if you look at 524 all of 524g it's clear that the statute is using claim and demand interchangeably from time to time so for example in 524g the statute says a demand is defined among other things as a quote unquote future quote unquote let me find my note on that a a demand is defined in part as a quote unquote present demand for payment now that is what what is that that's exactly the same thing as a current claim present demand for payment exactly the same thing as a current claim so in the same statute 524g is not using them as mutually exclusive it's using a present demand in a current claim as the same thing now they rely on another part of 524g which is g5a the part that says a demand is a present or future demand for payment that's a not a claim during the proceedings leading to confirmation of a plan of reorganization that's where they get the mutually exclusive argument but I think the key thing there is you have to read the whole phrase what does that mean when the statute says demand is something that's not a claim during the proceedings leading to confirmation of a plan of reorganization and the legislative history is very, very helpful and instructive there it's h10765 is attached to the third paragraph of the property damage FCR's brief because this comes up with Anderson Memorial as well and what that legislative history says I'm going to quote the key line quote from the beginning a central element of the case was how to deal with future claimants those who were not yet before the court because their disease had not yet manifested itself so Congress is using the first of all they're using future claim and future demand interchangeably again and I think they are used interchangeably and overlapping a lot in this statute that's consistent with the purpose of making sure the injunction covers and cleanses everything doesn't really matter which one it's called the Congress here is saying a future claim is one that's not yet before the court because the disease has not yet manifested itself and there's 14 times in the legislative history in three pages where future claim future demand are used interchangeably or synonymously this is the problem we quoted a little bit in our brief from judge Fitzgerald's opinion in flint coat where there's this very stark conflict between the mutually exclusive argument if claim is something that's defined solely as where there's pre petition exposure and this legislative history that says a claim is something not before the court because disease hasn't manifested itself yet usually we pay attention to what Congress says in the statute yes what shows up in legislative history right but this is this is a case where if you follow their hyperlittoral application as judge Fitzgerald said in flint coat you write the whole statute out of the book it was it was a nullity and it was dead on arrival in 1994 when it passed because every under that under their interpretation every claim was pre petition especially you stopped in the seventies and so every claim everything is a claim there are no future demands and the provision that says one of the statutory requisites is the debtor the court has to determine that there's a substantial likelihood that future demands will exist that provision can never be satisfied under their mutually exclusive claim and demand argument because everything's a claim there's never a demand and that's not something new that came up with grossments in 2010 that's something that was in the statute in 1994 because that that one oh one five expansive definition of a claim that was law on every other circuit other than friendville here so it's an unusual situation where they have a literal reading argument but there are these cannons like kids versus wins Supreme Court case says you don't apply an absurd don't apply an absurd interpretation their case is like Ron Pear Enterprises Griffin versus Oceana contractors don't go with an interpretation that renders the entire statute annulity in this contrary to the legislative purpose and that's what they have to do they have to write the whole statute out of the books to make this mutually exclusive argument work all right what what about the and they didn't since you're on Montana stick with Montana for a second yes Montana and the Canada they didn't make this argument here but certainly didn't their brief they argue that the first in first at-roll is going to clearly result in disparate treatment indirect claimants yes sir now assuming they're an indirect claimant although they don't want to acknowledge being an indirect claimant if they're an indirect claimant why aren't they right on this five-o argument well for one thing it sure doesn't hurt them because they have this $43 million liquidated claim that's going to be that would be Montana that paid on day one that would be Montana yeah what about Canada the crown well you know the five-o provision is in every one of these TDPs and the reason is this was a statute that anticipates claims being made over 2030 40 50 years and you have to have a mechanism for paying claims that way so it's been vetted in every case this court and federal mogul said every 524g case has five votes the only sensible way to do it other than they say the only fair mechanic is to wait 30 40 years until every claims in and then don't pay anybody until then and I don't think anybody thinks thinks that's fair so the the the five-o I think is it's the only way to do it and I think it's necessary and fair but will there be money for their claim to cover their claim yes sir that's Mr. Austerns testimony the future claimant's trap he looked at that issue very specifically and to the extent the crown has a PD claim because they have some sort of like lactic field PD claims judge standards the property damage future claimants looked at it judge standards testified there's reasonable assurance that the funds will be there David Austerns said it's likely the funds will be there for decades and that's because of things like the procedures are the same for the currents in the futures their deferred payments grace makes 110 million 100 and 100 million cash payment annually out to 2034 so there's this evergreen funding mechanism and that's why judge Austerns concluded yes the funds will be there judge Fitzgerald adopted and credited that testimony if you could turn to a garlock yes sir on garlock the gist of their argument and I'm turning to the merits briefly at the start because they're really focused on the fair and equitable test and they've backed away from the absolute priority always a term of hard as I read their reply brief but they're now saying yes sir before you go to the merits you know we spend a lot of time with the garlock attorney on standing yes sir and I am interested I'm intrigued that both sides said to the district court in effect they give us an advisory opinion you don't think they're standing we'd like to know what you think of the merits anyway I hope you want to enlighten us on that I'll be completely candid your honor it was it was a tactical decision because we were we felt the lower courts got standing right but if we lost we've been in bankruptcy 12 years we didn't want to get reversed on standing and then have to go back down on the merits and lose another year or two of the case that's that's all that it was that's why we asked and garlock joined us we do think the lower courts got it right on bankruptcy standing they have a higher standing under a person aggrieved what's the relevant injury that we should be looking at the only there there is no relevant injury because the terms of the analysis what's the relevant injury that we should be looking at the relevant injury would be if if their chapter 11 case is thrown out if you speculate that it's thrown out totally and they're back in the court system you could speculate and I think this is hypothetical it's speculative it doesn't pass the person aggrieved standard of a you know an immediate and pecuniary impact but you could speculate that at that point they'd be likely to have claims asserted in the future that would be impaired by the by the cap on damages and so forth that's why we entered into the stipulation we said if at the time there was no chapter 11 and we said they'd be likely to have future demands now at the chapter 11 it appears highly unlikely they would ever have that situation but that's the only situation I think where they might might speculate if we have an injury in the future if the chapter 11 gets thrown out they're back in the court system well if they've got if they've got a people coming to them in their chapter 11 an asserting liability against whatever trust they have set up is there any basis or any reason or legal foundation for them to say that doesn't that doesn't take away the fact that we have some some rights of contribution that arise the minute we're sued or the minute there's a no we're sued but the minute there's a claim that comes up that's asserted whether it's in bankruptcy or not and and we lose those we lose those rights because of this grace channeling injunction I've heard them say it and I've seen a lot of briefs I honestly don't follow their point on that your honor because contribution under Illinois law where I'm from all the states I'm familiar with it really arises and becomes an injury once you get a judgment or settlement you're ready to hand over the paper presented judgment or settlement or collect so I've heard counsel argue that but I don't follow their point their contribution claims or demands made against car lock in connection with it's against this bankruptcy estate while it's in bankruptcy do you can in that situation would there be standing no no no sir not there's no other bankruptcy standing no more constitutional standing I believe they fill both on that and then that was the the craftman of treachery standing is a very very low threshold well I guess in a sense it's moot because the purpose of bankruptcy standing is to allow parties and interests to participate fully and they certainly participated very fully they even got supplemental hearings before Judge Buckwater just for them on standing standing in the merits but with the absolutes say there's just no entry at all I think it's I think it's really different and take take for example in the Clinton New York case New York City and the hospitals they had the immediate impact from that line item veto which was that their budgets and their finances and their treasuries were being impacted an anticipation of what would happen with that decision may have been a little thin but there was standing here there's just the automatic stay is a strong barrier and there's just no impact on them now I'm I'm a little confused on my time I should have checked is this eight minutes out of the 30 or out of the 20 minutes talk about it's talk about it's to your question it's you still get it's eight minutes out of the time that you took and then they still get there all right thank you talking about staying with standing yes sir second and and garlock I mean how are they any more remote than the insurers in in-rate global the insurers in in-rate global had an immediate impact of increased administrative costs you have this 27 fold very suspicious jump in silica cland silicoces claims and even if the plan was insurance neutral as the debtor argued there they had this big jump in administrative claims they don't have any comparable financial jump like that that that that's how I distinguish global industrial which I know is is very broad and bankruptcy standing we appreciate that you I've done on on garlock or ground or Montana on garlock yeah okay it's I do have a let's assume on garlock trying to keep everything straight here that's not easy just from a timekeeping standpoint you're up twice more just wait yeah we don't want to have to ask you later something I was going to sit down and rest my voice but judge Fisher's coming back at me I keep coming back you have more time yeah I want to get you I keep you on your feet assuming we did find that garlock had standing yes sir okay and it appears that they've abandoned the absolute priority rule argument but what do you think in this context fair and equitable man it's very similar not identical but very similar to that equitable balancing test courts do in confirming plans in 1919 agreements agreements all all the time when we cited Texaco and TMT trailer ferry and Tribune and Nutriquist and all all those cases you look at the traditional set of equitable factors is it interreasonable range of litigation probabilities was it arms length was it good faith how long and complex did it go on it was it fair to creditors here 99.5% of that class the asbestos PI and Pair class voted in favor of this plan and the bankruptcy court had a very full record years of intimate oversight of the case here oversight on the negotiations the mediations before a former judge pointer two trials dozens of witnesses saw the risk to both sides heard the testimony of mr. Austin then the future claimants wrap he had spent four years of due diligence with financial advisors claim advisors estimating and setting the asbestos liabilities counsel very actively working he was in the middle of the negotiations the middle of the trial they had this big dispute on the liability $200 million to $468 million we the debtor at that time said the asbestos claimant said magnitude order magnitude higher 7.4 billion and it was settled 10 days into the trial because both sides were at risk and mr. Austin said here's he he looked at both non-monetary factors and financial factors he said there's a big downside risk and i'll i'll uh mr

. Conley then we'll get you back on the floor thank you very much afternoon Your Honor I guess I'll start with Montana since he was just up first of all on the floor as well and also Montana and the crown were sued on lots of theories other than failure to warn failure to act failure to regulate if you look at the crown's proof of claim in fact they say they were sued only for non-failure to warn theories but the real point here on failure to warn is the legal theory doesn't matter it's not the nature of the claim it's the nature of the conduct is Owens Corning implicated here Owens Corning is not implicated Your Honor because if you look at different periods of time where Montana they had one pre petition claim they had 219 claims asserted during the chapter 11 case Owens Corning talked about due process and discharge issues relating to that time period they have been fully asserted they're not barred there's no due process issue if you speculate in the future for Montana is it possible they would have future claims those are covered by Your Honor's point that the discharge and the channeling in junk under 524g applies here and it really doesn't matter if it's a claim or a demand because Congress was comprehensive in this cleansing statute and channeled and joined arranged to be paid any type of claim or demand no matter what it is so the right versus Owens Corning only implicates an issue of an hypothetical future claimant who might have a due process or due process or discharge issue if there was a bar date that they missed perhaps that's that that's that case and it's not their case because they're here in court representing themselves so they have no due process issue and again it's the nature it's the 524g1 and 2 for a claim 524g5 for a demand say it's the nature of the conduct if the contribution or indemnity claim the indirect claim arises from conduct that gave rise to the injunction its channel and enjoying not the nature of the claim I'm sure we'll be hearing about this from others too but would you address the argument that the claim and demand are mutually exclusive terms yes sir that's that's what I think of I see what I call a hyperlateral reading of the statute in 524g5a that says that but if you look at 524 all of 524g it's clear that the statute is using claim and demand interchangeably from time to time so for example in 524g the statute says a demand is defined among other things as a quote unquote future quote unquote let me find my note on that a a demand is defined in part as a quote unquote present demand for payment now that is what what is that that's exactly the same thing as a current claim present demand for payment exactly the same thing as a current claim so in the same statute 524g is not using them as mutually exclusive it's using a present demand in a current claim as the same thing now they rely on another part of 524g which is g5a the part that says a demand is a present or future demand for payment that's a not a claim during the proceedings leading to confirmation of a plan of reorganization that's where they get the mutually exclusive argument but I think the key thing there is you have to read the whole phrase what does that mean when the statute says demand is something that's not a claim during the proceedings leading to confirmation of a plan of reorganization and the legislative history is very, very helpful and instructive there it's h10765 is attached to the third paragraph of the property damage FCR's brief because this comes up with Anderson Memorial as well and what that legislative history says I'm going to quote the key line quote from the beginning a central element of the case was how to deal with future claimants those who were not yet before the court because their disease had not yet manifested itself so Congress is using the first of all they're using future claim and future demand interchangeably again and I think they are used interchangeably and overlapping a lot in this statute that's consistent with the purpose of making sure the injunction covers and cleanses everything doesn't really matter which one it's called the Congress here is saying a future claim is one that's not yet before the court because the disease has not yet manifested itself and there's 14 times in the legislative history in three pages where future claim future demand are used interchangeably or synonymously this is the problem we quoted a little bit in our brief from judge Fitzgerald's opinion in flint coat where there's this very stark conflict between the mutually exclusive argument if claim is something that's defined solely as where there's pre petition exposure and this legislative history that says a claim is something not before the court because disease hasn't manifested itself yet usually we pay attention to what Congress says in the statute yes what shows up in legislative history right but this is this is a case where if you follow their hyperlittoral application as judge Fitzgerald said in flint coat you write the whole statute out of the book it was it was a nullity and it was dead on arrival in 1994 when it passed because every under that under their interpretation every claim was pre petition especially you stopped in the seventies and so every claim everything is a claim there are no future demands and the provision that says one of the statutory requisites is the debtor the court has to determine that there's a substantial likelihood that future demands will exist that provision can never be satisfied under their mutually exclusive claim and demand argument because everything's a claim there's never a demand and that's not something new that came up with grossments in 2010 that's something that was in the statute in 1994 because that that one oh one five expansive definition of a claim that was law on every other circuit other than friendville here so it's an unusual situation where they have a literal reading argument but there are these cannons like kids versus wins Supreme Court case says you don't apply an absurd don't apply an absurd interpretation their case is like Ron Pear Enterprises Griffin versus Oceana contractors don't go with an interpretation that renders the entire statute annulity in this contrary to the legislative purpose and that's what they have to do they have to write the whole statute out of the books to make this mutually exclusive argument work all right what what about the and they didn't since you're on Montana stick with Montana for a second yes Montana and the Canada they didn't make this argument here but certainly didn't their brief they argue that the first in first at-roll is going to clearly result in disparate treatment indirect claimants yes sir now assuming they're an indirect claimant although they don't want to acknowledge being an indirect claimant if they're an indirect claimant why aren't they right on this five-o argument well for one thing it sure doesn't hurt them because they have this $43 million liquidated claim that's going to be that would be Montana that paid on day one that would be Montana yeah what about Canada the crown well you know the five-o provision is in every one of these TDPs and the reason is this was a statute that anticipates claims being made over 2030 40 50 years and you have to have a mechanism for paying claims that way so it's been vetted in every case this court and federal mogul said every 524g case has five votes the only sensible way to do it other than they say the only fair mechanic is to wait 30 40 years until every claims in and then don't pay anybody until then and I don't think anybody thinks thinks that's fair so the the the five-o I think is it's the only way to do it and I think it's necessary and fair but will there be money for their claim to cover their claim yes sir that's Mr. Austerns testimony the future claimant's trap he looked at that issue very specifically and to the extent the crown has a PD claim because they have some sort of like lactic field PD claims judge standards the property damage future claimants looked at it judge standards testified there's reasonable assurance that the funds will be there David Austerns said it's likely the funds will be there for decades and that's because of things like the procedures are the same for the currents in the futures their deferred payments grace makes 110 million 100 and 100 million cash payment annually out to 2034 so there's this evergreen funding mechanism and that's why judge Austerns concluded yes the funds will be there judge Fitzgerald adopted and credited that testimony if you could turn to a garlock yes sir on garlock the gist of their argument and I'm turning to the merits briefly at the start because they're really focused on the fair and equitable test and they've backed away from the absolute priority always a term of hard as I read their reply brief but they're now saying yes sir before you go to the merits you know we spend a lot of time with the garlock attorney on standing yes sir and I am interested I'm intrigued that both sides said to the district court in effect they give us an advisory opinion you don't think they're standing we'd like to know what you think of the merits anyway I hope you want to enlighten us on that I'll be completely candid your honor it was it was a tactical decision because we were we felt the lower courts got standing right but if we lost we've been in bankruptcy 12 years we didn't want to get reversed on standing and then have to go back down on the merits and lose another year or two of the case that's that's all that it was that's why we asked and garlock joined us we do think the lower courts got it right on bankruptcy standing they have a higher standing under a person aggrieved what's the relevant injury that we should be looking at the only there there is no relevant injury because the terms of the analysis what's the relevant injury that we should be looking at the relevant injury would be if if their chapter 11 case is thrown out if you speculate that it's thrown out totally and they're back in the court system you could speculate and I think this is hypothetical it's speculative it doesn't pass the person aggrieved standard of a you know an immediate and pecuniary impact but you could speculate that at that point they'd be likely to have claims asserted in the future that would be impaired by the by the cap on damages and so forth that's why we entered into the stipulation we said if at the time there was no chapter 11 and we said they'd be likely to have future demands now at the chapter 11 it appears highly unlikely they would ever have that situation but that's the only situation I think where they might might speculate if we have an injury in the future if the chapter 11 gets thrown out they're back in the court system well if they've got if they've got a people coming to them in their chapter 11 an asserting liability against whatever trust they have set up is there any basis or any reason or legal foundation for them to say that doesn't that doesn't take away the fact that we have some some rights of contribution that arise the minute we're sued or the minute there's a no we're sued but the minute there's a claim that comes up that's asserted whether it's in bankruptcy or not and and we lose those we lose those rights because of this grace channeling injunction I've heard them say it and I've seen a lot of briefs I honestly don't follow their point on that your honor because contribution under Illinois law where I'm from all the states I'm familiar with it really arises and becomes an injury once you get a judgment or settlement you're ready to hand over the paper presented judgment or settlement or collect so I've heard counsel argue that but I don't follow their point their contribution claims or demands made against car lock in connection with it's against this bankruptcy estate while it's in bankruptcy do you can in that situation would there be standing no no no sir not there's no other bankruptcy standing no more constitutional standing I believe they fill both on that and then that was the the craftman of treachery standing is a very very low threshold well I guess in a sense it's moot because the purpose of bankruptcy standing is to allow parties and interests to participate fully and they certainly participated very fully they even got supplemental hearings before Judge Buckwater just for them on standing standing in the merits but with the absolutes say there's just no entry at all I think it's I think it's really different and take take for example in the Clinton New York case New York City and the hospitals they had the immediate impact from that line item veto which was that their budgets and their finances and their treasuries were being impacted an anticipation of what would happen with that decision may have been a little thin but there was standing here there's just the automatic stay is a strong barrier and there's just no impact on them now I'm I'm a little confused on my time I should have checked is this eight minutes out of the 30 or out of the 20 minutes talk about it's talk about it's to your question it's you still get it's eight minutes out of the time that you took and then they still get there all right thank you talking about staying with standing yes sir second and and garlock I mean how are they any more remote than the insurers in in-rate global the insurers in in-rate global had an immediate impact of increased administrative costs you have this 27 fold very suspicious jump in silica cland silicoces claims and even if the plan was insurance neutral as the debtor argued there they had this big jump in administrative claims they don't have any comparable financial jump like that that that that's how I distinguish global industrial which I know is is very broad and bankruptcy standing we appreciate that you I've done on on garlock or ground or Montana on garlock yeah okay it's I do have a let's assume on garlock trying to keep everything straight here that's not easy just from a timekeeping standpoint you're up twice more just wait yeah we don't want to have to ask you later something I was going to sit down and rest my voice but judge Fisher's coming back at me I keep coming back you have more time yeah I want to get you I keep you on your feet assuming we did find that garlock had standing yes sir okay and it appears that they've abandoned the absolute priority rule argument but what do you think in this context fair and equitable man it's very similar not identical but very similar to that equitable balancing test courts do in confirming plans in 1919 agreements agreements all all the time when we cited Texaco and TMT trailer ferry and Tribune and Nutriquist and all all those cases you look at the traditional set of equitable factors is it interreasonable range of litigation probabilities was it arms length was it good faith how long and complex did it go on it was it fair to creditors here 99.5% of that class the asbestos PI and Pair class voted in favor of this plan and the bankruptcy court had a very full record years of intimate oversight of the case here oversight on the negotiations the mediations before a former judge pointer two trials dozens of witnesses saw the risk to both sides heard the testimony of mr. Austin then the future claimants wrap he had spent four years of due diligence with financial advisors claim advisors estimating and setting the asbestos liabilities counsel very actively working he was in the middle of the negotiations the middle of the trial they had this big dispute on the liability $200 million to $468 million we the debtor at that time said the asbestos claimant said magnitude order magnitude higher 7.4 billion and it was settled 10 days into the trial because both sides were at risk and mr. Austin said here's he he looked at both non-monetary factors and financial factors he said there's a big downside risk and i'll i'll uh mr. Frank will get up and explain this more in a minute there's a big downside risk if we don't settle in the middle there's a huge risk that these other non-monetary benefits like the deferred payments going out to 2034 and then look at all the financial payments 1.8 billion cash from the debtor uh 500 million of insurance 490 million of warrants billion plus and settlements contingent on the plan going effective from the former subsidiaries who had settled out of the fraudulent transfer litigation and he looked at all of those and said after doing aggressive due diligence this is fair and equitable and judge Fitzgerald relied relied on that very very powerful testimony rich record and we believe entitled to deference and abuse of uh no certainly no abuse of not even close to abuse of discretion what way over that about is full of record as you you can get and that's that's where we come out I'm fair and equitable just very strong evident sugar record you're all right i did have one question uh just curious there there is an assertion from the crown there are own not Montana's that you know Canadian citizens are getting the short end of this they're going to recover oh yes that's there that's their property they have they have a personal injury issue uh and then they've that's their property damage and they say well this isn't fair because we're getting one seventh as much as the United States claim claim on zonolite attic insulation or getting yeah what why is that assertion not problematic it it is there's no evidence in the record to support it absolutely none um it's just absent there there is an aggregate amount being contributed to the Canadian CAI fund of 8.6 million there's an aggregate amount in the first three years of funds being contributed by grace sealed air and presinious to the uscai fund of 60 million but you don't have the denominator comparing how many claims are going against those claims there were a million the ci i claims in the United States and we don't have any record of any in Canada so when the records devoid when did this come up for the first time you know in their brief I believe I don't I don't remember seeing it before there's also a legal issue that 1120 section 1123A4 of the code as I know your honors uh no deals with discrimination within among members within the same class uscai claimants are in class seven b Canadian zai pd claimants are in class eight they're different classes so even if they had evidence um you know it wouldn't be a well taken objection and with that unless there are questions I'll uh before go the rest of my time and turn the podium over to mr frankle the formerly counsel for the future claimants representative now as of last Friday himself the future claimants representative get your back later good afternoon your honors i'm Roger frankle i represented uh david austern during the since the time of his appointment in 2004 until his untimely death a month ago and now speaking as counsel but have been as mr donnelly indicated appointed as the future claims representative mr austern was appointed by the bankruptcy court on motion of wr grace uh to represent uh those that will assert uh personal injury demands broad term in the future uh as soon as he was uh appointed he hired advisors so that he could fulfill his duties uh as the legal representative and as mr donnelly indicated he hired lawyers he hired financial advisors and most importantly hired claims forecasters these experts helped mr austern assess the complex financial and legal issues which affect affect at his constituency these experts were at his side as he helped negotiate the contributions that would be made to the five twenty four g trust pursuant to the plan there were many factors for mr austern to consider during the 2008-2009 time period during these heated negotiations there was significant uncertainty regarding the magnitude of the present and future as best as claims there was significant uncertainty regarding the financial condition of grace and perhaps most importantly there was significant uncertainty regarding the outcome of the estimation trial as mr austern testified settlement negotiations over the plan and thus the contributions to the trust were arms length lively and intense mr austern testified at the confirmation hearing that the plan was fair and equitable to his constituency he testified based on his own experience in this case and the advice of his experts there was no expert for that matter no witness at all that testified that the plan was not fair and equitable under five twenty four g in fact mr austern was not even cross-examined by garlock and you're suggesting as does mr donnelly that fair and equitable under five twenty four g does not incorporate the absolute priority rule correct your honor and it's a balancing of the contributions to the trust with the range of liabilities that are estimated in the primary argument for that is what well your honor i think it's it's the sane reasoning of the language it cannot mean absolute priority in the eleven twenty nine cents because you have a seventy five percent vote requirement that cannot be overridden or at least it's not clear in the statute it can be overridden like it is in eleven twenty nine b so i think mr austern looked at this and took the common sense meaning of fair and equitable to mean am i getting a fair contribution to the trust in light of the potential outcome of the estimation trial which was hotly contested wouldn't the primary argument be that fair and equitable is used in five twenty four h but it's not used in five twenty four g well it is it is used in five twenty four g it's used as a measure of the of the contributions to the trust five twenty four h referring to the to the manville was was a case that was already uh extant i would say um but i think mr austern did the did your client or the district court make a specific determination as to whether or not grace could have contributed more i don't believe that there was a specific determination uh in the record that grace could or could not contribute more i think that the way this came out was a settlement of an estimation trial and the the uh what was stark about that was that graces expert grace had put on its entire case was that it had somewhere in the neighborhood of two hundred to four hundred million dollars present and future asbestos liabilities the experts on the other side the ACC and the future claims representative were in the seven billion dollar range so there was a lot of room in between to make a settlement grace could afford to pay a lot of that but it was not clear at all to mr austern that grace could afford to pay seven billion dollars and for him to take the risk as a fiduciary that he's going to win the estimation trial is a risk that he's really shouldn't be taking when there's an alternative the viable settlement uh that was available to him in order for the district in order for the bankruptcy court to be convinced that the uh that it was fair and equitable then the bankruptcy court have to evaluate how much uh WR grace could contribute you honor i don't think it had to evaluate how much they could possibly contribute i think they had to evaluate that it was a fair amount that it was contributing under the settlement i think that's what was critical and and you have to put in perspective grace's financial condition was changing during this whole case i mean when grace filed for bankruptcy it was teetering and and we go through the case grace is is is doing better but even as we're negotiating back in 2008 in the in the heart of the the financial depression or recession that we were in it was not at all clear how much grace could pay i think what the court evaluated was is this a fair amount considering all of the different factors even if even if the absolute priority rule is not incorporated into five twenty four g formulation of fair and equitable uh should it give us pause that the equity holders i have everything and the claimants get twenty five to thirty five percent i think that uh the deal that was made the settlement that was made uh was fair at the time and is still fair it's a lot of money that's going into the trust grace has an obligation to pay a billion five over fifteen years going out i understand your argument but i'm asking i i hope a more particular question which is you've made the pitch and and we've heard it that there's uh that the absolute primary rule is not embedded it's not a term of art is being maybe an eleven twenty nine but it can be but it is being used in a broader sense in in five twenty four g taking that as it as for purposes of discussion that we accept that does that mean that the fact that the equity holders keep a hundred percent is irrelevant or or is that something we should be paying attention to we're properly could pay attention to your honor i i do believe that uh for for this purpose for the purpose that mr. austrian looked at this it is irrelevant in other words we think the fact that the shareholders retain equity and retain a sizeable amount of equity might have happened the way it happened or might not have uh at at the time that this deal was negotiated all of that was taken into account by mr. austrian and his experts it wasn't just mr. austrian and uh the stock was was something don't forget one of the contributions to the trust was a warrant so the trust benefits from the stock being as high as it was uh so all of those things were taken into account thank you let me just go back to the fair and equitable fair and equitable the words are used in three places in the code right five twenty four g as you note five twenty four g four b two and five twenty four h and also eleven twenty nine eleven twenty nine you're saying means something different in effect then five twenty four i think that is what i'm saying because because eleven twenty nine defines how the fair and equitable treatment for instance by allowing the cram down and you can essentially vote that the treatment is fair and equitable override the the fair and equitable treatment i don't think that same provision that same language is in five twenty four g and i don't believe it's an oversight that it's not in five twenty four g they require the seventy five percent a very high majority of present claimants they require a futures representative and if you have the support of those two constituencies i believe congress is saying yes you can have a a contribution that is fair and equitable without meaning absolute does fair and equitable under five twenty four h in something different than fair and honestly i i would pass to mr

. Frank will get up and explain this more in a minute there's a big downside risk if we don't settle in the middle there's a huge risk that these other non-monetary benefits like the deferred payments going out to 2034 and then look at all the financial payments 1.8 billion cash from the debtor uh 500 million of insurance 490 million of warrants billion plus and settlements contingent on the plan going effective from the former subsidiaries who had settled out of the fraudulent transfer litigation and he looked at all of those and said after doing aggressive due diligence this is fair and equitable and judge Fitzgerald relied relied on that very very powerful testimony rich record and we believe entitled to deference and abuse of uh no certainly no abuse of not even close to abuse of discretion what way over that about is full of record as you you can get and that's that's where we come out I'm fair and equitable just very strong evident sugar record you're all right i did have one question uh just curious there there is an assertion from the crown there are own not Montana's that you know Canadian citizens are getting the short end of this they're going to recover oh yes that's there that's their property they have they have a personal injury issue uh and then they've that's their property damage and they say well this isn't fair because we're getting one seventh as much as the United States claim claim on zonolite attic insulation or getting yeah what why is that assertion not problematic it it is there's no evidence in the record to support it absolutely none um it's just absent there there is an aggregate amount being contributed to the Canadian CAI fund of 8.6 million there's an aggregate amount in the first three years of funds being contributed by grace sealed air and presinious to the uscai fund of 60 million but you don't have the denominator comparing how many claims are going against those claims there were a million the ci i claims in the United States and we don't have any record of any in Canada so when the records devoid when did this come up for the first time you know in their brief I believe I don't I don't remember seeing it before there's also a legal issue that 1120 section 1123A4 of the code as I know your honors uh no deals with discrimination within among members within the same class uscai claimants are in class seven b Canadian zai pd claimants are in class eight they're different classes so even if they had evidence um you know it wouldn't be a well taken objection and with that unless there are questions I'll uh before go the rest of my time and turn the podium over to mr frankle the formerly counsel for the future claimants representative now as of last Friday himself the future claimants representative get your back later good afternoon your honors i'm Roger frankle i represented uh david austern during the since the time of his appointment in 2004 until his untimely death a month ago and now speaking as counsel but have been as mr donnelly indicated appointed as the future claims representative mr austern was appointed by the bankruptcy court on motion of wr grace uh to represent uh those that will assert uh personal injury demands broad term in the future uh as soon as he was uh appointed he hired advisors so that he could fulfill his duties uh as the legal representative and as mr donnelly indicated he hired lawyers he hired financial advisors and most importantly hired claims forecasters these experts helped mr austern assess the complex financial and legal issues which affect affect at his constituency these experts were at his side as he helped negotiate the contributions that would be made to the five twenty four g trust pursuant to the plan there were many factors for mr austern to consider during the 2008-2009 time period during these heated negotiations there was significant uncertainty regarding the magnitude of the present and future as best as claims there was significant uncertainty regarding the financial condition of grace and perhaps most importantly there was significant uncertainty regarding the outcome of the estimation trial as mr austern testified settlement negotiations over the plan and thus the contributions to the trust were arms length lively and intense mr austern testified at the confirmation hearing that the plan was fair and equitable to his constituency he testified based on his own experience in this case and the advice of his experts there was no expert for that matter no witness at all that testified that the plan was not fair and equitable under five twenty four g in fact mr austern was not even cross-examined by garlock and you're suggesting as does mr donnelly that fair and equitable under five twenty four g does not incorporate the absolute priority rule correct your honor and it's a balancing of the contributions to the trust with the range of liabilities that are estimated in the primary argument for that is what well your honor i think it's it's the sane reasoning of the language it cannot mean absolute priority in the eleven twenty nine cents because you have a seventy five percent vote requirement that cannot be overridden or at least it's not clear in the statute it can be overridden like it is in eleven twenty nine b so i think mr austern looked at this and took the common sense meaning of fair and equitable to mean am i getting a fair contribution to the trust in light of the potential outcome of the estimation trial which was hotly contested wouldn't the primary argument be that fair and equitable is used in five twenty four h but it's not used in five twenty four g well it is it is used in five twenty four g it's used as a measure of the of the contributions to the trust five twenty four h referring to the to the manville was was a case that was already uh extant i would say um but i think mr austern did the did your client or the district court make a specific determination as to whether or not grace could have contributed more i don't believe that there was a specific determination uh in the record that grace could or could not contribute more i think that the way this came out was a settlement of an estimation trial and the the uh what was stark about that was that graces expert grace had put on its entire case was that it had somewhere in the neighborhood of two hundred to four hundred million dollars present and future asbestos liabilities the experts on the other side the ACC and the future claims representative were in the seven billion dollar range so there was a lot of room in between to make a settlement grace could afford to pay a lot of that but it was not clear at all to mr austern that grace could afford to pay seven billion dollars and for him to take the risk as a fiduciary that he's going to win the estimation trial is a risk that he's really shouldn't be taking when there's an alternative the viable settlement uh that was available to him in order for the district in order for the bankruptcy court to be convinced that the uh that it was fair and equitable then the bankruptcy court have to evaluate how much uh WR grace could contribute you honor i don't think it had to evaluate how much they could possibly contribute i think they had to evaluate that it was a fair amount that it was contributing under the settlement i think that's what was critical and and you have to put in perspective grace's financial condition was changing during this whole case i mean when grace filed for bankruptcy it was teetering and and we go through the case grace is is is doing better but even as we're negotiating back in 2008 in the in the heart of the the financial depression or recession that we were in it was not at all clear how much grace could pay i think what the court evaluated was is this a fair amount considering all of the different factors even if even if the absolute priority rule is not incorporated into five twenty four g formulation of fair and equitable uh should it give us pause that the equity holders i have everything and the claimants get twenty five to thirty five percent i think that uh the deal that was made the settlement that was made uh was fair at the time and is still fair it's a lot of money that's going into the trust grace has an obligation to pay a billion five over fifteen years going out i understand your argument but i'm asking i i hope a more particular question which is you've made the pitch and and we've heard it that there's uh that the absolute primary rule is not embedded it's not a term of art is being maybe an eleven twenty nine but it can be but it is being used in a broader sense in in five twenty four g taking that as it as for purposes of discussion that we accept that does that mean that the fact that the equity holders keep a hundred percent is irrelevant or or is that something we should be paying attention to we're properly could pay attention to your honor i i do believe that uh for for this purpose for the purpose that mr. austrian looked at this it is irrelevant in other words we think the fact that the shareholders retain equity and retain a sizeable amount of equity might have happened the way it happened or might not have uh at at the time that this deal was negotiated all of that was taken into account by mr. austrian and his experts it wasn't just mr. austrian and uh the stock was was something don't forget one of the contributions to the trust was a warrant so the trust benefits from the stock being as high as it was uh so all of those things were taken into account thank you let me just go back to the fair and equitable fair and equitable the words are used in three places in the code right five twenty four g as you note five twenty four g four b two and five twenty four h and also eleven twenty nine eleven twenty nine you're saying means something different in effect then five twenty four i think that is what i'm saying because because eleven twenty nine defines how the fair and equitable treatment for instance by allowing the cram down and you can essentially vote that the treatment is fair and equitable override the the fair and equitable treatment i don't think that same provision that same language is in five twenty four g and i don't believe it's an oversight that it's not in five twenty four g they require the seventy five percent a very high majority of present claimants they require a futures representative and if you have the support of those two constituencies i believe congress is saying yes you can have a a contribution that is fair and equitable without meaning absolute does fair and equitable under five twenty four h in something different than fair and honestly i i would pass to mr. lockwood on five twenty four g h that's a great segue to mr. lockwood i've seen this red light on for so long uh thank you good afternoon your honors um with respect to five twenty four h you have to remember that manville had two different proceedings the original bankruptcy and bankruptcy discharge and a one oh five trust the original trust passed claims through into the tort system for litigation as a result of the influx of claims way in excess of those expected the manville trust began to run out of money judge Weinstein issued a show cause order directing everybody to come in and address the perspective and solvency of the manville trust which was not eligible for bankruptcy but the the five twenty four fair and equitable one to five twenty four h means something different than fair and equitable one to five twenty four g under five twenty four h refers to the absolute priority rule and it got it yeah it's it's specifically specifically refers eleven twenty nine right and it refers to that because it said it five twenty four h said that that absolute priority rule had to be applicable to any pre five twenty four g case such as manville or you and r and uh and manville in fact the absolute priority rule was was applied to if you read the decision there was a descending group of equity shareholders who claimed that uh another group of shareholders shouldn't participate in manville by the way the shareholders retained twenty percent of the equity of the company uh thus demonstrating that it is okay in the legislative history to have some equity retained in this case is mr. Frankle pointed out the trust got ten percent of the equity and effect through the issuance of the warrant to the trust so there's really the five twenty four h does refer to eleven twenty nine but doesn't seem out of five manville doesn't it seem in congress that you would have the same term used in one subsection and the immediately subsequent subsection you have the same term used but it means something different well it in five I mean the first thing you're saying is just sort of you know whatever a judge thinks is fair and equitable the second is is very different because you're saying it refers to eleven twenty nine therefore if that age incorporates the absolute priority rule but g doesn't age extends a requirement that the absolute priority rule have been applied in certain historical cases that had already been completed at the time the statute was yeah but come back I mean doesn't it's I mean just pure statutory construction this is theory now right doesn't seem in congress that you're that you would interpret the same term in one subsection different from the way you interpret it in the immediately subsequent subsection well in the first subsection it's defined in very specific terms and it requires you to measure the contribution to the trust against the benefits received by the party making the contract you're still not answering my question and I mean well it has to seem in congress but there's an answer to what is what you're saying yeah part of the problem I think arises that determines your honor just said earlier fair and equitable is a term that judges and lawyers use in courts of equity all the time but in bankruptcy and as a law but in certain at least in certain places in bankruptcy it is a term of art in certain places it is and in certain places it isn't I believe I think bankruptcy judges and there's court decisions to talk about the treatment of creditors in a bankruptcy case has to be fair and equitable the term is is is is a term that is sort of situational if you will it you look to whatever it is that's being evaluated in the sense can you imagine making that argument to Justice Scalia well in a g it's just situational and age well it's not well no in g it's not situational in g it's it's very specific defined and in 1129 b it's also it says fair and equitable means and then lists a number of subsections and one of those is the absolute priority subsection but but it doesn't say absolute priority equals fair and equitable it says fair and equitable includes and one of the tests is the absolute priority rule thus demonstrating as I believe one of the appellants has argued that fair and equitable is not limited to the absolute priority rule even in section 1129 b itself um you might uh i understand the question i'm not sure i fully understand your answer but the answer might be in the text of a level 524h it's specifically refers to 1129 it does and it also refers to that being i mean it might not be any more complicated than that well i i thought the question sort of assumed that as being inadequate the argument against i was trying to give the historical content would be that the drabter simply forgot to put it into g i don't think so your honor because bankruptcy plans are consensual if you put it into 524g how would it work it would say that you couldn't create a trust if equity retained any value manville itself retained 20% of the value why would this congress have decided based on a precedent where the shareholders of manville were retaining 20% of the equity the company to apply a rule that said you could never have a 524g trust if the debtor setting that trust that no matter how small he has bestest lie to at least were retained any equity why would you want to do that what would be the legislative purpose behind that a couple of minor points your honor with respect to the question about the 5.0 q the judge fisher raised i would i would point out that the manner in which that 5.0 q being at the end of it is protected is through the operation of something called the payment percentage in the tdp which is established by the respective claims estimators for the futures representative and the and the present asbestos claimants and the purpose of that is to make sure that throughout the what the 40 year life of a trust the payment percentage will remain the same and there's a specific statutory provision in 5.24g it's 5

. lockwood on five twenty four g h that's a great segue to mr. lockwood i've seen this red light on for so long uh thank you good afternoon your honors um with respect to five twenty four h you have to remember that manville had two different proceedings the original bankruptcy and bankruptcy discharge and a one oh five trust the original trust passed claims through into the tort system for litigation as a result of the influx of claims way in excess of those expected the manville trust began to run out of money judge Weinstein issued a show cause order directing everybody to come in and address the perspective and solvency of the manville trust which was not eligible for bankruptcy but the the five twenty four fair and equitable one to five twenty four h means something different than fair and equitable one to five twenty four g under five twenty four h refers to the absolute priority rule and it got it yeah it's it's specifically specifically refers eleven twenty nine right and it refers to that because it said it five twenty four h said that that absolute priority rule had to be applicable to any pre five twenty four g case such as manville or you and r and uh and manville in fact the absolute priority rule was was applied to if you read the decision there was a descending group of equity shareholders who claimed that uh another group of shareholders shouldn't participate in manville by the way the shareholders retained twenty percent of the equity of the company uh thus demonstrating that it is okay in the legislative history to have some equity retained in this case is mr. Frankle pointed out the trust got ten percent of the equity and effect through the issuance of the warrant to the trust so there's really the five twenty four h does refer to eleven twenty nine but doesn't seem out of five manville doesn't it seem in congress that you would have the same term used in one subsection and the immediately subsequent subsection you have the same term used but it means something different well it in five I mean the first thing you're saying is just sort of you know whatever a judge thinks is fair and equitable the second is is very different because you're saying it refers to eleven twenty nine therefore if that age incorporates the absolute priority rule but g doesn't age extends a requirement that the absolute priority rule have been applied in certain historical cases that had already been completed at the time the statute was yeah but come back I mean doesn't it's I mean just pure statutory construction this is theory now right doesn't seem in congress that you're that you would interpret the same term in one subsection different from the way you interpret it in the immediately subsequent subsection well in the first subsection it's defined in very specific terms and it requires you to measure the contribution to the trust against the benefits received by the party making the contract you're still not answering my question and I mean well it has to seem in congress but there's an answer to what is what you're saying yeah part of the problem I think arises that determines your honor just said earlier fair and equitable is a term that judges and lawyers use in courts of equity all the time but in bankruptcy and as a law but in certain at least in certain places in bankruptcy it is a term of art in certain places it is and in certain places it isn't I believe I think bankruptcy judges and there's court decisions to talk about the treatment of creditors in a bankruptcy case has to be fair and equitable the term is is is is a term that is sort of situational if you will it you look to whatever it is that's being evaluated in the sense can you imagine making that argument to Justice Scalia well in a g it's just situational and age well it's not well no in g it's not situational in g it's it's very specific defined and in 1129 b it's also it says fair and equitable means and then lists a number of subsections and one of those is the absolute priority subsection but but it doesn't say absolute priority equals fair and equitable it says fair and equitable includes and one of the tests is the absolute priority rule thus demonstrating as I believe one of the appellants has argued that fair and equitable is not limited to the absolute priority rule even in section 1129 b itself um you might uh i understand the question i'm not sure i fully understand your answer but the answer might be in the text of a level 524h it's specifically refers to 1129 it does and it also refers to that being i mean it might not be any more complicated than that well i i thought the question sort of assumed that as being inadequate the argument against i was trying to give the historical content would be that the drabter simply forgot to put it into g i don't think so your honor because bankruptcy plans are consensual if you put it into 524g how would it work it would say that you couldn't create a trust if equity retained any value manville itself retained 20% of the value why would this congress have decided based on a precedent where the shareholders of manville were retaining 20% of the equity the company to apply a rule that said you could never have a 524g trust if the debtor setting that trust that no matter how small he has bestest lie to at least were retained any equity why would you want to do that what would be the legislative purpose behind that a couple of minor points your honor with respect to the question about the 5.0 q the judge fisher raised i would i would point out that the manner in which that 5.0 q being at the end of it is protected is through the operation of something called the payment percentage in the tdp which is established by the respective claims estimators for the futures representative and the and the present asbestos claimants and the purpose of that is to make sure that throughout the what the 40 year life of a trust the payment percentage will remain the same and there's a specific statutory provision in 5.24g it's 5.24g2b25 that says specifically that trust will operate through mechanisms such as structured periodic or supplemental payments, pro-rata distributions, matrices or periodic review of estimates of the numbers and values of present claims in future demands to ensure that the trust will value and be in a financial position to pay present claims in future demands that involve similar claims in substantially the same manner that is the provision that is that has resulted in the claim the creation of payment percentages and the protection of people in the latter part of the q. Let me ask you a quick question uh my colleagues on doltsme because i know your your red light's been on a bit here but mr. Lockwood uh there's the assertion that the trust advisory committee is unfair because it includes attorneys represent asbestos claimants and there's some fashion there's unfairness in the structure itself you want to respond to that please? Sure your honor um the role of the attack as testified to below is to essentially represent the constituency of present claimants as opposed to the future claimants representative who represents the future claimants with respect to the trust um and in that capacity as the trust agreement and our papers point out the role of the attack is very limited very high level supervised the thing the attack does not get involved in the resolution of individual claims and thus the tag members are not in a position to affect the processing of their firms individual claims and indeed they're also dealing with dealing with the rights of lawyers and their clients who they don't represent in their capacity as that and finally anything that they do is subject has to be agreed to by the trustees and the future claimants representative and if they either of those two separate sets of fiduciaries disagree with the tag and there's a dispute the bankruptcy court retains jurisdiction under the trust agreement to resolve the dispute so their power even with respect to the high level advisory capacity that they operate at is very limited and and so we think that and and these tags have been used in all of the cases again going all the way back to manville where it's called the select council for the beneficiaries thank you one final point your honor has to do with the uh jid case which i had to fortunate of arguing in front of you the point here is that in jid the insurance companies judge Jordan hell had been denied the opportunity to participate in the bankruptcy place uh case as a result of denial of standing here as judge Jordan pointed out they were not so denied garlock is agreed that the evidence that they helped generate was was fully presented and that they could reach the marriage the issue here is a pellet standing we are now through and in jid you held that the appellate standing issue i didn't apply i think we dealt with it the bankruptcy standing is fairly easy to meet it's it's the uh pellet standing is the appellate standing is the issue that we would press here you're right thank you mr. Cassada if you could have just talk about briefly the the fair and equitable issue that we were talking about relating to 524 g and h uh yes your honor um we believe uh fair and equitable means means one of two things either it has its pre-code term of art meaning uh as set forth in the case be lumber and void and other cases uh term of art recognized by over 70 years of Supreme Court uh opinions and that is that the creditors are entitled to be paid before stockholders can retire paying right but but you're a drafter and of a legislative provision and if you put in there that future future demand holders have to be paid in full even though you know not don't necessarily know who those future demand holders would be that seems to be an extension of absolute priority that goes way too far uh well i would respectfully uh disagree your honor uh certainly yeah i mean so i'm just being practical explain the practicalities well the the other side here has said if that's the rule you you cannot make one of these sinks function because you know Congress never intended to take everything away and undermine the existence of the company completely i take that to be the gist of their argument which what's why are they wrong well because the parties could agree what the full liability is and they certainly could they could have agreed in this case that the three billion dollars that is being contributed by grace and others would pay the liability in full and in that case they would in their judgments provision they would say that any creditor who actually takes the trust to try to get paid a hundred percent and then the question is whether that was the purpose of having a 75 percent majority in the statute itself if not to address that kind of concern that congress understood knows how these things work and said look if you get three quarters of these classes to agree to it then that's good enough for us run with it but that's not what congress said congress said you need the vague and that's under one provision then under a completely separate provision said that naming the debtor in the injunction with respect to future claimants has to be fair and equitable with respect to future claimants and light of the contributions of the debtor so that's asking the question how much much must I debtor pay to be completely cleansed of its bestest liabilities it's it's basically directing the court to measure the amount of the benefit of the trust of the debtor here the magnitude of discharge against the contribution that debtor is making so how much what's the response to Mr. Lockwood's statement that they couldn't be what it meant because 524G was meant to embody the manville method and then in the manville case they had 20 percent of the equity that they kept so just historically it doesn't add up it's it's not clear that it intended to adopt that aspect of manville and that explains the difference between 524G and 524H isn't one way to explain it to Sué Judge Fisher did 524H rift specifically explicitly refers back to 1129B 524G doesn't and Congress knew how to refer to it when it wanted to and when it didn't want to it didn't no in in 524G congress is referring to the term of art and 524H it's referring to 1129B which are different things if you read just as suitors opinion in the Bank of America case he recognizes that he says that 1129B did not codify the pre-coded version of fair and equitable the term of art it's a it's a more relaxed definition of fair and equitable and all 524H recognized as that these past cases that we want to give the blessing of this statute they wouldn't have applied they wouldn't have known to apply 524G and in fair and equitable which Congress knew was a term of art when it passed when it enacted 524G so they basically said as long as you there was a court determination that the plan was fair and equitable within the meaning of the 1129B which is the only fair and equitable test that existed when those cases came along then then those conjunctions are blessed and and and you get the same kind of production as if they were 524G but essentially they are two different understandings of what 524G or excuse me what fair and equitable means there's the pre-coded term of art and I agree it means general fairness but it includes within general fairness and understanding that creditors get paid before shareholders participate that's a bare minimum of fair and equitable it includes the future demand holders get paid as well 524G says that the court must determine that naming a debtor in an injunction will be fair and equitable to persons who might assert demands or future claims so yes there has to be a determination that future claims will be paid in full before shareholders participate that's what fair and equitable that's what the term of art means and that has to be we submit what Congress meant when it used that term fair and equitable so the reason that 1129 is not referenced in 524G 4B2 is what is because Congress was not adopting 1129B it was adopting the term of art as explained by Justice Souter and Bank of America the term of art that existed before the cut that term of art was describing case after case the case B lumber case the boy case and most recently in the Bank of America case and that term of art says that the holder of any climber interest that is junior excuse me that's the good that creditors are entitled to be paid before shareholders can participate that's what the term of art means Congress we believe knew that when it enacted 524G and that's what it meant in this case it doesn't the Bank of America case say the exact opposite no the Bank of America case was trying to determine whether within within the fair and equitable definition that was adopted in 1129B whether the language there had made room for a new extension of value exception to absolute priority and the code and the court in that case said that the the debtor didn't qualify the debtors plan didn't qualify before but acknowledge that there was room in the formulation of fair and equitable under 1129B for a new value exception but the court recognized that there was a difference between fair and equitable under 1129B and fair and equitable under the precode version in our position we have an abandoned as suggested by the debtors our absolute priority rule argument what we've said is we're not arguing the 1129B applies we're arguing that fair and equitable is defined by the Supreme Court is applied right thank you very much okay thank you very much it's your Monica thank you and I know we're over the limits I promise to be brief and I'll address just a couple of the arguments made by Mr. Donnelly in response to your honest questions about due process I'm Mr

.24g2b25 that says specifically that trust will operate through mechanisms such as structured periodic or supplemental payments, pro-rata distributions, matrices or periodic review of estimates of the numbers and values of present claims in future demands to ensure that the trust will value and be in a financial position to pay present claims in future demands that involve similar claims in substantially the same manner that is the provision that is that has resulted in the claim the creation of payment percentages and the protection of people in the latter part of the q. Let me ask you a quick question uh my colleagues on doltsme because i know your your red light's been on a bit here but mr. Lockwood uh there's the assertion that the trust advisory committee is unfair because it includes attorneys represent asbestos claimants and there's some fashion there's unfairness in the structure itself you want to respond to that please? Sure your honor um the role of the attack as testified to below is to essentially represent the constituency of present claimants as opposed to the future claimants representative who represents the future claimants with respect to the trust um and in that capacity as the trust agreement and our papers point out the role of the attack is very limited very high level supervised the thing the attack does not get involved in the resolution of individual claims and thus the tag members are not in a position to affect the processing of their firms individual claims and indeed they're also dealing with dealing with the rights of lawyers and their clients who they don't represent in their capacity as that and finally anything that they do is subject has to be agreed to by the trustees and the future claimants representative and if they either of those two separate sets of fiduciaries disagree with the tag and there's a dispute the bankruptcy court retains jurisdiction under the trust agreement to resolve the dispute so their power even with respect to the high level advisory capacity that they operate at is very limited and and so we think that and and these tags have been used in all of the cases again going all the way back to manville where it's called the select council for the beneficiaries thank you one final point your honor has to do with the uh jid case which i had to fortunate of arguing in front of you the point here is that in jid the insurance companies judge Jordan hell had been denied the opportunity to participate in the bankruptcy place uh case as a result of denial of standing here as judge Jordan pointed out they were not so denied garlock is agreed that the evidence that they helped generate was was fully presented and that they could reach the marriage the issue here is a pellet standing we are now through and in jid you held that the appellate standing issue i didn't apply i think we dealt with it the bankruptcy standing is fairly easy to meet it's it's the uh pellet standing is the appellate standing is the issue that we would press here you're right thank you mr. Cassada if you could have just talk about briefly the the fair and equitable issue that we were talking about relating to 524 g and h uh yes your honor um we believe uh fair and equitable means means one of two things either it has its pre-code term of art meaning uh as set forth in the case be lumber and void and other cases uh term of art recognized by over 70 years of Supreme Court uh opinions and that is that the creditors are entitled to be paid before stockholders can retire paying right but but you're a drafter and of a legislative provision and if you put in there that future future demand holders have to be paid in full even though you know not don't necessarily know who those future demand holders would be that seems to be an extension of absolute priority that goes way too far uh well i would respectfully uh disagree your honor uh certainly yeah i mean so i'm just being practical explain the practicalities well the the other side here has said if that's the rule you you cannot make one of these sinks function because you know Congress never intended to take everything away and undermine the existence of the company completely i take that to be the gist of their argument which what's why are they wrong well because the parties could agree what the full liability is and they certainly could they could have agreed in this case that the three billion dollars that is being contributed by grace and others would pay the liability in full and in that case they would in their judgments provision they would say that any creditor who actually takes the trust to try to get paid a hundred percent and then the question is whether that was the purpose of having a 75 percent majority in the statute itself if not to address that kind of concern that congress understood knows how these things work and said look if you get three quarters of these classes to agree to it then that's good enough for us run with it but that's not what congress said congress said you need the vague and that's under one provision then under a completely separate provision said that naming the debtor in the injunction with respect to future claimants has to be fair and equitable with respect to future claimants and light of the contributions of the debtor so that's asking the question how much much must I debtor pay to be completely cleansed of its bestest liabilities it's it's basically directing the court to measure the amount of the benefit of the trust of the debtor here the magnitude of discharge against the contribution that debtor is making so how much what's the response to Mr. Lockwood's statement that they couldn't be what it meant because 524G was meant to embody the manville method and then in the manville case they had 20 percent of the equity that they kept so just historically it doesn't add up it's it's not clear that it intended to adopt that aspect of manville and that explains the difference between 524G and 524H isn't one way to explain it to Sué Judge Fisher did 524H rift specifically explicitly refers back to 1129B 524G doesn't and Congress knew how to refer to it when it wanted to and when it didn't want to it didn't no in in 524G congress is referring to the term of art and 524H it's referring to 1129B which are different things if you read just as suitors opinion in the Bank of America case he recognizes that he says that 1129B did not codify the pre-coded version of fair and equitable the term of art it's a it's a more relaxed definition of fair and equitable and all 524H recognized as that these past cases that we want to give the blessing of this statute they wouldn't have applied they wouldn't have known to apply 524G and in fair and equitable which Congress knew was a term of art when it passed when it enacted 524G so they basically said as long as you there was a court determination that the plan was fair and equitable within the meaning of the 1129B which is the only fair and equitable test that existed when those cases came along then then those conjunctions are blessed and and and you get the same kind of production as if they were 524G but essentially they are two different understandings of what 524G or excuse me what fair and equitable means there's the pre-coded term of art and I agree it means general fairness but it includes within general fairness and understanding that creditors get paid before shareholders participate that's a bare minimum of fair and equitable it includes the future demand holders get paid as well 524G says that the court must determine that naming a debtor in an injunction will be fair and equitable to persons who might assert demands or future claims so yes there has to be a determination that future claims will be paid in full before shareholders participate that's what fair and equitable that's what the term of art means and that has to be we submit what Congress meant when it used that term fair and equitable so the reason that 1129 is not referenced in 524G 4B2 is what is because Congress was not adopting 1129B it was adopting the term of art as explained by Justice Souter and Bank of America the term of art that existed before the cut that term of art was describing case after case the case B lumber case the boy case and most recently in the Bank of America case and that term of art says that the holder of any climber interest that is junior excuse me that's the good that creditors are entitled to be paid before shareholders can participate that's what the term of art means Congress we believe knew that when it enacted 524G and that's what it meant in this case it doesn't the Bank of America case say the exact opposite no the Bank of America case was trying to determine whether within within the fair and equitable definition that was adopted in 1129B whether the language there had made room for a new extension of value exception to absolute priority and the code and the court in that case said that the the debtor didn't qualify the debtors plan didn't qualify before but acknowledge that there was room in the formulation of fair and equitable under 1129B for a new value exception but the court recognized that there was a difference between fair and equitable under 1129B and fair and equitable under the precode version in our position we have an abandoned as suggested by the debtors our absolute priority rule argument what we've said is we're not arguing the 1129B applies we're arguing that fair and equitable is defined by the Supreme Court is applied right thank you very much okay thank you very much it's your Monica thank you and I know we're over the limits I promise to be brief and I'll address just a couple of the arguments made by Mr. Donnelly in response to your honest questions about due process I'm Mr. Donnelly seem to focus on notice but it's really about it's more than notice it's in the gentleman case says this it's it's more about our right to assert future claim or future rights to payment and if the court agrees with us then we're permitted to go against reorganized debtor yeah probably I keep coming back to is that it's hard for me to conjure that that the debtors didn't warn the citizens of Montana or citizens of Canada with regard to a possible problem that's being alleged against the sovereign it's not really being alleged against the debtors or against grace is it I'm not sure exactly what you mean you're on her but is it fair you're the one yes there's a failure is there a claim being made against grace that they failed to warn I think there might be I'm not I'm not entirely sure about that my only point is that if if we're right in our arguments then we have the right to go against the organized debtor and the pie decreases for for the direct plaintiffs if you agree with the plan proponents or the debtor more specifically then we're reduced to going against the trust in a tortured process it's going to decrease the pie for victims and I think the legislative history by saying it's going to reduce the pie for the victims is there's more than one interest in play here I mean the fact that there would be more for victims necessarily means you're and you could go against grace outside necessarily means there's more liability for grace as a practical matter why would we why should we accept the argument that's what Congress intended when it set up 5.4 months for Monica. Your Honor I was just going to briefly this is cited by the plan proponents in their answering brief this legislative history and I'm just very quickly Senator Brown says this amendment is about growing the pie available to victims. Senator Hefflyn states the the injunction provision is simply about growing the pie available to pay victims. Well so it can't be simply about that right even if one senator said it was simply about that this is complicated legislative fix for a complicated problem and even you have acknowledged I think that part of this is a fresh start I mean that's a piece of the aren't you aren't you asking us to focus on one thing to the exclusion of that other in a way that the statute sort of seems to counsel against. Someone's box is going to ignore it that's what this is about and I understand the courts to let me you're you're balancing on all I'm suggesting to the court respectfully that if you it would not do injustice or violate the spirit letter of 524g contrary to what the plan proponents say if you were to adopt Montana the Crown's argument

. Donnelly seem to focus on notice but it's really about it's more than notice it's in the gentleman case says this it's it's more about our right to assert future claim or future rights to payment and if the court agrees with us then we're permitted to go against reorganized debtor yeah probably I keep coming back to is that it's hard for me to conjure that that the debtors didn't warn the citizens of Montana or citizens of Canada with regard to a possible problem that's being alleged against the sovereign it's not really being alleged against the debtors or against grace is it I'm not sure exactly what you mean you're on her but is it fair you're the one yes there's a failure is there a claim being made against grace that they failed to warn I think there might be I'm not I'm not entirely sure about that my only point is that if if we're right in our arguments then we have the right to go against the organized debtor and the pie decreases for for the direct plaintiffs if you agree with the plan proponents or the debtor more specifically then we're reduced to going against the trust in a tortured process it's going to decrease the pie for victims and I think the legislative history by saying it's going to reduce the pie for the victims is there's more than one interest in play here I mean the fact that there would be more for victims necessarily means you're and you could go against grace outside necessarily means there's more liability for grace as a practical matter why would we why should we accept the argument that's what Congress intended when it set up 5.4 months for Monica. Your Honor I was just going to briefly this is cited by the plan proponents in their answering brief this legislative history and I'm just very quickly Senator Brown says this amendment is about growing the pie available to victims. Senator Hefflyn states the the injunction provision is simply about growing the pie available to pay victims. Well so it can't be simply about that right even if one senator said it was simply about that this is complicated legislative fix for a complicated problem and even you have acknowledged I think that part of this is a fresh start I mean that's a piece of the aren't you aren't you asking us to focus on one thing to the exclusion of that other in a way that the statute sort of seems to counsel against. Someone's box is going to ignore it that's what this is about and I understand the courts to let me you're you're balancing on all I'm suggesting to the court respectfully that if you it would not do injustice or violate the spirit letter of 524g contrary to what the plan proponents say if you were to adopt Montana the Crown's argument. Well could you respond to the argument that they've made that that if we were to accept that argument 5.4g just craters. Their assertion is that that effectively renders the statute anality. You know I did not agree with that I think that's what I just said is that if we're permitted on on our future right the payment to go against grace. Grace is stated in testimony I think it's in our papers that they have the ability to pay a $750 million contribution demification judgment. Thank that could be and we got it for purposes of this discussion let's take it out of this case for a second as a as an abstract legal matter if we accept the theory or propounding what is to prevent every indirect claimant from saying well that doesn't mean us hence increasing the liability for a future debtor and making these kinds of the use of this kind of mechanism ineffective

. Well your honor I think if it had been handled differently at the bankruptcy court level whether it be getting a separate class to indirect claimants or setting up a separate fund we might not be here today. Did you guys ask for a separate class? Yeah I think we did put it in our papers that we were subject we were not subject to we should not be part of class six. That we were different that that is a mantra that we have been saying over and over again. That's interesting. Okay. Thank you very much. Thank you. Thank you to all council for very well presented arguments and also well done briefs take the matter under advisement and call th