Practice Areas Practice Areas

Mass Tort Bankruptcy

ZEK has a nationwide practice representing insurers in “mass tort” bankruptcy cases, which one judge remarked was the “highest and best use of the Bankruptcy Code.”  Two recent examples involving more than half a billion dollars in recoveries are:

  • In re Montreal, Maine & Atlantic Canada Co., (Bankr. D. Me).  A derailment and explosion of an oil train in Lac-Megantic, Quebec, killed 47 people, injured many others, and substantially destroyed down-town Lac-Megantic.  Ultimately our insurer client contributed to a global fund of $400 million (Canadian), and all contributing parties were protected by two world-wide “channeling injunctions” from Canadian and U.S. courts. 
  • In re New England Compounding Pharmacy Inc., (Bankr. D. Mass.).  Tainted steroid compounds caused 64 deaths and 751 injuries throughout the United States.  Our insurer clients contributed to a global fund of over $200 million and were protected by a nationwide channeling injunction.  When Bankruptcy Judge Henry Boroff approved this settlement, over objections from the United States Trustee, he remarked on the record that settling a mass tort case in this fashion was the “highest and best use” of the Bankruptcy Code. 

ZEK’s mass tort bankruptcy practice began in 1999 with the Dow Corning breast implant case and has since included all manner of mass torts, from asbestos to pharmaceuticals.  Reorganization of mass tort cases usually results from a global resolution, binding upon all classes of stakeholders, and protecting all voluntary contributing parties.  While sometimes debtors and insurers work cooperatively from the inception of a mass tort bankruptcy case, other times debtors and tort claimants will initially propose a plan of reorganization which is materially adverse to insurers’ rights.  We have challenged more than 25 such plans in court.  Each of these cases was ultimately resolved on terms satisfactory to our clients.