British Asbestos Newsletter
BRITISH ASBESTOS NEWSLETTER
PO Box 93, Stanmore HA7 4GR, England
Compiled by Laurie Kazan-Allen
Jerome Consultants
Issue 58: Spring 2005
1. T&N: The End of the Road?
Nothing short of a miracle will stop the administrators of the T&N Group
from beginning a controlled realization of the companyÕs assets on April
30, 2005. The threat of industrial unrest at T&NÕs English companies and
the seemingly unbridgeable gap between the U.S. and UK positions have
left little room to manoeuvre in what has become one of the worldÕs most
complicated transnational insolvency events and "probably the longest
ever trading (UK) administration." Asbestos claimants remain shut out
from the feeding frenzy that has paid handsome rewards to the companyÕs
administrators, lawyers, accountants and other professional advisers.
Although T&N pensioners continue to receive full pension entitlements
for the time being, deferred pensioners and the current workforce agonize
over what the future holds.
Towards the end of 2004, there was a flurry of activity generated by
the prospects of a December 9 hearing in the U.S. Bankruptcy Court for
the District of Delaware. In the run-up to that Court date, proposals
were made by the U.S. co-proponents of the Federal-Mogul (FM) Reorganization
Plan (the Plan) to UK administrators and independent trustees of the T&N
and Champion Pension Plans. Unfortunately, a global agreement could not
be reached. The UK administrators, Kroll Limited Corporate Advisory and
Restructuring Group, and the independent trustees of the T&N Pension Fund,
Alexander Forbes, remained convinced that the Plan was structurally unfair,
treated creditors unequally, did not comply with UK insolvency law and
failed to give creditors the best possible result. Rulings by High Court
judges supported the right of the administrators and trustees to withhold
their support for the Plan. On October 21, 2004, Mr. Justice Richards
directed the administrators not to propose UK insolvency procedures to
implement the U.S. Plan without a further court order and gave them permission
to file their objections to the Confirmation Plan in the U.S. Bankruptcy
Court. He said:
"I am satisfied that the administrators and the creditors represented
on this application have raised serious issues requiring consideration
with respect both to the fairness and to other aspects of the proposals
embodied in the Plan. I do not consider that it would be right to direct
the administrators to oppose confirmation, in the sense of requiring them
to do so. It is however appropriate to give them liberty to be represented
in the hearings and to oppose confirmation."
In the same vein, Mr. Justice Patten supported the independent trusteesÕ
rejection of the Plan finding that this action did not breach their fiduciary
duty to T&N Pension Scheme members. Patten noted:
"It seems to me that the trustees would be open to attack, were they now
to seek to implement Let it Run in the face of the actuarial and investment
advice they have received."
Anne Hearn Associates, the independent trustee of the Champion Pension Plan,
acting on the advice of the same UK judge, voted to accept FMÕs offer of
£11 million as part of the Plan. In light of the impasse which has been
reached, T&N administrator Gary Squires is understandably pessimistic:
"ItÕs looking increasingly unlikely that the Champion scheme will receive
the GBP11m the closer we get to 30 April without a wider agreement being
reachedÉ This (ChampionÕs) deal is dependent on doing deals with T&N pension
scheme trustees and the UK asbestos community. The biggest sticking point
is the T&N (pension) scheme because the deficit is so colossal and the
plan proponents have so far been unable to agree on a settlement."
One of the major stumbling blocks is disagreement over the size of FM/T&NÕs
asbestos-related liabilities. Estimates compiled for FM by Dr. Peterson
are considered "grossly inflated" by UK experts. Peterson calculates that:
- the cost of pending claims is $565m;
- the present cost of future claims is $5.728bn;
- the present value of total liability for U.S. claims is $10.497 bn;
- the value of future UK liabilities is £232m.
An analysis of PetersonÕs data, submitted to Mr. Justice Richards by
the administrators and compiled by the EMB Consultancy LLP, assessed:
- the present value of pending and future U.S. claims at $5.2bn;
- the value of future UK asbestos liabilities at £183m (£49m less than
FMÕs estimate!).
Yet another analysis of PetersonÕs data was commissioned by the T&N
pension scheme trustees. Consulting Actuary Michael Angelina, who warned
of the "inherent uncertainty in any actuarial estimates of asbestos liabilities,"
estimated future U.S. asbestos liabilities in the range of $2.1-$5.5bn.
His figure for UK claims of £216.7m is £35.3m less than PetersonÕs (£252m).
Because of the dispute over the figures, an estimation hearing will be
held in the U.S. in June, 2005. Even when the court rules on this issue,
the matter will not be resolved as the estimates will be based on the
U.S. tort system judicial process and not the more rigorous English system
under which the claims would eventually be considered and adjudicated
as part of a UK liquidation process. So, while a U.S. court ruling on
the sum total of FM/T&NÕs asbestos liabilities could be helpful, it will
not be determinative.
Although T&NÕs UK businesses have continued to trade, the ongoing uncertainty
has taken its toll on the workforce and customer base. Negotiations between
U.S. and UK stakeholders over the last few months have been non-productive;
as a consensual solution remains elusive, the administrators have decided
that, in the absence of a breakthrough, a controlled realization of the
companyÕs UK assets must commence at the end of April, 2005. T&NÕs businesses
will be sold off as going concerns; the monies raised will eventually
be divided amongst all creditors including the pension plans and asbestos
victims.
The threat to pensions is a political hot potato especially in the pre-election
period. On April 6, 2005 the Pension Protection Fund (PPF), set up to
cover pension payments to workers whose companies go bust, opened for
business. Although the fund is designed to cover schemes that collapse
after April 6, T&NÕs pensioners might be eligible; under the PPF, a second
insolvency event, such as liquidation or even a company voluntary arrangement,
might enable those in the T&N schemes to qualify. Dick Croft, a spokesperson
for Amicus, has been negotiating on behalf of T&N pensioners; he believes
that the PPF:
"... could be the lifeboat. There are still a lot of negotiations to go
through before we even get to that but at least people who are members
of the pension scheme know where the bottom line is."
Theoretically, the PPF will pay 100% of pension entitlement, up to £25,000
a year, for people who have reached normal pension age with younger scheme
members receiving only 90%. In reality, however, a flood of claims, such
as those coming from T&N and MG Rover pension holders, could threaten the
viability of the Fund. The PPF was intended to protect workers at risk from
small pension fund failures and not members of schemes run by major corporations;
total funding for the first two years is £450m with only £150m allocated
for 2005. Actuary Danny Vassiliades says:
"If the scheme starts with an enormous deficit, then you are likely to
get one of two things. Either the premium companies have to pay will go
up or the benefits for victims of failed schemes will be cut. ThereÕs
no guarantee that members will receive the 90% entitlement. The problem
we have is the fund is starting with nothing. ThereÕs no doubt that the
fund will struggle if a number of schemes enter straight away."
Tim Culverhouse, a trustee of the T&N Pension Fund, agrees:
"Negotiations with the Company and the Plan Proponents continue. Should
these not be successful it seems probable that there will be a second
insolvency event and that will trigger a PPF assessment period. It is
likely that the scheme, with no further support, will be unable to pay
PPF level of benefits."
Pensions expert John Ralfe believes that once T&NÕs UK assets are sold,
the PPF could face a bill of £225m to plug the pension hole.
What about T&NÕs UK asbestos victims? Representatives of UK asbestos
claimants told Mr. Justice Richards of their concern over the possibility
that they might:
"be required to release rights to sue UK companies in the UK courts in
respect of claims governed by UK law, and will instead have their rights
adjudicated in the United States by US representatives of the trustees
under procedures governed by US law."
In May, 2004, a settlement was reached with the EmployersÕ Liability insurers
which covered T&N during the period 1969-1995. As of mid-April, 2005 none
of the £34.74m paid by the Brian Smith Syndicate at LloydÕs of London and
the Royal and Sun Alliance has found its way to injured workers or grieving
relatives. According to the administrators, a scheme of arrangement to permit
distribution of the settlement monies, which will require creditor and court
approval, is being prepared. Neil Griffiths, a solicitor for the administrators,
believes that the process "is likely to take some months yet but much of
the preparatory work has now been done. The intention is to start paying
claims very soon after court approval is obtained."
Colin Laidler, whose fatherÕs settlement with T&N was reached four days
before the company went into administration, is "angered and saddened"
at the events of the last three years:
"My father had worked for 39 years at Turner & Newalls Manufacturing plant
in Washington in Tyne & Wear. He was proud that he was an employee of
T&N. My brother, also Ronald, co-executor of my FatherÕs Estate, and I
were 3rd generation Laidlers to be employed by T&N. My brother has pleural
plaques, as does my mother, Sarah Laidler. My grandfather had asbestosis
and my grandmother had cancer. I have a cousin who has been affected by
exposure to asbestos. What we have in common is that we were employed
by T&NÉT&N has slowly but surely been killing and maiming three generations
of my family who had been their loyal and hard working employees."
Ronald LaidlerÕs diagnosis of mesothelioma devastated the whole family.
In May, 2001 Mr. Laidler filed a claim for damages, hoping that he could
"gain some financial security and stability" for his wife. Even this small
consolation was denied to him:
"My father knew about the complexity of the legal problems that beset
his case after the Administration Order was made. He died a painful and
degrading death not knowing whether there would be a satisfactory outcome
to it all. Now, 21 months after his death my mother, brother and I have
still to see my fatherÕs dying wish fulfilled; that my mother would be
financially provided for by the compensation T&N had agreed to pay for
causing his untimely deathÉ
I am concerned that the Americans (proponents of the FM Plan) seem to want
to push through a plan that is not only unfair, but contains no indication
of how much or when compensation would be paid and may make no meaningful
contribution towards the compensation for my fatherÕs death."
By the end of 2001, 193 UK mesothelioma claims against T&N had been
frozen by the administration order.
Ian McFall, a member of T&N CreditorsÕ Committees and Head of National
Asbestos Litigation at Thompsons Solicitors, represents the Laidler family
and other T&N asbestos claimants. Commenting on the administration process,
he said:
"Throughout this wretched process it is undoubtedly our clients who have
suffered most through illness and death from asbestos related disease
caused directly by T&N. Yet despite the strength of their claims they
are likely to benefit least from the outcome of the Administration. So
far they have had nothing; not a penny in compensation, while obscene
amounts in professional fees have been consumed on both sides of the Atlantic.
How much longer must this sickening farce continue before the interests
of our clients are redressed ?"
2. Mesothelioma Summit
A Mesothelioma Summit held at the London headquarters of the British
Medical Association on March 9, 2005 attracted a capacity audience of
asbestos victims, family members, trade unionists, medical personnel,
journalists and public health campaigners to consider what steps can be
taken to focus national attention on the needs of thousands of UK citizens
who have been disadvantaged by asbestos-related illnesses. This initiative
was organized by the British Lung Foundation
(BLF) in collaboration with the http://www.junehancockfund.org/, the Mick
Knighton Mesothelioma Research Fund and other groups and individuals
active on this issue. Welcoming delegates, Dr. Mark Britton, Chairman
of the BLF and a Consultant Physician with an interest in chest diseases,
described the seemingly inexorable rise of mesothelioma deaths in the
UK. Photographs of hazardous working conditions and a graph showing a
correspondence between national asbestos consumption and the annual incidence
of male mesothelioma deaths were the background to a presentation which
pinpointed current geographic hotspots and at-risk occupations such as
carpenters, plumbers, insulators and shipbuilders.
The next speaker, Professor Mike Richards, is commonly referred to as
the Cancer Tsar. The 1999 appointment of Richards by the Department of
Health as the National Cancer Director broke the UK tradition whereby
only civil servants worked with ministers to develop and implement government
health policy. In his presentation The Challenges of Mesothelioma,
Professor Richards acknowledged that while the incidence of mesothelioma
is increasing in the UK, the diagnosis, treatment and care of those with
this lethal disease remain patchy. The Department of HealthÕs new Lung
Cancer Advisory Group is currently looking at ways to improve the delivery
of services; it has been proposed that mesothelioma networks should be
set up throughout the country headed by designated specialist clinicians
to oversee treatment of mesothelioma patients in their regions. Richards
admitted that no clinical guidelines for the treatment of mesothelioma
have been issued by The National Institute
for Clinical Excellence (NICE). (NICE Guideline 24: The diagnosis
and treatment of lung cancer does not cover mesothelioma. ) Responding
to a question about the funding of multicentric mesothelioma trials, Richards
replied that "the number of people on clinical (mesothelioma) trials has
doubled in 3 years."
According to Prevention, Trends and Statistics, the presentation
by Dr. John Osman, Head of the Health and Safety ExecutiveÕs (HSEÕs) Epidemiology
and Medical Statistics Unit, there will be 65,000 UK mesothelioma deaths
between 2002 and 2050. For those already affected by this deadly disease,
care and treatment services need to be vastly improved. To prevent future
avoidable deaths, the HSE introduced the Control of Asbestos at Work Regulations
(2002); Regulation 4, which came into force in May, 2004, assigns responsibility
for the management of asbestos in non-domestic premises to a variety of
parties including property owners, landlords, building and maintenance
managers, licensees, tenants and employers. Making the effective management
of asbestos a statutory priority for organizations signalled a new determination
to manage a hazard which continues to pollute the national infrastructure.
Dame Helena Shovelton, Chief Executive of the BLF, expressed the view
of many delegates that that there is a real need to push mesothelioma
up the national political agenda:
"The government needs to make it (mesothelioma) more of a priority, it
was hardly mentioned in the 2000 Cancer Plan and victims are basically
told there is nothing that can be done for them. This is distressing for
those diagnosed with the cancer and simply is not good enough. It would
not happen with any other cancer."
To raise awareness, Shovelton said, the BLF is proposing that:
- a Mesothelioma Action Group be constituted to work towards a national
Mesothelioma Action Day in February 2006;
- a Mesothelioma Charter be composed which lays out the human rights
of mesothelioma patients and their families.
Speaking about this "failed group of patients," Liz Darlison discussed
the steps being taken by Mesothelioma UK to educate and communicate with
a broad spectrum of stakeholders. Forums at which she has participated
include those organized by lung cancer nurse specialists, researchers,
asbestos victims, charities, civil servants and solicitors; a free phone
help-line provides vital support to victims and their relatives as well
as nursing staff.
Dr. Helen Clayson, a specialist in palliative care, described the findings
of a research project comparing the experiences and treatment of 83 mesothelioma
patients in Barrow-in-Furness, Leeds and Doncaster. The use of quotes
from interviewees added a personal dimension to the data and findings
presented:
- asbestos exposure was identified in 78 patients; in 71 it had been
industrial;
- the median interval between first exposure and onset of disease was
46 years;
- 12 (15%) of the patients had pleural plaques;
- median survival from presentation was 11 months;
- mean time from symptom onset to hospital consultation was 3_ months
(the range was from the same day to 2 years);
- 22 patients (26%) were admitted as emergency cases on their first
hospital visits;
- 75 patients (90%) required hospital admissions during their last
year of life due to pleural effusions.
A recurrent theme was the difficulty of accessing government benefits and
obtaining compensation. Professor Anthony Newman Taylor, Chairman of the
Industrial Injuries Advisory Council, a scientific advisory group to the
Department for Work and Pensions (DWP), confirmed that due to the underclaiming
of Industrial Injuries Disablement Benefits (IIDB) by mesothelioma victims,
a comprehensive review of mesothelioma and other asbestos-related diseases
had been conducted. The report which is now awaiting the MinisterÕs attention
confirmed that:
- there is a lack of awareness of the IIDB scheme;
- patients are often too ill to claim;
- a belief that the DWP requires medical assessment and extensive corroborative
evidence deters claims;
- sufferers who were self-employed or non-occupationally exposed are
barred from IIDB.
Adrian Budgen, of Irwin Mitchell Solicitors, explained some of the complexities
of claiming benefits such as Industrial Injures Disablement, Constant Attendance
Allowance and Exceptionally Severe Disablement and the process of obtaining
civil compensation from negligent employers. Responding to a question about
the high cost of treatment with Pemetrexed (Alimta), a palliative chemotherapy
drug, Mr. Budgen suggested including treatment costs in mesothelioma awards.
Another recurrent theme was the lack of government funding for medical
research and treatment with new drugs. Dr. Jeremy Steele said that 60%
of patients experienced improvement in their symptoms after treatment
with drugs such as Alimta and Cisplatin; unfortunately, six cycles of
these drugs cost £10,000. According to the Greater Manchester Asbestos
VictimsÕ Support Group, Primary Care Trusts in Greater Manchester are
refusing to approve the necessary expenditures:
"Treatment of mesothelioma has to date cost the NHS very little; until
recently patients were simply sent home to die. Now that palliative chemotherapy
treatment is available it is imperative for medical and ethical reasons,
and justified on grounds of cost, that it be provided NOW."
In the UK, funds for research into mesothelioma biology and treatment protocols
are urgently needed.
The penultimate session of the day was a presentation by Chris Knighton,
whose husband Mick died of mesothelioma in 2001. Photographs of Mick in
his naval uniform showed a fit and robust man, referred to by Chris as
"her rock." The story of MickÕs symptoms, diagnosis, medical treatment
and deterioration was the most hard-hitting of the day. Chris said:
"It happened so suddenly. When Mick was diagnosed he was told he had just
months left and there was no treatment, no cure. He was just left."
Determined to ensure that others do not suffer as Mick did, Chris and her
family set up the Mick Knighton Mesothelioma Research Fund; their original
goal to raise £100,000 for research has been surpassed.
To facilitate discussion about the proposed Mesothelioma Charter, delegates
were offered the opportunity to join one of five break-out groups. Opinions
expressed in these sessions included:
- there is a need for an agreed standard of care for mesothelioma;
the availability of and access to treatment is patchy and slow: it can
take 6 months for a mesothelioma patient to get a referral; a sense
of nihilism regarding mesothelioma prevails amongst many general practitioners;
there are few centres of excellence for treatment of mesothelioma, CT
scans, surgery and radiotherapy;
- treatment of mesothelioma requires coordinated treatment plans implemented
by specialist multi-disciplinary teams; access pathways for support,
benefits and compensation should be built into the process;
- there was disagreement over the benefits of screening at-risk groups
such as construction workers;
- the current lack of funding for UK research is unjustifiable;
- the difficulties faced by the self-employed, women and mesothelioma
patients who experienced non-occupational exposure need to be remedied;
- enforcement of asbestos legislation by the HSE and local authorities
is compromised by the decreasing number of HSE inspectors and lack of
funding;
- hazardous asbestos exposure is still common in the construction industry;
- employers who expose workers to asbestos should be punished with
prison sentences;
- the level of civil damages is "atrociously small"; mesothelioma victims
who wish to continue at work should be given as much support as they
need to do so;
- government determination to tackle the national mesothelioma epidemic
is essential;
- campaigning for mesothelioma victims in the UK should be linked to
global action; a global asbestos ban is essential.
There was consensus on the need for coordinated action and it was agreed
that the Mesothelioma Charter, with some revisions, should be adopted.
During the day, an agreement was signed by Kimberley Stubbs, Co-Trustee
of the June Hancock Mesothelioma Research Fund (the Fund), and Mark Britton,
representing the BLF, which will "permanently amalgamate the assets and
fundraising activities of the Fund into those of the Charity (BLF), andÉ
enable the continuation of the Fund under the British Lung FoundationÕs
charity number." Ms. Stubbs, June HancockÕs daughter, explained the reason
for the June 1, 2005 merger:
"In partnership, we will become an even greater force in the fight against
this terrible disease. I couldnÕt wish for anything more, and I know that
my Mum would be pleased and proud that we have come so far. Between us,
we can significantly increase the profile of mesothelioma on a nationwide
level by achieving a much louder voice, sharing valuable resources, and
jointly lobbying those individuals and institutions that can really influence
the fight against this disease."
Since it was founded in 1997, shortly after JuneÕs death from mesothelioma,
the Fund has raised £250,000; awards by the Fund have financed the National
Mesothelioma Helpline ( 0113 231 1010 ) and supported important research
projects in Leicester, Glasgow and London including the pilot project for
the MSO1 trial.
3. Spring Events in the UK
A series of asbestos events is being planned for the UK:
May 18: Mesothelioma - The Silent Epidemic, British Museum, London.
Organized by: Irwin Mitchell Solicitors; contact: Guy Darlaston: email:
Guy.Darlaston@IrwinMitchell.com
May 18: Asbestos Seminar. Barking, East London. Organized by: Barking
and District Asbestos VictimsÕ Support Group; contact Margaret Sharkey:
email: margaret@lhc.org.uk
May 20: Asbestos Conference, Belfast. Organized by: Justice for Asbestos
Victims (Northern Ireland); contact Fiona Sterritt: email: fionasterritt@hhdsolicitors.com
May 23: Asbestos Seminar, University of Strathclyde, Glasgow. Contact:
Arthur McIvor; email: a.mcivor@strath.ac.uk
May 24: Asbestos Meeting, Glasgow. Organized by: Clydebank Action on
Asbestos and West Dunbartonshire Council. Contact: Tommy Gorman; email:
Thomas.Gorman@west-dunbarton.gov.uk
May 26: Asbestos Seminar, Cardiff. Organized by: Asbestos Awareness
Wales. Contact: Mary Nicol; email: mary@santaclara.fsnet.co.uk
June 3: Conference - Asbestos & The Law, Liverpool. Organized by Merseyside
Asbestos Victims Support Group. Contact: John Flanagan; email@gfr15@dial.pipex.com
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