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Newly Affirmed Bankruptcy Court Ruling Outlines Path to Bankruptcy Discharge for Mass Tort Claims
18 February 2014
The Southern District of New York has affirmed a bankruptcy court ruling confirming that mass tort claims may be discharged using a comprehensive noticing scheme, rather than a trust mechanism or future claims representative. This option may provide strong protection against certain tort claims without the expense and delay of the trust process.
The rulings highlight the importance of developing a bar date noticing scheme that goes beyond national newspaper notice. In Chemtura, the debtor’s use of “site-specific” notices for unknown claimants was found to be “unusually thorough” and therefore was at least “reasonably calculated” to provide notice sufficient to meet constitutional due process requirements.
Development of an enhanced noticing scheme that leverages what is known about unknown claimants – such as particular products and specific locations – can protect reorganized debtors by reinforcing the effectiveness of discharge.
Richard F. Hahn
M. Natasha Labovitz
George E.B. Maguire
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