A Georgia manufacturing company has filed Chapter 11 bankruptcy recently because of extensive asbestos lawsuits. They have agreed to create an asbestos trust fund to finance any future asbestos exposure lawsuits that might be filed.

For the last four decades a Georgia-based affiliate of Georgia-Pacific LLC, Bestwall LLC, has been inundated with lawsuits regarding asbestos exposure. Recently, it filed bankruptcy and announced it would be setting up an asbestos trust fund to continue to settle claims of future claimants after the dissolution of the company.

Bestwall LLC announced that it filed a voluntary petition for Chapter 11 relief in the U.S. Bankruptcy Court for the Western District of North Carolina in Charlotte. This action, it claims, is in an effort to “equitably and permanently resolve all its current and future asbestos claims,” PR Newswire reports.

It should be noted that only Bestwall LLC has filed for bankruptcy and not Georgia-Pacific LLC.

Bestwall LLC is attempting to set up an asbestos trust fund under Section 524(g) of the U.S. Bankruptcy Code so that anyone who seeks to file an asbestos exposure lawsuit will be able to recover damages under this asbestos trust fund.

Bestwall LLC was a manufacturer of a joint compound that was used to seal drywall. This joint compound contained asbestos. According to Law360, the company has utilized a provision in that Bankruptcy Code under which Bestwall could channel future litigation toward this asbestos trust fund. Future liability claims could be covered under the asbestos trust fund even if the company is no longer viable.

The Georgia-Pacific Chief Financial Officer, Tyler Woolson, told Law360, “Bestwall’s Chapter 11 filing is an important and necessary step toward an efficient and permanent resolution of the asbestos litigation Bestwall and its predecessor have been facing, and Bestwall would have continued to face, for decades.”

These claims regarding asbestos exposure date from the 1970s. Bestwall Gypsum Company was acquired by Georgia-Pacific in 1965. Until 1977, Bestwall manufactured these joint compounds that contained small amounts of chrysotile asbestos.

Allegedly, the amount of asbestos in the drywall compound amounted to less than 1% of the total asbestos used in the United States in over 3,000 asbestos products in the 20th century. However, Bestwall has been named in 70-80% of all asbestos-related mesothelioma lawsuits, PR Newswire reports.

Bestwall said in a court brief recently, “As numerous defendants filed for bankruptcy, reorganized and established bankruptcy trusts, including virtually all of Bestwall’s primary competitors, increasing numbers of plaintiffs began to recall purported exposures to Bestwall’s old joint compound product, and Bestwall thus found itself increasingly targeted in place of the companies that had filed for bankruptcy and exited the tort system.”

In essence, Bestwall claims that as other similar companies have gone through the same process to set up their own asbestos trust fund to settle future litigation, plaintiffs have been targeting Bestwall because they are the only company under similar accusations that hadn’t filed for bankruptcy yet.

Bestwall and their predecessor have spent nearly $3 billion resolving and defending around 430,000 asbestos lawsuits.

At the time of the bankruptcy filing, Bestwall had 62,000 lawsuits pending against them regarding asbestos. These lawsuits have been projected to continue to go to litigation until 2050.