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(Reuters) – The judge overseeing the bankruptcy of Imerys Talc America said she needed more information on an offer to ignore 18,000 votes on the restructuring plan proposed by the former talc miner that have changed after their initial submission, which could interfere with the Company’s ability to process forward.
In a virtual hearing on Tuesday, U.S. bankruptcy judge Laurie Selber Silverstein in Wilmington, Delaware, approved requests from insurers and a group of personal injury claimants to investigate what they say are issues ranging from votes cast late to potentially invalid votes. If votes in favor of the plan are rejected, as requested by a group of claimants represented by Arnold & Itkin, the current 80% approval of the plan among personal injury claimants could be at risk.
Imerys Talc, represented by Latham & Watkins, filed for bankruptcy in February 2019 facing around 15,000 lawsuits alleging its products caused ovarian cancer and asbestos-related mesothelioma. This was the American unit of the French group Imerys SA. In 2020, it was sold to Magris Resources Canada for $ 223 million. These proceeds will go to a trust which, under the plan proposed by the company in Chapter 11, will pay the personal injury claims.
Imerys Talc garnered votes on its proposed plan earlier this year, but has since been hammered with allegations from opponents of the plan that the voting process was fraught with errors. The most egregious, according to the Arnold group – which says it represents more than 2,000 talcum bodily injury claimants – is the change of 18,000 votes other personal injury claimants who had rejected the plan to accept the plan after the voting deadline.
The company denies that there was anything inappropriate about the voting changes. To complicate matters, the disagreement between Imerys Talc, Arnold’s claimants and others over the process by which claimants could change their votes. While Imerys Talc argues that the votes were changed in accordance with procedures outlined in an order Silverstein signed earlier in the case, the Arnold Group claims that anyone modifying a vote had to, but did not, file an order. petition to the court to do so.
Silverstein herself admitted that she had not paid close attention to the Solicitation Procedures Ordinance’s provision governing voting changes.
“Just because I signed doesn’t mean it’s correct,” she said.
Plus, said Silverstein, she doesn’t know if she has the power to disregard votes. She asked lawyers for both sides to provide her with more information on the dispute.
The Arnold group was supported in its demand to disregard these votes by former Imerys Talc client Johnson & Johnson, who used talcum extract from Imerys for their baby powder and also faced to numerous disputes related to talc.
Johnson & Johnson has denied wrongdoing and said the Imerys Talc plan will lead applicants to demand more money from the pharmaceutical giant. Johnson & Johnson, represented by Weil Gotshal & Manges, also requested additional information on the voting process as a whole, but reached a deal with Imerys Talc ahead of Tuesday’s hearing.
According to Imerys lawyer Kim Posin of Latham, of the more than 100,000 votes submitted, nearly 8,000 were defective for a variety of reasons, including not accepting or rejecting the plan or not including the numbers of social Security. These issues, she added, are not unusual in garnering votes for a Chapter 11 plan.
“These are not unusual things,” Posin said.
The case is In re Imerys Talc America Inc., US Bankruptcy Court, District of Delaware, No. 19-10289.
For Imerys: Jeffrey Bjork, Kimberly Posin, Helena Tseregounis and Richard Levy from Latham & Watkins and Mark Collins, Michael Merchant, Amanda Steele and Brett Haywood from Richards Layton & Finger
For the Arnold Plaintiff Group: Laura Davis Jones, Debra Grassgreen, John Morris and Peter Keane of Pachulski Stang Ziehl & Jones, and Jason Itkin of Arnold & Itkin
For Johnson & Johnson: Diane Sullivan, Gary Holtzer, Ronit Berkovich and Theodore Tsekerides from Weil Gotshal & Manges, and Patrick Jackson from Faegre Drinker Biddle & Reath
[This story has been corrected to reflect that Imerys is no longer mining talc and that Johnson & Johnson is no longer a customer.]