Safely out of a legal storm that would’ve cost it hundreds of millions of dollars, Travelers Cos. can close its signature red umbrella.
Yesterday, a district judge reversed a bankruptcy court’s 2011 ruling that required the St. Paul, Minnesota-based insurance company to pay more than $500 million to resolve asbestos-related claims tied to its coverage of policyholder Johns-Manville Corp., which was the largest U.S. maker of products containing asbestos from the 1920s to 1970s.
Johns Manville filed for bankruptcy in 1982 when it became overwhelmed with asbestos-related litigation. The company settled many of the claims in 1986 and emerged from Chapter 11 in 1988.
Three settlements in 2004 called for Travelers to pay $445 million to asbestos claimants, and last year, U.S. Bankruptcy Judge Burton Lifland added $65 million in interest to the amount, saying the dispute had gone on long enough.
But U.S. District Judge John Koeltl in Manhattan ruled yesterday that “it was an error to require Travelers to make the settlement payments” and that “the judgment must be reversed.” He wrote that Judge Lifland had incorrectly concluded that settlement lawyers had met all conditions required for Travelers to make payments under the 2004 settlements. One unmet condition, according to Travelers, was that settlement lawyers in Hawaii show that the plaintiffs had dismissed all claims against the insurer.