BUS110

Case Study:

 

Chapter 11 Bankruptcy (BK)

In re Johns-Manville Corp.

36 B.R. 727 (Bkrtcy. N.Y. 1984)

 

Case Description: 

Johns-Manville Corp. is a Fortune 500 company and was deemed a paradigm of success in corporate America by the financial community. However, the company produced a product that was poison—asbestos.  Moreover, Manville knew it was poison and had known it since the 1930s, and it hid the danger ( ASBESTOS: THINK AGAIN: INDUSTRY HID DANGERS FOR DECADES (Links to an external site.) ). 

By 1982 approximately 16,000 lawsuits were pending against Manville, and it anticipated a further crushing economic burden by the filing of an even more staggering number of suits by those who had been exposed but who will not manifest the asbestos-related diseases until some time during this future period (20-30 years as the disease manifests itself--“the future asbestos claimants”). Approximately 6,000 asbestos health claims were estimated to have arisen in only the first 16 months since the filing date. The burden was compounded by the insurance industry’s general disavowal of liability to Manville on policies written for this very purpose.

Procedure:

JM petitioned for a preemptive bankruptcy under Chapter 11; attorneys representing some of the people poisoned by JM’s product moved to dismiss the petition.

Issue: 

Can JM preemptively declare bankruptcy and discharge future cases? Why? or Why Not?             

Case Questions:

1. What was the intention of Manville's Chapter 11 declaration? Why was it important for the company to declare Chapter 11? (Analyze the purpose of Manville's BK declaration and the reason behind it.) 

2. Was it ethical for Manville to initiate the BK proceedings?

3. How does this case demonstrate the fundamental purpose of Chapter 11 as opposed to Chapter 7 BK filings? 

4. The historical background here is that Manville knew from at least 1930 that asbestos—used in many industrial applications—was a deadly carcinogen, and for decades, it worked diligently to conceal and obfuscate the fact. What “good faith” argument was raised by the movants in this case?

 

Case Study Directions:

Submit a 5 page paper (about 2500 words) analyzing the Case above. Give background information describing BK, types of bankruptcies, and the purpose of BK filings. 

Provide a scholarly argument on the issue: Can JM preemptively declare bankruptcy and discharge future cases? Why? or Why Not? You also need to provide analytical and critical responses to the three (3) Case Questions listed above.   

As a college-level course, please ensure that your arguments original, substantive, analytical, interactive, and critical. Make sure to use scholarly writing using APA format, and include appropriate references, proper grammar, and punctuation in all of your interactions.  

 

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You can use the following sample outline for your Case Study assignment: 

Case Study Assignment Sample Outline:

1. Give a summary of the Case, may be an Abstract  if you like

2. Describe what the Issue/Problem is and the cause and effect of the Problem

3. Provide your conclusion of the Case and your recommendations

4. It may be useful if you breakdown your Paper based on topics like:

I. Abstract  

II. Introduction,

III. Case Analysis

IV. Conclusion

V. References

 

You can follow the outline to answer the Case questions within the framework above