In re Asbestos Corp.

• Court: U.S. Bankruptcy Court — Southern District of New York
• Writing for the Court: MARTIN GLENN CHIEF UNITED STATES BANKRUPTCY JUDGE
• Docket Number: 25-10934 (MG)
• Decision Date: 30 October 2025
• Parties: In re: ASBESTOS CORPORATION LTD., Debtor in a Foreign Proceeding.

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In re: ASBESTOS CORPORATION LTD., Debtor in a Foreign Proceeding.

No. 25-10934 (MG)

United States Bankruptcy Court, S.D. New York

October 30, 2025

Chapter 15

APPEARANCES: ORRICK, HERRINGTON & SUTCLIFFE LLP Counsel for the Petitioner Raymond Chabot Inc., in its capacity as Foreign Representative Evan Hollander, Esq. Daniel A. Rubens Esq. David Litterine-Kaufman, Esq. Michael Trentin, Esq Jenna MacDonald Busche, Esq. Daniel Carnie, Esq. WILLIAM K HARRINGTON UNITED STATES TRUSTEE, REGION 2 Alexander Hamilton Custom House DENTONS U.S. LLP Counsel to TIG Insurance Company and certain other insurance companies Geoffrey M. Miller, Esq. MORGAN LEWIS & BOCKIUS LLP Counsel for Peter D. Protopapas, the Court-Appointed Receiver for the Insurance Assets of Asbestos Corporation Limited MORGAN LEWIS & BOCKIUS LLP 1000 Louisiana Street, Suite 4000 Houston, TX 77002 By: Brady Edwards, Esq. COOLEY LLP Counsel for Charles M. Forman, solely in his capacity as the Chapter 7 Trustee for the bankruptcy estate of National Services Industries, Inc. SIMPSON THACHER & BARTLETT LLP Counsel to Certain Underwriters at Lloyd's, London and certain London market insurance companies WINDELS MARX LANE & MITTENDORF, LLP Counsel to Allstate Insurance Company, solely as successor in interest to Northbrook Excess and Surplus Insurance Company, formerly Northbrook Insurance Company One Giralda Farms Anthony F. Sirianni, Jr., Esq. RUGGERI PARKS WEINBERG LLP Counsel for First State Insurance Company, Hartford Accident and Indemnity Company and New England Reinsurance Corporation MCELROY, DEUTSCH, MULVANEY & CARPENTER, LLP Counsel for First State Insurance Company, Hartford Accident and Indemnity Company and New England Reinsurance Corporation MCELROY, DEUTSCH, MULVANEY & CARPENTER, LLP PARKER, HUDSON, RAINER & DOBBS LLP Counsel for the Certain Solvent Non-Resolute London Market Companies Harris B. Winsberg, Esq. Anna K. MacFarlane, Esq. Matthew M. Weiss, Esq. - and - STRADLEY RONON STEVENS & YOUNG LLP WYCHE, P.A. Counsel for the Asbestos Parties Matthew T. Richardson, Esq. DEAN OMAR BRANHAM SHIRLEY, LLP Charles W. Branham, III, Esq. DAVIS POLK & WARDWELL LLP Counsel to General Dynamics Corporation Frances E. Bivins, Esq. James I. McClammy, Esq. Darren S. Klein, Esq. WHITE AND WILLIAMS LLP Counsel to Oakwood Insurance Company as successor to Central National Insurance Company of Omaha, but only for policies issued through Cravens Dargan and Company Pacific Coast Jeremiah J. Vandermark, Esq. - and - PLEVIN & TURNER LLP 580 California Street, Suite 1200 San Francisco, California 94104 PLEVIN & TURNER LLP 1701 Pennsylvania Ave., N. Miranda H. Turner, Esq.

MEMORANDUM OPINION GRANTING MOTION FOR RECOGNITION OF FOREIGN MAIN PROCEEDING AND ADDITIONAL RELIEF AND OVERRULING ASBESTOS PARTIES OBJECTIONS

MARTIN GLENN CHIEF UNITED STATES BANKRUPTCY JUDGE

Pending before the Court is the Foreign Representative's motion ("Motion," ECF Doc. No. 4) for recognition of the Canadian Proceeding (defined infra) as a foreign main proceeding for the above-captioned debtor ("Debtor" or "ACL"). The Asbestos Parties (defined infra) filed an objection ("Objection," ECF Doc. No. 75) to the Motion, which incorporates by reference the Receiver's Limited Response ("Receiver Response," ECF Doc. No. 23) to the Foreign Representative's earlier motion for interim relief. The Foreign Representative filed a reply ("Reply," ECF Doc. No. 81) in support of its Motion, as did the London Market Insurers (defined infra) ("CLMI Reply," ECF Doc. No. 83). The Court held an evidentiary hearing on the Motion on October 8, 2025. This Opinion contains the Court's findings of fact and conclusions of law. See Fed. R Bank. P. 7052. For the reasons explained below, the Court concludes that the Foreign Representative has satisfied the requirements of Section 1517(a) and has made a proper showing under Section 1521 to extend the stay to the Stay Parties (defined infra). The Court therefore GRANTS the Motion in full and OVERRULES the Asbestos Parties objection.

I. BACKGROUND

A. Company Structure and History

ACL is a Québecois corporation, founded in 1925 and incorporated under the laws of Canada. (Declaration of Ayman Chaaban (the "Chaaban Decl."), (ECF Doc. No. 2) ¶ 8.) For sixty years, ACL operated open pit chrysolite mines for the purpose of asbestos mining in Québec. (Id. ¶ 15.) Asbestos mined in Québec would be shipped by ACL worldwide. While asbestos mined by ACL would be sold and shipped to the United States, over 90% of total ACL sales occurred outside of the U.S. Recognition Hearing at 3:36:15, In re Asbestos Corporation Ltd., No. 25-10934 (Bankr. S.D.N.Y Oct. 8, 2025).

Mining operations ceased in 1980. In recent years, ACL has operated the mines on a limited basis for purposes of extracting minerals from tailings, the waste material remaining from the past mining operations. In addition, ACL continues to manage, restore, lease and redevelop its properties, including various warehouses and other buildings, all of which are in Québec. (Id. ¶ 16). As of the filing of the Verified Petition on May 6, 2025 (Verified Petition, ECF Doc. No. 1) (the "Petition"), all of ACL directors and officers reside and work in Canada, which is also where all board meetings have been exclusively held. (Id. ¶ 12.) As all senior management work and reside in Canada, it is also here where all operational and strategic decisions are made. (Id. ¶ 11.) All individuals currently employed by ACL live and work in Canada. (Id. ¶ 20.)

Aside from these operations, ACL's activities have included the management of the thousands of personal injury lawsuits filed against the corporation for injuries resulting from exposure to asbestos fiber connected to ACL. (Id. ¶ 16.) ACL entered into an Interim Settlement Agreement ("ISA") with Certain London Market Insurers ("CLMI")^[1] for managing the costs of defense and judgments related to asbestos claims against ACL. (Id. ¶ 27.) First entered in 1998, the effective term of the ISA has been extended to the current indefinite term. The terms of the ISA effectively extend the "London Policies" as agreed to by ACL's former parent corporation, General Dynamics.^[2] (Id. ¶ 27.) The ISA established an arrangement in which CLMI would reimburse ACL for Defense Costs and Indemnity Payments attributable to Asbestos-Related Bodily Injury Claims (as defined by the ISA). (Id.) Thousands of claims have been settled through this protocol. Of the more than 50,000 asbestos-related claims initially brought against ACL, only approximately 6,100 remain. Approximately 19,000 claims have been settled under the ISA. (Asbestos Parties Ex. 83.)

Settlement efforts with the remaining claimants have stalled after the appointment by a South Carolina Court of Peter Protopapas as the Court-Ordered Receiver (the "Receiver") of ACL.^[3] Since his appointment in late 2023, the Receiver has accepted service on ACL's behalf in a number of new asbestos actions, cases in which ACL has declined to retain counsel as they challenge the Receiver's validity. (Id. ¶ 31.) ACL, facing increasing number of default judgments deriving from these proceedings^[4] and seeking to consolidate the various claims being brought against it, and CLMI seeking protection from actions brought directly against the insurers, initiated insolvency proceedings for ACL under the Companies' Creditors Arrangement Act, R.S.C. 1985 in Canada on May 5, 2025 (the "CCAA Proceeding" in the "Canadian Court"). (Chaaban Decl. Ex. 2.)

Soon after filing in the Canadian Court, ACL initiated this Chapter 15 proceeding seeking: recognition of the CCAA proceeding as a foreign main, or in the alternative, foreign nonmain proceeding; authorization of the Foreign Representative, on behalf of the Debtor, to possess and control, and be entrusted with the exclusive control and administration, of all of the Debtor's U.S. Interests; and to extend the section 362 to ACL, CLMI, Third Party Claim Administrator Resolute hired by CLMI to handle the U.S. asbestos claims, and former parent entity General Dynamics (the "Stay Parties"). (Motion at 14). This Court issued a Temporary Restraining Order ordering a section 362 stay as to ACL and the Stay Parties, recognizing the Foreign Representative of the Debtor and scheduling a hearing for May 19, 2025 to show why provisional relief should be extended. (Temporary Restraining Order, ECF Doc. No. 8.) After the hearing, an order was entered by this Court extending the initial relief until a final determination is made by this Court with respect to the Petition. (Order Granting Motion for Provisional Relief, ECF Doc. No. 37.) The Canadian Court granted preliminary relief to ACL extending the stay of proceedings as to ACL and the Stay Parties on an interim basis as work on the ultimate reorganization plan continued. (Certified Translation of July 30, 2025 Judgment, ECF Doc. No. 66-1.) In granting such relief, the Canadian Court overruled an objection challenging that ACL had continuing operations and maintained assets in Québec, holding that such arguments "def[ied] logic."^[5] (Id. ¶ 76.)

B. Asbestos Parties Objection

The Asbestos Parties^[6] object to the recognition of the CCAA proceeding and, if the Court recognizes the Canadian proceeding, they object to extending the section 362(a) stay to the Stay Parties.

1. The Asbestos Parties Argue that the CCAA Proceeding Should Not Be Recognized

The Asbestos Parties argue that the CCAA Proceeding is not a foreign main proceeding under Chapter 15 as ACL's COMI is not in Canada. See 11 U.S.C. § 1502(4) (A foreign main proceeding is one "pending in the country where the debtor has [its] center of [] main interests.") While a debtor's COMI is presumed to be the location of the debtor's registered office (...