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In re Chapter 11
1
BESTWALL LLC,
Case No. 17-31795 (LTB)
Debtor.
The Official Committee of Asbestos Claimants (the “Committee”), by and through its
Interest [Docket No. 921] (the “Standing Motion”) filed by Georgia-Pacific LLC (“New GP”),
PRELIMINARY STATEMENT
1. It is far from “readily apparent” that New GP should be, or even is, a party in
interest to any estimation proceeding on the Bestwall Asbestos Claims.2 New GP claims to be a
“party in interest” under 11 U.S.C. § 1109(b) by deliberately conflating the Bestwall Asbestos
Claims—personal injury tort claims—with New GP’s contractual obligations to the Debtor
arising under the Funding Agreement. But, New GP has no protectible pecuniary interest in any
estimation proceeding. Most importantly, any estimation proceeding will not fix or establish
liability. Therefore, New GP cannot claim any pecuniary interest in an estimation trial.
1
The last four digits of the Debtor’s taxpayer identification number are 5815. The Debtor’s
address is 133 Peachtree Street, N.W., Atlanta, Georgia 30303.
2
The Committee contends that the term “Bestwall Asbestos Claims” is misleading in that the
asbestos claims at issue in this case arise exclusively from conduct of Old GP (and possibly New
GP), but not at all from conduct by Bestwall, and are equally and properly “New GP Asbestos
Claims” or “Georgia-Pacific Asbestos Claims”. However, the Committee uses the defined term
used by the Debtor and adopted by the Court throughout for consistency.
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2. Further, New GP disavows any liability for the Bestwall Asbestos Claims,
directing all parties to the documentation for the 2017 Corporate Restructuring. While the
Committee contends that New GP has direct, independent successor liability for the Bestwall
Asbestos Claims, New GP cannot on the one hand disavow such liability and on the other hand
assert a pecuniary interest in the outcome of any estimation hearing. The Funding Agreement
completely alters the character of New GP’s liability. New GP’s sole interest in seeking to
participate in any estimation proceeding is ultimately with the hope of gaining leverage to argue
for a limitation of its own contractual liability to the Debtor. That interest is neither sufficiently
concrete nor beneficial to the Debtor. The Debtor is neutral (or should be) as to what New GP’s
cannot meet such a heavy burden. Instead, New GP relies on Rule 24 of the Federal Rules of
Civil Procedure (the “Civil Rules”) which is excluded from applicability to the estimation
nevertheless cannot meet the burden required for Civil Rule 24 intervention. As the Fourth
Circuit has noted, “a would-be intervenor bears the burden of demonstrating to the court a right
to intervene.” Richman v. First Woman’s Bank (In re Richman), 104 F.3d 654, 658 (4th Cir.
1997). The Court should deny New GP’s Standing Motion and allow the Debtor, the Committee,
and the FCR to conduct an estimation—if such is ordered by the Court—without New GP’s
participation.3
3
As evidenced by the Committee’s recent filings, it is the Committee’s position that estimating
the Bestwall Asbestos Claims is wasteful and improper because such a proceeding will not
inform the decisions of the Debtor, the Committee, or the FCR. See generally Objection of the
Official Committee of Asbestos Claimants to Motion of the Debtor for Estimation of Current and
Future Mesothelioma Claims [Docket No. 937] (the “Committee’s Estimation Objection”);
Continued…
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OBJECTION
4. Section 1109(b) of the Bankruptcy Code provides that “[a] party in interest . . .
may raise and may appear and be heard on any issue in a case under this chapter.” Although
New GP asserts that “party in interest” is defined broadly, the Fourth Circuit has actually limited
“party in interest” status to those entities “whose pecuniary interests are directly affected” by the
particular bankruptcy proceeding at issue. See Yadkin Valley Bank & Tr. Co. v. McGee (In re
Hutchinson), 5 F.3d 750, 756 (4th Cir. 1993); see also Grausz v. Englander, 321 F.3d 467, 473
(4th Cir. 2003) (noting party in interest is entity with “a pecuniary interest in the distribution of
assets to creditors”).
5. An estimation of the Bestwall Asbestos Claims will not, and indeed cannot, fix
the Debtor’s liability for those claims. At best, an estimation proceeding in a section 524(g) case
only provides a debtor, the asbestos creditors, and a future claimants’ representative with some
guidance to assist in negotiating the funding for a trust designed to compensate present and
future asbestos claimants. However, for the reasons set forth in more detail in the Committee’s
Estimation Objection and the Committee’s Second Motion to Dismiss, estimation will not inform
the ultimate funding negotiation and the Debtor’s bankruptcy case will not benefit from an
….Continued
Motion of the Official Committee of Asbestos Claimants to (I) Dismiss the Chapter 11 Case for
Cause Pursuant to 11 U.S.C. § 1112(b), or Alternatively, (II) to Set a Deadline (A) By Which the
Debtor Must Confirm a Chapter 11 Plan or (B) to Lift the Preliminary Injunction in Favor of
New GP and the Protected Parties [Docket No. 938] (the “Committee’s Second Motion to
Dismiss”). Nevertheless, if the Court determines it should proceed with an estimation of the
Bestwall Asbestos Claims, it is the Committee’s position that New GP is not a party in interest
and should not be permitted to intervene in the estimation proceeding.
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6. Even if the Court determines that it will proceed with estimation, such a
proceeding will have absolutely no impact on New GP’s rights or obligations. This is a
dispositive distinction.
negotiations for section 524(g) trust are not governed by estimation decisions. Both the Bondex
and Garlock estimation decisions, along with countless others, demonstrate this fact.
8. Moreover, New GP’s obligations under the Funding Agreement are not analogous
to an insurance contract. According to the Debtor and New GP, New GP is responsible for
payment of the Bestwall Asbestos Claims, whatever they are. If the Debtor elects to consider
New GP’s views on funding of a trust (as it undoubtedly will), then New GP will be a participant
in fixing its liability under the Funding Agreement, even if it has no contractual right to do so.
9. Importantly, New GP did not bargain for a right to participate in the quantification
of the Bestwall Asbestos Claims. Particularly because the Funding Agreement was part of a
parcel of documents expressly created in anticipation of this bankruptcy case, had New GP
Claims, it was fully capable of negotiating, or otherwise providing for, such a right in the
Funding Agreement. Having failed to do so, it cannot now claim a pecuniary interest based
10. It is the Debtor’s position (and New GP’s position), that “the Debtor became
solely responsible for the Bestwall Asbestos Claims as a result of an internal corporate
restructuring that occurred on July 31, 2017, . . . and no Protected Party assumed or otherwise
obtained liability for any such claims as part of the restructuring.” See Adv. Proc. 17-03105,
[Docket No. 2], at 2 (emphasis added). New GP has also asserted that “[t]he Debtor alone, and
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not New GP, was allocated Old GP’s asbestos-related liabilities.” See Adv. Proc. 17-03105
[Docket No. 97], at 2. New GP described the 2017 Corporate Restructuring as “a transaction
that created Bestwall, lawfully allocated Old GP’s asbestos-related liabilities to Bestwall,
ensured that Bestwall’s ability to pay those liabilities was not diminished from that of Old GP,
and created an option for Bestwall to pursue a resolution of its asbestos-related liabilities
under section 524(g) in an efficient manner without the business disruption, complexity and
expense that would have occurred had Old GP filed a chapter 11 case.” See Notice of Filing
Annotated Response to Dismissal Motion [Docket No. 675, Ex. A], at 13-14 (emphasis added).
11. New GP advances the argument that it has a pecuniary interest in the Bestwall
Asbestos Claims because it was caused to enter into the Funding Agreement in connection with
the 2017 Corporate Restructuring. However, New GP’s assertion that the Funding Agreement
may serve as the basis for seeking party in interest status for any estimation proceeding, is
simply incorrect. The Standing Motion purposefully and incorrectly conflates (what New GP
argues is) the Debtor’s ultimate, negotiated liability for the Bestwall Asbestos Claims with New
GP’s actual unconditional, uncontestable, and unlimited contractual obligation under the Funding
Agreement to fund a section 524(g) trust. According to New GP, the “Funding Agreement does
not include any contingencies or restrictive covenants that could operate to excuse New GP’s
performance under the agreement.” [Docket No. 675], at ¶ 9. In fact, the “Funding Agreement
obligates New GP to provide the funding for a section 524(g) asbestos trust in whatever amount
is required by a confirmed plan of reorganization for the Debtor, to the extent that such amount
exceeds the value available from the Debtor’s own assets.” Id. at ¶ 8; see also [Docket No. 665,
Ex A], at Art. 2 (confirming that New GP is required to pay Debtor’s requested funding amount,
subject only to the Debtor’s affirmation that contract-mandated representations and warranties
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continued to be true and correct and that money would only be used to satisfy permitted funding
use).
12. Therefore, even if the estimation proceeding were to fix New GP’s liability under
the Funding Agreement, which it will not, the Funding Agreement does not provide New GP
with a “pecuniary interest” in the Bestwall Asbestos Claims or the right to participate in an
estimation proceeding of those claims as a party in interest. New GP already agreed to pay
whatever the Court-ordered amount is, no matter what that liability turns out to be. New GP’s
motion does not seek to “confirm standing,” but seeks to participate in any estimation proceeding
solely to reduce its own liability for the Bestwall Asbestos Claims.
13. Likewise, New GP’s contention that it is a creditor because the Funding
Agreement requires Bestwall to indemnify New GP for any Bestwall Asbestos Claims asserted
against New GP, is a red herring. New GP fails to identify any instance where a plaintiff named
New GP and New GP was required to pay a Bestwall Asbestos Claim in the ninety-four days
between the 2017 Corporate Restructuring and the Petition Date. Since the Petition Date, the
Court has enjoined the asbestos-related personal injury victims’ ability to bring causes of action
against New GP. Further, it is the Debtor’s stated intention and underlying purpose in filing this
Chapter 11 Case that it resolve the Bestwall Asbestos Claims asserted against it and New GP as
is entirely circular and a construct designed to provide New GP with a form over substance
argument that it has an interest in this proceeding—it exists solely to provide New GP with the
ability to argue it may be a “creditor” of the Bestwall estate. New GP’s assertion that the various
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creditor under the various ancillary agreements for the simple fact that the Debtor has complied
15. New GP pays constitutional standing short-shrift in its Standing Motion, claiming
that because party in interest status is so “readily apparent,” and that party-in-interest is broader
than constitutional standing, it does not need to address constitutional standing. Therefore, New
GP should be prevented from arguing constitutional standing at the hearing on the Standing
Motion. Even if New GP is permitted to argue this point, New GP cannot establish that it has the
Claims.
16. Even if the Court considered New GP a party in interest in the bankruptcy case at
large, such status does not provide New GP with the right to participate in an estimation of the
Bestwall Asbestos Claims. Limits exist regarding what a party in interest may do, and the right
to appear and be heard is not to be confused with standing. See In re Phillips, 573 B.R. 626, 642
(Bankr. E.D.N.C. 2017) (“the right to appear and be heard is not the same as standing and §
1109(b) does not necessarily mean that every party in interest can seek relief on every issue.”
(citing Matter of Rimsat, Ltd., 193 B.R. 499, 503 (Bankr. N.D. Ind. 1996)). Critically, “party in
interest standing does not arise if a party seeks to assert some right that is purely derivative of
another party’s rights in the bankruptcy proceeding.” In re Woodberry, 383 B.R. 373, 379
First, the plaintiff must have suffered an injury in fact—an invasion of a legally
protected interest which is (a) concrete and particularized, and (b) actual or
imminent, not conjectural or hypothetical. Second, there must be a causal
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connection between the injury and the conduct complained of—the injury has to
be fairly ... trace[able] to the challenged action of the defendant, and not ... th[e]
result [of] the independent action of some third party not before the court. Third,
it must be likely, as opposed to merely speculative, that the injury will be
redressed by a favorable decision.
United States v. Windsor, 570 U.S. 744, 757 (2013) (internal quotations omitted) (quoting Lujan
18. As interpreted by the Fourth Circuit, New GP bears the burden of “establishing
injury, traceability, and redressability . . . .” Friends for Ferrell Parkway, LLC v. Stasko, 282
F.3d 315, 320 (4th Cir. 2002). “The relevant showing for purposes of Article III standing . . . is
. . . injury to the plaintiff.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528
U.S. 167, 181 (2000). The purported injury must not be “conjectural or hypothetical.” Ferrell
Parkway, 282 F.3d at 320 (citation omitted). “The traceability requirement ensures that it is
likely the plaintiff's injury was caused by the challenged conduct of the defendant, and not by the
independent actions of third parties not before the court.” Id. (citation omitted) (emphasis
added). Finally, the redressability aspect of the test examines whether it is “likely, and not
merely speculative, that a favorable decision from the court will remedy the plaintiff's injury.”
Id. (citation omitted). Each element of the Lujan test “must be supported in the same way as any
other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of
evidence required at the successive stages of the litigation.” Bradacs v. Haley, 58 F. Supp. 3d
499, 506 (D.S.C. 2014) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)).
19. In any estimation trial, not even the Debtor’s liability—let alone New GP’s
20. Further, as stated above in detail, throughout the entire bankruptcy process,
including the adversary proceeding, New GP is unable to establish that its participation in any
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uncontestable, and unconditional amount under the Funding Agreement to establish a section
524(g) trust. Thus, New GP fails to establish the requisite injury, traceability, and redressability
on the Bestwall Asbestos Claims necessary for constitutional standing and should not be allowed
21. New GP’s only reason for participating in an estimation of the Bestwall Asbestos
Claims is for litigation advantage—to limit its own contractual liability under the Funding
Agreement (and, any liability it has, despite its litigation position, as a successor to Old GP).
But, for the reasons stated above, the Funding Agreement—and the liability New GP has to
Bestwall under the agreement—does not rise to the level of providing New GP with
constitutional standing to participate in any estimation proceeding for the Bestwall Asbestos
Claims.
22. Finally, New GP requests that the Court allow it to intervene under Civil Rule 24
based on New GP’s own assertion that “the Court will benefit from hearing New GP’s
perspective in assessing the Debtor’s alleged liability relating to pending and future asbestos
claims.” See Standing Motion at ¶ 14. The Committee disputes this self-serving statement. The
argument that the Debtor is not fully capable of trying the estimation case without New GP.
Further, because New GP has represented that there is no “daylight between New GP’s position
. . . and Bestwall’s . . .,” 3/21/2019 Hr’g Tr. 35:24-36:2, New GP should not be permitted to rely
on Civil Rule 24 to intervene in an estimation proceeding as argued in greater detail below. See
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23. “[I]t should be pointed out that while it is true that the estimation process is a
contested matter governed by Bankruptcy Rule 9014, which makes certain rules automatically
applicable, Bankruptcy Rule 7024 is not one of them.” In re Bicoastal Corp., 122 B.R. 771, 774
Id. As such, New GP does not have, under the Bankruptcy Rules or otherwise, the ability to
intervene in an estimation proceeding as a matter of right. See Fed. R. Bankr. P. 2018(a) (noting
that intervention in contested matters is discretionary for cause shown. Assuming arguendo that
New GP was entitled to intervene in an estimation proceeding as of right, New GP cannot meet
24. The Committee disputes the notion that the Standing Motion was timely filed. As
New GP itself states, “the ACC raised concerns regarding New GP’s standing during and
subsequent to the status conference on July 11, 2019.” Standing Motion at ¶ 16. The Standing
Motion was not filed until August 12, 2019. Moreover, the Standing Motion was filed with a
request for shortened notice to be heard at the August 22, 2019 omnibus hearing. New GP was
on notice of the Committee’s position for exactly one month before filing the Standing Motion,
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and certainly had enough notice to file the Standing Motion to be heard in August on regular
notice had it so desired. While a month between notice and filing might be timely in other
instances, the Standing Motion is not timely under the current scenario and the Court should
25. New GP has attempted to manufacture standing by asserting its obligations under
estimation of the Bestwall Asbestos Claims scheduled in this case. As detailed above, New GP’s
Funding Agreement obligations do no such thing. An estimation trial is non-binding. And, New
GP’s sole interest in any estimation proceeding is to protect its own interests, not those of the
26. Despite New GP’s assertions to the contrary, it has no interest—let alone a
protectable interest—in estimating the Bestwall Asbestos Claims. Denying intervention in any
scheduled estimation of the Bestwall Asbestos Claims does not impact New GP’s obligations as
set forth in the Funding Agreement. New GP’s obligations, if any, will be determined by
obligated to pay the fees and costs associated with the Debtor’s bankruptcy case as well as fund a
section 524(g) trust in an amount determined by the Court or in a confirmed plan. Its liability
arises not from the Bestwall Asbestos Claims, but from a contractual promise to pay. A
determination that New GP is not entitled to participate in estimation does not alter its obligation
to pay under the Funding Agreement. New GP is not impaired by non-participation; it is getting
exactly what it bargained for when signing the Funding Agreement—a fixed obligation to pay an
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unknown amount in exchange for the Debtor assuming liability for all Bestwall Asbestos Claims.
5. The Debtor is the Correct Party to Litigate the Bestwall Asbestos Claims
27. This factor also favors denying intervention. The Debtor is the proper party to
28. Civil Rule 24(b)(1)(B) provides that the Court may permit anyone who files a
“timely motion” to intervene where that entity “has a claim or defense that shares with the main
action a common question of law or fact.” Fed. R. Civ. P. 24(b)(1)(B). Civil Rule 24(b) is
permissive, allowing the Court to grant intervention upon a party meeting three criteria: (1)
timeliness; (2) shared question of law or fact; and (3) undue delay or prejudice. Communs. Elec.
Indus., 2016 U.S. Dist. LEXIS 84399, at *16 (citing Stuart, 706 F.3d at 355).
interprets timeliness. Id. (noting that Civil Rule 24’s timeliness requirement is “strict[ly]
Motion is untimely.
30. Also discussed above, New GP’s obligation under the Funding Agreement—to
pay what a confirmed plan requires for a section 524(g) trust—is not the same question of law or
fact as an estimation decision concerning the Debtor’s liability for the Bestwall Asbestos Claims.
Finally, prejudice and delay would result from the Court permitting New GP to intervene in any
estimation proceeding of the Bestwall Asbestos Claims. That New GP signed a contract
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“solely and lawfully assigned” to the Debtor by the 2017 Corporate Restructuring does not
justify intervention. The Court should deny New GP’s request to intervene.
CONCLUSION
WHEREFORE, the Committee respectfully requests that the Court enter an order (i)
denying the Standing Motion, and (ii) granting the Committee such other and further relief as the
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