## Facts

- Johns-Manville Corporation and affiliates filed Chapter 11 due largely to extensive asbestos-related litigation and projected long-tail liabilities.
- Asbestos diseases often have long latency periods, creating a population of persons exposed prepetition who had not yet manifested injury and therefore had not filed claims.
- Keene Corporation, a co-defendant with Manville in asbestos litigation, moved for appointment of an independent legal representative for “future asbestos claimants.”
- For purposes of the motion, “future asbestos claimants” were defined as persons and entities exposed to Manville asbestos products on or before August 26, 1982, who had not yet filed personal injury or property damage claims.
- The court found that treatment of future asbestos liabilities was central to any feasible reorganization because the plan would allocate finite assets among current and future claimants.

## Issues

1. Whether persons exposed to Manville asbestos products prepetition, but who had not yet manifested injury or filed claims, had a cognizable interest in the Chapter 11 case and qualified as “parties in interest” under 11 U.S.C. § 1109(b).
2. If so, whether the bankruptcy court should appoint a legal representative to protect and present the interests of those future claimants in the reorganization.

## Decision

- The court held that future asbestos claimants possessed a cognizable interest in the reorganization and qualified as “parties in interest” under 11 U.S.C. § 1109(b).
- The court granted Keene’s motion and ordered appointment of a legal representative for future asbestos claimants.
- The court reasoned that future claimants had a direct economic stake in plan formulation because plan terms would determine reserves, classification, and mechanisms for long-tail claim payment.
- The court found logistical and notice difficulties manageable and not a basis to deny recognition or representation to affected persons.

## Legal Principles

- “Party in interest” under 11 U.S.C. § 1109(b) is construed broadly to include constituencies materially affected by a Chapter 11 case, not only those expressly listed in the statute.
- In mass-tort reorganizations involving latent injuries, prepetition exposure can create an interest sufficient to warrant participation protections even if injury has not manifested and no claim has been filed.
- Bankruptcy courts may use their case-management and equitable authority to appoint a future claimants’ representative when affected individuals are unknown or cannot effectively appear, to protect interests implicated by plan negotiations and confirmation.

## Conclusion

The bankruptcy court recognized prepetition asbestos-exposed persons with unmanifested injuries as parties in interest under § 1109(b) and required appointment of a representative so the reorganization could account for future liabilities and fairly allocate limited assets among present and future claimants.


In re Johns-Manville Corp., 36 B.R. 743 (Bankr. S.D.N.Y. 1984)