aearo technologies bankruptcies

The 7th Circuit should uphold Judge Grahams thorough decision rejecting non-debtor 3Ms attempt to shield itself through the bankruptcy system, the statement said. Kirkland said that's not just because appellate review will speed up the resolution of the more than 200,000 cases in the earplug MDL but also because this appeal will clarify whether 3M, J&J and other corporations can use subsidiaries' Chapter 11 filings as an escape hatch from mass tort litigation. Let's call it the Hoosier Hop. Aearo Technologies, the unit that made the plugs, is filing for bankruptcy as part of the plan. Oh wait, why bother forum shopping? In conjunction with the chapter 11 process, Aearo Technologies will file customary first day motions with the bankruptcy court seeking authority to continue operating in the normal course of business, without interruption or disruption to its customers, vendors, and employees. Aearo has long been a separate subsidiary from 3M; there was no Texas divisional merger monkey business before the filing. These cases are currently consolidated into multidistrict litigation before U.S. District Judge M. Case Rodgers in Pensacola, Florida. Graham also held that the 7th Circuit limits bankruptcy court authority to issue injunctions barring claims against non-debtors to cases that will have an actual impact on the debtor's estate, not just litigation related to the bankruptcy. Facing . . 22-2890. All quotes delayed a minimum of 15 minutes. In an email statement, earplug MDL lead counsel Bryan Aylstock of Aylstock Witkin Kreis & Overholtz and Christopher Seeger of Seeger Weiss said Aearo's appeal is without merit. The lawyers at Abraham, Watkins, Nichols, Agosto, Aziz & Stogner stand with these veterans and will continue to fight their fight in whatever legal battlefield they encounter. I don't know. If a court buys that story, then all of the moves--the injunction and the funding agreement and the ultimate non-debtor release--are sort of necessary pieces that have to be accepted. Although 3M is not in bankruptcy, the company argued in a supplemental brief that it should be included in the automatic stay offered to Aearo as a result of Aearos July 26 bankruptcy filing. Aearo and 3M also planned much better than J&J did--they set up a situation where Aearo's DIP financing is from 3M, but that financing is contingent upon Aearo indemnifying 3M, and that indemnification is the key hook (bolstered by shared insurance coverage) for Aearo's argument why a suit against 3M is really a suit against Aearo. And at least three appellate courts have ruled that parent companies are covered by the automatic stay on litigation when claims against the parent would diminish the estate of the bankrupt subsidiary. Earlier in the year, Aearo Technologies, a subsidiary of 3M, filed for bankruptcy. The. 3M's earphone subsidiary, Aearo Technologies, filed for bankruptcy today in the Southern District of Indiana. MORE, The Verus blog is including mass tort-related articles by guest authors. Aearo will continue in the chapter 11 proceedings, which it . Note that this is different than "Liking" our Facebook page, although a "Like" in either place will get you Credit Slips post on your Facebook news feed. 3M is looking to spin off its health care business and sell off a lot of its medical supplies business. But it seems that it doesn't actually protect hearing as well as it should, as some 230,000 current and former servicemembers have sued for hearing loss. No surprise there, but the argument K&E puts forward is quite something. 3m has committed $1 billion to fund the trust, based on the analysis of an experienced estimator of claims The MDL is in re 3M Combat Arms Earplug Products Liability Litigation, U.S. District Court, Northern District of Florida, No. Those suits are mainly in a federal MDL based in Florida (apparently the largest MDL in history) and a Minnesota state court action. Background of 3's Bankruptcy Attempts. But it's really quite ridiculous--it's the Naboth's Vineyard problem--where Aearo's argument for protecting 3M is primarily based on an action it chose to as part of a financing deal it "negotiated," rather than seeking arm's length DIP financing, which would not have such a ridiculous indemnification. This is a summary of a request from Aearo Technologies LLC to hire Ice Miller LLP as co-counsel, filed Aug. 9 with the U.S. Bankruptcy Court in Indianapolis. Let's call it the Hoosier Hop. Judge Rodgers questioned whether 3M was acting in good faith when it participated in mediation hearings even as it was drafting the funding and indemnity agreement that would serve to shift its liability to the bankrupt entity. Aearo specialized in making the defective earplug and other safety equipment and was acquired by 3M in 2008. 3M subsidiary Aearo Technologies LLC filed for bankruptcy protection in Indiana on July 26, seeking to resolve lawsuits alleging that 3M's Combat Arms Earplugs Version 2 (CAEv2) caused hearing loss. 3M subsidiary Aearo Technologies LLC filed for bankruptcy protection in Indiana on July 26, seeking to resolve lawsuits alleging that 3M's Combat Arms Earplugs Version 2 (CAEv2) caused hearing . (FOX 9) - Hearing more than 200,000 combined claims that its Combat Arms Earplugs Version 2 were faulty, 3M subsidiary Aearo Technologies has initiated filing for Chapter 11 bankruptcy. The 7th Circuit has some of the laxest law in the country on third-party releases and been scared that they might run into a bad decision in the LTL appeal. The Indianapolis bankruptcy court isn't the typical venue for large corporate Chapter 11 cases, but its business-friendly legal findings have made it the logical choice for 3M Co.'s Aearo Technologies LLC to try to resolve widespread litigation over allegedly faulty combat earplugs. Frankel is the author of Double Eagle: The Epic Story of the Worlds Most Valuable Coin. But with both circuit courts likely to rule over the next several months, we can expect answers to important statutory questions about whether parent companies mired in mass tort litigation can benefit from the bankruptcies of their subsidiaries. Here's the story. This copy is for your personal, non-commercial use only. https://www.wsj.com/articles/firm-retention-summary-aearo-technologies-llc-11666129329. This is looking like a really interesting case: it looks like a new generation of the Texas Two-Step strategy. Now the debtor does get "first crack" and the fraudulent transfer actions, but it exactly that sort of thing that could be the basis for a trustee motion. Aearo manufactures various a type of hearing protection gear used by the military. According to Graham, the 7th Circuit has never adopted reasoning from other federal circuits that the automatic litigation stay can be extended to non-debtors including corporate parents if a judgment against them would in effect be a judgment against the bankrupt subsidiary. Earplug MDL plaintiffs, meanwhile, will probably tell the 7th Circuit that Graham faithfully applied longstanding and well-reasoned circuit precedent. (Im summarizing a nuanced holding that combined legal and factual analysis, but thats the gist of it.). They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. Bankruptcy Petition #: 22-02890-JJG-11 Assigned to: Jeffrey J. Graham Chapter 11 Voluntary Asset Date filed: 2022-07-26 Deadline for filing claims (govt. Here's the story. Both companies Aearo Technologies and 3M now argue that the earplug cases should be resolved in bankruptcy court. Aearo Technologies LLC, a 3M subsidiary named as a co-defendant and its publicly traded parent company in the roughly 230,000 pending claims, filed for bankruptcy last month. Parties that . (Reuters) - By the end of 2023, we should have a much better idea about whether companies facing vast mass torts exposure can use the bankruptcy system to sidestep multidistrict litigation in federal court. A blog on all things about credit, bankruptcy, consumers, and financial institutions. Before joining Reuters, she was a writer and editor at The American Lawyer. The Aearo Entities are operating as debtors-in-possession pursuant to 1107(a) So did the Aearo tort claimants creditors committee, which argued that there is no urgent reason to disrupt ordinary bankruptcy procedures. 609-466-0427, As the Manager of Research Services at Verus, Kim uses both historical documents and current analysis to conduct ongoing research into the products and exposure sites for each of the Trusts administered by Verus. Graham said that litigation against 3M would not actually impede Aearos estate because the financing agreement that the two companies entered on the eve of Aearos Chapter 11 filing made 3M ultimately responsible for Aearos liability in the earplug litigation. To request a Aearo Technologies LLC 7911 Zionsville Road Indianapolis, IN 46268 MARION-IN Tax ID / EIN: xx-xxx0356 fka E-A-R Specialty Composites fka Aearo Company fka Aearo Technologies Represented By. Companies that file for bankruptcy typically receive an immediate reprieve from lawsuits, and 3M subsidiary Aearo Technologies LLC argued that extending those protections to 3M would buy Aearo time to address its debts and restructuring goals. Even if the case gets tossed on good faith filing grounds or the like, they've still probably derailed and delayed the MDL by at least six months, and who knows how much longer, given the way court scheduling works. This is a summary of a request from the official committee of unsecured creditors for tort claimants of Aearo Technologies LLC to hire Brown Rudnick LLP as special litigation counsel, filed Sept. 21 with the U.S. Bankruptcy Court in Indianapolis. And it's also arguably asking the court to approve an actual fraudulent transfer--bankruptcy is the fraudulent transfer mechanism. Aearo Technologies filed for bankruptcy on July 26, 2022, and said it had committed $1 billion to resolve litigating arising out of the use of their earplugs. 19-md-2885. There's certainly a lot of legal risk involved for Aearo and 3M, but it's hard to see what they lose by trying beyond a bunch of attorneys' fees. Their contributions have added new perspectives and ideas to this site, and we thank them for their participation. Here's the story. On Wednesday, the 7th U.S. subscription on Bankr-L, Now like J&J, 3M appears solvent and capable of paying all of the hearing claims in full. Although Bankr-L is a free service, Circuit Court of Appeals granted a petition by 3M Co subsidiary Aearo Technologies LLC to review a bankruptcy court's decision refusing to block MDL litigation. Notice of Hearing with Certificate of Service re: Motion to Extend Exclusivity Period/Deadlines under Section 1121, 1129, 1189 or 1221, filed by Jeffrey A Hokanson on behalf of Debtor Aearo Technologies LLC Related [+]. Plaintiffs in the earplug MDL, in which combat veterans have won 10 of 16 bellwether jury trials and have garnered a total of $25 million in damages, opposed Aearos request to proceed directly to the 7th Circuit without stopping in the trial court. Not so fast, judge tells 3M in surprise decision. Carvanas Earnings Crash Spurs Bond Selloff, Virgin Islands $150 Million Propane Fight Clouds Solar Plans, Distressed Chinese Developer Sells L.A. Circuit Court of Appeals granted a petition by 3M Co subsidiary Aearo Technologies LLC to review a bankruptcy courts decision refusing to block MDL litigation against the parent company despite Aearos Chapter 11 bankruptcy. D.N.J. https://www.abrahamwatkins.com/wp-content/uploads/2022/07/New-Associates.png, https://www.abrahamwatkins.com/wp-content/uploads/2022/03/Video-Thumbnail-Dark.png, https://www.abrahamwatkins.com/wp-content/uploads/2022/07/lifetime-achievement-award.png, https://www.abrahamwatkins.com/wp-content/uploads/2022/03/ABHW_1121_HolidayImage.jpg, Real Trial Lawyers, Real Results | Abraham Watkins. As part of her efforts to decide the issue, Judge Rodgers had requested the earlier indemnification agreement between 3M and Aearo as well as information on which company carried liability on its balance sheets. And for authority that bankruptcy offers the solution, the adversary proceeding complaints quotes the bankruptcy court in LTL: Addressing mass torts through a legislative scheme enacted by Congress within the bankruptcy system provides a judicially accepted means of aggregating and resolving mass tort claims. The first is by invoking exceptions to the general rule that the automatic stay of litigation for Chapter 11 debtors does not apply to non-debtors, including parent companies. 2022). Both companies have argued that the bankruptcy process is a faster, fairer way than complex federal-court litigation to resolve plaintiffs claims. On Wednesday, the 7th U.S. But theres no doubt that the consequences of these numbing questions about the relationship between parent companies and bankrupt subsidiaries have never been higher than they are now, in the era of the so-called Texas two-step to use bankruptcy to shut down mass tort claims. Aearo Technologies filed for Chapter 11 bankruptcy protection this week as a way to deal with the more than 230,000 product liability suits filed against the company and its corporate parent, 3M . This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply. Notably, days before the filing, Aearo Technologies entered into an agreement to indemnify 3M for all liability related to CAEv2. The judge also questioned whether Aearo's bankruptcy filing in the U.S. Bankruptcy Court for the Southern District of Indiana was an effort by 3M to avoid her jurisdiction and re-litigate earlier rulings the company disagreed with, including her decision to place thousands of claims into an administrative docket. Oct. 18, 2022 5:42 pm ET This is a summary of a request from the official committee of unsecured creditors for tort claimants of Aearo Technologies LLC to hire Brown Rudnick LLP as special. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. , 637 B.R. The 7th Circuit order means that Aearo will not have to first challenge the ruling by U.S. Bankruptcy Judge Jeffrey Graham of Indianapolis in federal district court, which is usually the first stop for bankruptcy appeals. bankruptcy system provides a judicially accepted means of aggregating and resolving mass tort claims. By declaring bankruptcy of this subsidiary, 3M attempted to avoid litigation itself with regard to the defective . 3M's earphone subsidiary, Aearo Technologies, filed for bankruptcy today in the Southern District of Indiana. Emily Geier Kirkland & Ellis LLP 601 Lexington Avenue New York, NY 10022 212-446-4800 Email: emily.geier@kirkland.com Jeffrey A Hokanson Ice Miller LLP For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. The financing appears to have been agreed to the day before the bankruptcy filing, so it's not technically a DIP financing agreement--no court approval seems necessary (at least from my quick glance). Opinions expressed are those of the author. The Aearo Technologies chapter 11 cases were filed in the U.S. Bankruptcy Court for the Southern District of Indiana. The claims of over 300,000 veterans who allege their use of CAEv2 earplugs during their military careers have been placed on hold after Aearo Technologies, a subsidiary of 3M Company and the original maker of the earplugs, filed for bankruptcy. (Attachments: (1) Exhibit 1) (Hokanson, Jeffrey) (Entered: 10/28/2022) 10/27/2022: 719: Notice of Hearing with Certificate of Service re: Motion for Protective Order, filed by Jeffrey A Hokanson on behalf of . Main (If you change your mind, you can undo it later.) Aearo promptly filed an adversary proceeding against all of the tort plaintiffs seeking to enjoin them from suing 3M. Moreover, Aearo filed for bankruptcy in the Southern District of Indiana, where it is headquartered, rather than in Delaware where all the entities are incorporated. The cases are being jointly administered under Case No. Copyright 2022 Dow Jones & Company, Inc. All Rights Reserved. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Aearo Technologies and 3M disagree with the ruling and Aearo intends to appeal the decision. If you are interested in writing, click on: Submit Your Request, Copyright 2022 Verus LLC |Privacy Policy |Terms of Use, Two 3M Earplug Verdicts Won by Former Service Members, Split 3M Earplug Decisions with More Cases Scheduled for 2022, CVS and Walgreens Reach Tentative $10B Settlement of Opioid Litigation Cases, Camp LeJeune Water Contamination Litigation Claim Update, J&Js LTL Management Bankruptcy and Talc Litigation Update, Social Media Addiction Lawsuits Consolidation Update, Judge Rules Earplug Litigation Cases Will Proceed Despite Aearo Technologies Bankruptcy, Plaintiffs Request JPML Consolidation for 28 Social Media Addiction Lawsuits, JPML Consolidates Gardasil Vaccine Claims Before District Court Judge, President Biden Signs PACT Act to Increase Veterans Health Care Benefits. Aearo Technologies LLC designs and manufacturers materials for noise, vibration, shock, thermal and cushioning solutions for commercial vehicles, heavy equipment, medical equipment, electronics and aircraft. In a briefing filed in Indianapolis bankruptcy court, Aearo Technologies and 3M openly criticized Judge Rodgers rulings and handling of the MDL. The judge also questioned whether Aearos bankruptcy filing in the U.S. Bankruptcy Court for the Southern District of Indiana was an effort by 3M to avoid her jurisdiction and re-litigate earlier rulings the company disagreed with, including her decision to place thousands of claims into an administrative docket. Aearos petition to the 7th Circuit previewed the central argument it will make in appellate briefing: The 7th Circuit should clarify its interpretation of the relevant bankruptcy statutes to align its precedent with that of other appellate courts that have given bankruptcy courts broad power to block claims that could affect the debtor. 2022 Abraham, Watkins, Nichols, Agosto, Aziz & Stogner, All Rights Reserved | Website by NBBC Group. | Let's Make Some Crypto Law! This is looking like a really interesting case: it looks like a new generation of the Texas Two-Step strategy. To order presentation-ready copies for distribution to your colleagues, clients or customers visit https://www.djreprints.com. 396, 411 (Bankr. 2022). Aearos petition for direct review by the 7th Circuit laid out the two basic routes by which a parent company can take advantage of a subsidiarys bankruptcy to receive a reprieve from pending litigation. in Corporate Bankruptcy. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. Aearo Technologies will continue to operate in the ordinary course. Plaintiffs lawyers, they said, had continued to make filings, despite the automatic stay in place since 3M subsidiary Aearo Technologies filed for bankruptcy on July 26. You can tell from my summary that Aearos legal arguments will likely be dauntingly technical. Our Standards: The Thomson Reuters Trust Principles. So instead, it is hoping to use bankruptcy to be the forum for forcing a deal on plaintiffs. J&J likewise maintains that its talc products are safe. Alison Frankel has covered high-stakes commercial litigation as a columnist for Reuters since 2011. Is 3M earplug bankruptcy the beginning of the end of mass tort MDLs? 3M's Aearo Technologies' Bankruptcy: the Hoosier Hop 3M's earphone subsidiary, Aearo Technologies, filed for bankruptcy today in the Southern District of Indiana. Will this work? ): 2023-01-23 Debtor Aearo Technologies LLC 7911 Zionsville Road fka E-A-R Specialty Composites Indianapolis, IN 46268 MARION-IN EIN: 13- ******* Member Debtor Aearo LLC 7911 Zionsville Road I should say here that 3M denies there was anything wrong with its earplugs. K&E must have seen the light? The case is In re: Aearo Technologies LLC et al., case number 1:22-bk-02890, in the U.S. Bankruptcy Court for the Southern District of Indiana. The bankruptcy is Aearo Technologies LLC, 22-02890, United States Bankruptcy Court for the Southern District of Indiana (Indianapolis). By "Liking" us on Facebook, you will receive excerpts of our posts in your Facebook news feed. 396, 411 (Bankr. On August 14, she ruled she was unable to rule on the issue in one of the motions filed since lawyers for the plaintiffs had asked for intervention from the court too soon, given the fact that 3M had not yet implicated Aearo in any of the verdicts against it to date. on august 26, judge jeffrey j. graham of the u.s. bankruptcy court for the southern district of indiana ruled that the bankruptcy of 3m's subsidiary aearo technologies did not halt the earplug litigation cases pending against the parent company, and denied aearo's motion for a preliminary injunction that, if granted, would have stayed more than See here for a complete list of exchanges and delays. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. D.N.J. The conglomerate has already spent nearly $350 million defending the sprawling litigation, according to court papers. Under agreements signed between Aearo and 3M, the parent company has committed to pay $240 million to fund Aearo's reorganization process in the U.S. Bankruptcy Court in Indianapolis and at. | The industry leader for online information for tax, accounting and finance professionals. click here to visit the page for the list. 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