Chapter 11 and Asbestos: Encouraging Private Enterprise or Conspiring to Avoid Liability?

This paper explores the American bankruptcy system -- especially the Chapter 11 code -- which since 1978 has allowed insolvent companies the opportunity to restructure and reorganise with the benefit of court protection from creditors. Particular attention is focused on asbestos companies, such as Johns--Manville, which have been among the most consistent and controversial filers for bankruptcy under Chapter 11. The history of asbestos and Chapter 11 is explored, against the backdrop of the burgeoning asbestos crisis, caused by increasing mortality and litigation. Some of the business and ethical issues involved are highlighted by examining in detail a recent bankruptcy (Federal Mogul/T&N in 2001) that has implications in both Britain and America. Chapter 11 bankruptcy is evaluated, particularly in the light of the trend towards similar mechanisms of insolvency in the UK, Europe and the rest of the world. It is concluded that, certainly as regards the experience with asbestos, Chapter 11 offers an inefficient and inequitable method of rehabilitating or rescuing failing businesses.     

Piercing the Corporate Veil: Cape Industries and Multinational Corporate Liability for a Toxic Hazard, 1950-2004

The ‘corporate veil’ refers to the separation oflegal identity between parent firms and their subsidiaries,which gives the parent protection against the liabilities ofits subsidiaries. Fearing that such liability protection wouldfacilitate illicit activity, early twentieth century courts,especially in America, would sometimes ‘pierce’the corporate veil. This article explores Adams v. Cape (1990),in which American plaintiffs attempted to persuade the Englishcourts to lift the corporate veil and impose liability for industrialdisease on Cape Industries, a leading U.K. asbestos manufacturer.This landmark case shows how corporate strategy can be closelyintertwined with international corporate law and occupationalhealth and safety issues. It also highlights how limited liabilitylaw and separate legal personality can result in significantinjustice to claimants against multinational enterprises.