New West Virginia Legislation Provides Limits on Asbestos-Related Liabilities for Successor Corporations
On February 22, 2016, the West Virginia Legislature passed Senate Bill 14, which provides limits on asbestos-related liabilities for successor corporations. For purposes of this bill, a successor corporation is a corporation that merged or consolidated with another corporation that was involved with asbestos. The Legislature enacted this bill because it was concerned about asbestos-related claims that threaten companies that never manufactured, sold or distributed asbestos products and are only liable because they are successor corporations.
In order to qualify for these limitations, a corporation must have either (1) become a successor corporation prior to May 13, 1968 or (2) merged or consolidated with another corporation that became a successor prior to May 13, 1968. The limitations on liability do not apply to workers' compensation benefits, claims that are not successor asbestos-related liabilities, insurance corporations, obligations under the National Labor Relations Act or collective bargaining agreements, successors who continued the asbestos work of the previous corporation, prior contractual obligations that resolve asbestos claims or potential asbestos claims, claims made against the estate of a debtor or bankruptcy trust in a bankruptcy proceeding commenced prior to May 22, 2016, and premises liability claims if the successor owned or controlled the premises after the merger or consolidation.
A successor corporation's asbestos-related liabilities are limited to the fair market value of the total gross assets of the company with which it merged or consolidated as of the time of the merger or consolidation, including intangible assets. This amount is adjusted annually, but not compounded. The total gross assets include the liability insurance coverage of the preceding company, but this amount is not adjusted annually.
The bill goes into effect 90 days after passage, which is May 22, 2016. Therefore, it only applies to asbestos claims filed on or after that date.