Originally posted on Global Restructuring Review on September 8, 2025
By Marco Schaden
A Québec-based asbestos mining company is facing opposition to its request for Chapter 15 recognition of its Canadian insolvency from a group of asbestos claimants and a Chapter 7 trustee who claim the company’s centre of main interest (COMI) is in the US.
On 2 September, Charles Forman, the Chapter 7 trustee of Atlanta-based industrial conglomerate National Services Industries, and a group of US-based individuals with personal injury claims against Asbestos Corporation Limited (ACL) asked Chief Judge Martin Glenn in the US Bankruptcy Court for the Southern District of New York to reject ACL’s request for Chapter 15 recognition.
National Service Industries, a former participant in the asbestos market, is currently pursuing a US$151 million indemnity lawsuit against ACL via a bankruptcy trust created in its own Chapter 7 liquidation, which was filed in July 2012 after it was hit with a host of asbestos claims.
The objecting parties claim that ACL’s insurer, Certain London Market Insurers (CLMI), is seeking to leverage the company’s “nominal, legacy ties” with Canada to force thousands of US-based mass tort claimants into a Canadian court, which it believes will be “friendlier” to the insurers’ objectives.
ACL, its insurers and its former indirect majority owner General Dynamics entered a settlement agreement in August 1998 to manage the defence of asbestos personal injury claims against ACL, defence costs, settlements and judgments.
The objecting parties told the New York court that ACL’s Canadian court-appointed monitor and foreign representative, Raymond Chabot Grant Thornton partner Ayman Chaaban in Montréal, has failed to show that ACL’s COMI is in Canada and that its “operational, financial, and litigation footprint” is in the US.
The company is seeking Chapter 15 relief after 30 years of pursuing “litigation tactics condemned by U.S. courts”, they said, including refusing discovery requests, inviting default judgments unenforceable in Canada and settling with victims for low amounts because of such tactics.
The objecting creditors’ counsel, Dean Omar Branham Shirley partner Trey Branham in Dallas, tells GRR that, if there is going to be a bankruptcy proceeding to resolve the mass tort claims, it should be brought in the US where ACL, Berkshire Hathaway-owned third-party claims administrator Resolute Management and CLMI have engaged in litigation with thousands of claimants across the US for three decades.
He says the US Congress created section 524(g) of the US Bankruptcy Code to expressly handle asbestos claims through a US bankruptcy proceeding, which he tells GRR offers more protection to claimants than a Canadian CCAA proceeding, specifically with regard to protections for future claimants and a higher voting threshold for creditors to approve a plan.
“The decision to file in Canada clearly appears designed to protect ACL’s insurers and limit the asbestos claimants’ ability to receive fair treatment under the congressionally mandated method of addressing asbestos claims in bankruptcy,”Branham says.
The objectors claim that ACL is a legacy asbestos company that has not operated in decades and maintains its shell company status while Resolute and CLMI oversee US state court litigation that has so far led to default judgments against ACL, which have been unenforceable abroad.
They said the alleged strategy worked until September 2023 when a South Carolina state court appointed Rikard & Protopapas partner Peter Protopapas as ACL’s receiver, who found a previously unknown insurance policy with an estimated value of US$1 billion that the claimants believe will cover their claims.
“Through the CCAA proceedings, and corresponding Chapter 15 recognition, CLMI and Resolute aim to reestablish the prior status quo of depriving asbestos claimants of information, process, and meaningful recovery while petitioning for stay relief to which they are not entitled under the facts or law,” the objection said.
Founded in 1925, ACL is headquartered in Québec and owns eight mines in the Canadian province with only six Canada-based employees. The company and its parent, Canadian-based natural resource company Mazarin, are both listed on the Toronto stock exchange.
ACL, which has operated open pit chrysotile mines in Québec for 60 years, stopped mining for asbestos in the 1980s. It continues to operate the mines for extracting minerals from serpentinite, a waste material remaining after mining.
A number of ACL’s excess liability insurers, including CLMI, applied for CCAA protection on ACL’s behalf in the Superior Court of Québec on 5 May.
A Chapter 15 petition in New York followed and Judge Glenn ordered an interim stay of proceedings to halt creditor action the next day.
ACL and its insurers are looking “to bring order to the process of resolving these mass tort claims”, Chaaban said in a declaration filed with the Chapter 15 petition.
Chaaban said the mass tort claims are “multiplying across jurisdictions and threatening to drive [ACL] deeper into insolvency”. Rather than allowing litigation to proceed piecemeal, the CCAA proceeding will allow ACL to channel the mass tort claims into a “single forum” for resolution, he said.
He said ACL is a Québec corporation that has been located in Québec for the last century, where it is regulated under the Canada Business Corporations Act.
“ACL lacks a United States domicile or place of business,” Chaaban said, but it has paid a US$300,000 retainer to Orrick Herrington & Sutcliffe as counsel to the foreign representative.
The mining company is currently a defendant in asbestos personal injury litigation in 14 states, including New York, California, Illinois, Delaware and South Carolina.
A final Chapter 15 recognition hearing has been scheduled for 16 September.
In the US Bankruptcy Court for the Southern District of New York
- Chief Judge Martin Glenn
Foreign representative to Asbestos Corporation Limited
- Raymond Chabot Grant Thornton
Partners Ayman Chaaban , Jean Gagnon and Emmanuel Phaneufin in Montréal
Counsel to the foreign representative and Asbestos Corporation Limited
- Orrick Herrington & Sutcliffe
Senior partner Evan Hollander and partner Daniel Rubens with senior associate Michael Trentin and managing associate Jenna MacDonald Busche in New York
Counsel to Asbestos Corporation Limited’s insurers
- Simpson Thacher & Bartlett
Partners David Zylberberg and Alan Turner in New York
Counsel to National Services Industries’ Chapter 7 trustee Charles Forman and certain asbestos claimants
- Cooley
Partners Cullen Speckhart and Michael Klein with associate Jeremiah Ledwidge in New York and associate Olya Antle in Washington DC
- Wyche
Member Matthew Richardson in South Carolina
- Dean Omar Branham Shirley
Partner Trey Branham in Dallas
In the Superior Court of Québec
- Justice Jean-François Émond
Counsel to Asbestos Corporation Limited
- Fasken Martineau Dumoulin
Partner Luc Beliveau in Montréal and London with associates Nicolas Mancini and Éliane Dupéré-Tremblay in Montréal
Counsel to Asbestos Corporation Limited’s insurers
- Stikeman Elliott
Partners Guy Martel , Nathalie Nouvet and Danny Duy Vu with associates Darien Bahry and Melis Celikaksoy in Montréal
- Raymond Chabot Grant Thornton
Partners Ayman Chaaban, Jean Gagnon and Emmanuel Phaneufin in Montréal
Counsel to the court-appointed monitor
- McCarthy Tétrault
Partners Alain Tardif and Frédérique Drainville with associate Amélie Lehouillier in Montréal
Counsel to General Dynamics
- Blake, Cassels & Graydon
Partner Sébastien Guy with associate Eric Stachecki in Montréal
