SB3056 94TH GENERAL ASSEMBLY

LRB094 19196 LCT 54739 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
SB3056

Introduced 1/20/2006, by Sen. Rickey R. Hendon - Kirk W. Dillard

SYNOPSIS AS INTRODUCED:

New Act

Creates the Successor Asbestos-Related Liability Fairness Act. Limits the cumulative successor asbestos-related liabilities of a corporation to the fair market value of the total gross assets of the transferor determined as of the time of the merger or consolidation. Provides that a corporation is not responsible for successor asbestos-related liabilities in excess of that limitation. Provides guidelines for establishing the fair market value of the total gross assets for the purpose of the liability limitation.

A BILL FOR

AN ACT concerning liability.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Successor Asbestos-Related Liability Fairness Act.

Section 5. Definitions. As used in this Act:

"Asbestos claim" means any claim, wherever or whenever made, for damages, losses, indemnification, contribution, or other relief arising out of, based on, or in any way related to asbestos, including:

(1) the health effects of exposure to asbestos, including any claim for:

(A) personal injury or death;

(B) mental or emotional injury;

(C) risk of disease or other injury; or

(D) the costs of medical monitoring or surveillance, to the extent that the claims are recognized under State law;

(2) any claim made by or on behalf of any person exposed to asbestos, or a representative, spouse, parent, child, or other relative of the person; and

(3) any claim for damage or loss caused by the installation, presence, or removal of asbestos.

"Corporation" means a domestic corporation organized under the laws of this State or a foreign corporation organized under laws other than the laws of this State.

"Successor" means a corporation that assumes or incurs, or has assumed or incurred, successor asbestos-related liabilities.

"Successor asbestos-related liabilities" means any liabilities, whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due, that are related in any way to asbestos claims as defined by this Act and that were assumed or incurred by a corporation as a result of or in connection with a merger or consolidation, or the plan of merger or consolidation related to the merger or consolidation, with or into another corporation or that are related in any way to asbestos claims based on the exercise of control or the ownership of stock of the corporation before the merger or consolidation. The term includes liabilities that, after the time of the merger or consolidation for which the fair market value of total gross assets is determined under Section 20, were or are paid or otherwise discharged, or committed to be paid or otherwise discharged, by or on behalf of the corporation, or by a successor of the corporation, or by or on behalf of a transferor, in connection with settlements, judgments, or other discharges in this State or another jurisdiction.

"Transferor" means a corporation from which successor asbestos-related liabilities are or were assumed or incurred.

Section 10. Limitations; applicability.

(a) The limitations in Section 15 shall apply to a domestic corporation or a foreign corporation: (i) that has had a certificate of authority to transact business in this State or that has done business in this State; and (ii) that is a successor which became a successor prior to January 1, 1972 or that is any of that successor corporation's successors.

(b) The limitations in Section 15 shall not apply to:

(1) workers' compensation benefits paid by or on behalf of an employer to an employee under the Workers' Compensation Act or a comparable workers' compensation law of another jurisdiction;

(2) any claim against a corporation that does not constitute a successor asbestos-related liability;

(3) an insurance or surety company, as those terms are used in the Illinois Insurance Code;

(4) any obligations under the National Labor Relations Act (29.U.S.C. Section 151 et seq.), as amended, or under any collective bargaining agreement; or

(5) a successor that, after a merger or consolidation, continued in the business of mining asbestos, in the business of selling or distributing asbestos fibers, or in the business of manufacturing, distributing, removing, or installing asbestos-containing products that were the same or substantially the same as those products previously manufactured, distributed, removed, or installed by the transferor.

Section 15. Limitations on liabilities.

(a) Except as further limited in subsection (b) of this Section, the cumulative successor asbestos-related liabilities of a corporation are limited to the fair market value of the total gross assets of the transferor determined as of the time of the merger or consolidation. The corporation does not have any responsibility for successor asbestos-related liabilities in excess of this limitation.

(b) If the transferor had assumed or incurred successor asbestos-related liabilities in connection with a prior merger or consolidation with a prior transferor, then the fair market value of the total assets of the prior transferor, determined as of the time of the earlier merger or consolidation, shall be substituted for the limitation set forth in subsection (a) of this Section for purposes of determining the limitation of liability of a corporation.

Section 20. Establishing fair market value of total gross assets.

(a) A corporation may establish the fair market value of total gross assets for the purpose of the limitations under Section 15 through any method reasonable under the circumstances, including:

(1) by reference to the going concern value of the assets or to the purchase price attributable to or paid for the assets in an arm's-length transaction; or

(2) in the absence of other readily available information from which fair market value can be determined, by reference to the value of the assets recorded on a balance sheet.

(b) Total gross assets include intangible assets.

(c) Total gross assets include the aggregate coverage under any applicable liability insurance that was issued to the transferor whose assets are being valued for purposes of this Section and which insurance has been collected or is collectable to cover successor asbestos-related liabilities, except compensation for liabilities arising from workers' exposure to asbestos solely during the course of their employment by the transferor. A settlement of a dispute concerning the insurance coverage entered into by a transferor or successor with the insurers of the transferor before the enactment of this Act shall be determinative of the aggregate coverage of the liability insurance to be included in the calculation of the transferor's total gross assets.

Section 25. Adjustment.

(a) Except as provided in subsections (b), (c), and (d) of this Section, the fair market value of total gross assets at the time of a merger or consolidation increases annually at a rate equal to the sum of:

(1) the prime rate as listed in the first edition of the Wall Street Journal published for each calendar year since the merger or consolidation, unless the prime rate is not published in that edition of the Wall Street Journal, in which case any reasonable determination of the prime rate on the first day of the year may be used; and

(2) 1%.

(b) The rate in subsection (a) of this Section is not compounded.

(c) The adjustment of fair market value of total gross assets continues as provided under subsection (a) of this Section until the date the adjusted value is first exceeded by the cumulative amounts of successor asbestos-related liabilities paid or committed to be paid by or on behalf of the corporation or a predecessor, or by or on behalf of a transferor, after the time of the merger or consolidation for which the fair market value of total gross assets is determined.

(d) No adjustment of the fair market value of total gross assets shall be applied to any liability insurance otherwise included in the definition of total gross assets by subsection (c) of Section 20.

Section 30. Scope of Act. The courts in this State shall apply, to the fullest extent permissible under the United States Constitution, this State's substantive law, including the limitation under this Act, to the issue of successor asbestos-related liabilities.

Section 35. Applicability; pending claims. This Act applies to all asbestos claims filed on or after its effective date and to all pending asbestos claims in which trial has not commenced as of its effective date.