US Judge Approves $535m Talc Settlement Involving Berkshire Hathaway Insurance Unit Despite Objections

A US bankruptcy judge has approved a $535 million settlement involving a defunct talc supplier and Berkshire Hathaway's insurance unit, rejecting objections from claimants who argued that the agreement would provide insufficient compensation for lawsuits alleging that asbestos-contaminated talc caused cancer.

US Bankruptcy Judge Michael Kaplan in New Jersey ruled on Thursday that the settlement involving Whittaker Clark & Daniels was fair and reasonable, based on his assessment of the litigation claims and the claimants' prospects of obtaining judgments against the company's former corporate parents.

The agreement seeks to resolve liabilities involving National Indemnity Co., Berkshire Hathaway's insurance unit, which acquired Whittaker in 2007 and assumed its liabilities, as well as other former corporate affiliates, including chemical distributor Brenntag.

The ruling marks a significant development in the bankruptcy proceedings, but it has not ended the dispute over whether companies linked to Whittaker should face additional claims. Lawyers representing asbestos claimants have challenged the settlement and said they intend to appeal, arguing that the arrangement protects potentially wealthy corporate entities while limiting victims' ability to pursue compensation.

Whittaker filed for bankruptcy in 2023 after facing what it described as a "deluge" of lawsuits from approximately 2,700 people. The plaintiffs alleged that the company supplied asbestos-contaminated talc to manufacturers of cosmetics, chemicals, and other products, causing cancer.

The allegations have placed the defunct supplier at the center of a broader legal dispute over responsibility for historic talc exposure and the extent to which corporate affiliates can be held liable for claims against a bankrupt business.

Talc claimants argued that the $535 million agreement was an insider settlement between Whittaker and companies connected to its corporate history. They maintained that the deal was negotiated without their input and could resolve the liabilities of National Indemnity, Berkshire Hathaway and other affiliates without adequately addressing the full value of the claims.

According to the claimants, companies with substantial financial resources could face billions of dollars in potential liability arising from the lawsuits. They contended that the settlement would shield those entities from further exposure while leaving victims with limited compensation.

The objections underpin a usual tension in mass-tort bankruptcies: how to distribute a finite pool of money among claimants while determining whether other companies associated with the debtor should contribute additional funds.

A settlement can provide a defined source of compensation and help bring prolonged litigation to a close. However, claimants may oppose such agreements when they believe the amount is too low or that potentially liable parties have not contributed enough.

Judge Kaplan also rejected the claimants' request for permission to sue Brenntag, National Indemnity and other potential corporate successors directly for a greater contribution to the settlement.

The judge ruled that Whittaker was responsible for pursuing claims for indemnification and contribution against those companies as part of the bankruptcy process. Other plaintiffs could not take control of those legal claims because they were considered property of the debtor.

The decision limits the claimants' ability to pursue those potential recovery avenues independently within the proceedings. It does not, however, eliminate their stated objections to the settlement or the separate legal challenge they have brought over the use of bankruptcy to restrict claims against non-bankrupt corporate affiliates.

Suzanne Ratcliffe, an attorney representing asbestos claimants in the bankruptcy, criticized the ruling and said she planned to appeal.

"This order blesses a greed-fueled insider 'settlement' between Whittaker and multi-billionaires - including Berkshire Hathaway affiliates - a settlement which no victim wants or asked for," Ratcliffe said in a statement.

Her comments reflect the claimants' position that the agreement was reached on terms that inadequately protect people seeking compensation. The court, by contrast, found the settlement fair and reasonable after evaluating the claims and the prospects of obtaining judgments against former corporate parents.

Supreme Court Challenge Adds Another Legal Front

The dispute also extends beyond the settlement itself. Talc claimants have petitioned the US Supreme Court to challenge an earlier ruling in the case, arguing that companies should not be able to use bankruptcy proceedings to prevent plaintiffs from suing a bankrupt business's non-bankrupt owners or affiliates.

The Supreme Court has not acted on the petition.

But the challenge raises broader questions about the boundaries of bankruptcy protection, particularly when a debtor seeks to resolve extensive liabilities through a settlement involving related companies. The outcome could affect how claimants pursue compensation when they believe a bankrupt entity cannot provide adequate funds but associated businesses may have greater financial resources.

The legal dispute also reveals the difficulty of establishing responsibility across corporate structures that have changed over time. A company may acquire operating assets without assuming every liability associated with the previous business, while later ownership arrangements can introduce separate questions about which obligations were transferred.

Whittaker operated one of the largest talc and industrial compound supply and distribution businesses in the United States during the 1970s and 1980s. It ceased operations in 2004, and its corporate existence since then has largely been devoted to resolving legal claims linked to its historical production and distribution activities.

Brenntag acquired Whittaker's operating assets in 2004, leaving the asbestos liabilities with the defunct company. National Indemnity subsequently acquired Whittaker and assumed its remaining assets and liabilities. Brenntag has denied responsibility for Whittaker's talc liabilities.

The $535 million settlement now has judicial approval, but the planned appeal and pending Supreme Court petition leave important questions unresolved.