Taxation and State Taxation -- 2004



Lippe v. Bairnco Corp.   (2nd Circuit)

Unpublished opinions

The NAM sent a letter to the U.S. Court of Appeals for the Second Circuit saying that its decision in this asbestos bankruptcy case is important and should be published, so that it can be cited as precedent for other cases. The decision involved the point at which a company becomes insolvent, which occurs when its assets are less than its "probable liability" on existing debts as they become absolute and matured. According to the court, the future claims of persons exposed to asbestos -- but not yet symptomatic -- are not accrued tort claims and do not give rise to a debtor-creditor relationship under New York law. Thus, a company with numerous suits by asymptomatic asbestos claimants can continue to carry on its business without considering such claims as debts and without risking having payments made to others subject to challenge as "fraudulent" under the bankruptcy laws.