In re Energy Future Holdings Corp.

619 B.R. 99

IN RE: ENERGY FUTURE HOLDINGS CORP., et al., Debtors.

Case No. 14-10979 (CSS) (Jointly Administered)

United States Bankruptcy Court, D. Delaware.

Signed August 27, 2020

FOX ROTHSCHILD LLP, Jeffrey M. Schlerf, 919 North Market Street, Suite 300, Wilmington, DE 19801 and WHITE & CASE LLP, Thomas E. Lauria, Matthew C. Brown, Southeast Financial Center, Suite 4900, 200 South Biscayne Blvd., Miami, FL 33131 and WHITE & CASE LLP, J. Christopher Shore, 1221 Avenue of the Americas, New York, NY 10020, Counsel to Sempra Energy and the Reorganized EFH/EFIH Debtors

HOGAN MCDANIEL, Daniel K. Hogan, 1311 Delaware Avenue, Wilmington, DE 19806, Counsel for Denis and Meri Bergschneider and Kaye Heinzmann

THE RUCKDESCHEL LAW LAW FIRM LLC, Jonathan Ruckdeschel, 8357 Main Street, Ellicott City, MD 21043, Counsel for Kaye Heinzmann

KAZAN MCCLAIN SATTERLEY & GREENWOOD, A Professional Law Corporation, Jack London Market, 55 Harrison Street, Suite 400, Oakland, CA 94607, Counsel for Denis and Meri Bergschneider

Related Docket Nos. 14047 and 14055

OPINION¹

Sontchi, C.J.

INTRODUCTION

Before the Court is the Motion of Bergschneider to Allow Late Filed Proofs of Claim , filed by Denis and Meri Bergschneider² (collectively, "Bergschneider") and the Motion of Heinzmann to Allow Late Filed Proofs of Claim , filed by Kaye Heinzmann, surviving spouse of David Heinzmann³ ("Heinzmann" and together with Bergschneider, the "Movants") both of which seek to file proofs of claims after the bar date. Both the Bergschneider claim and the Heinzmann claim relate to asbestos-related illnesses diagnosed after the Unmanifested Bar Date (as defined below). Nonetheless, the Motions were filed 41 months and 29 months after the Movants' respective diagnoses, during the entirety of which time the Movants were participating actively in litigation and appeals related to the Asbestos Bar Date. For the reasons set forth below, the Court will deny the Motions.

JURISDICTION

This Court has jurisdiction over this matter, pursuant to 28 U.S.C. sections 157 and 1334. Venue is proper in this District, pursuant to 28 U.S.C. sections 1408 and 1409. This is a core proceeding, pursuant to 28 U.S.C. section 157(b)(2). The Court has the authority to enter a final order.

STATEMENT OF FACTS

A. Procedural History

In December 2015, and as discussed in detail below, the Court established a bar date in these cases for asbestos related claims. Thereafter, the Movants were diagnosed with asbestos-related illnesses, and participated actively in the plan and confirmation process related to the Debtors' Plan (as defined below), including an appeal of the confirmation order to the Third Circuit. After the Third Circuit's disposition of that appeal on February 18, 2020,⁴ affirming this Court's confirmation of the Plan and finding that the notice of the Asbestos Bar Date was sufficient under the facts and circumstances of these cases, the Movants filed the Motions on April 20, 2020, and May 1, 2020 respectively.⁵ The Motions are fully briefed⁶ and the Court heard argument on the Motions on June 1, 2020. At the conclusion of the argument, the Court took these Motions under advisement. This is the Court's ruling thereon.

B. Factual History of the Bankruptcy Cases

On April 29, 2014, each of the Debtors filed a voluntary petition under chapter 11 of the Bankruptcy Code. The Debtors are operating their businesses and managing their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.

The United States Trustee has appointed two official committees of unsecured creditors in these cases.⁷

C. Factual History Related to Bar Date Motion and Asbestos Claims

In 2014, the Debtors sought to establish a process to notify potential asbestos claimants of the bankruptcy and a deadline for them to submit proof of claims.⁸

Various personal injury law firms⁹ objected to the Debtors' motion to establish a bar date, arguing that it "would violate the fundamental due process rights of thousands of potential asbestos claimants."¹⁰ The objecting law firms argued that providing adequate notice for Unmanifested Asbestos Claimants¹¹ was not possible.¹² On August 13 and October 28, 2014, the Court held two hearings and ordered additional briefing on the issue.¹³

On January 7, 2015, the Court issued a written opinion in which it held that it had the power and jurisdiction to establish a bar date for Unmanifested Asbestos Claims and found that an appropriate notice program could satisfy due process concerns.¹⁴ The Court stated that the discharge of the Debtors' liability for Unmanifested Asbestos Claims could be consistent with due process and found that, for Unmanifested Asbestos Claims under Third Circuit law, "publication notice may be sufficient to satisfy due process."¹⁵

The Bar Date Opinion required that the Debtors devise a comprehensive notice program to inform potential asbestos claimants, including "Unmanifested Asbestos Claimants," of their rights to file proofs of claim.¹⁶ To that end, the Debtors and the E-side Committee each retained noticing experts and engaged in extensive diligence. Two asbestos claimants, including one of the Kazan Law's clients, sat on the E-side Committee throughout the cases.¹⁷

The Debtors retained Hilsoft Notifications ("Hilsoft") to design a comprehensive plan (the "Notice Plan") to provide notice of the bar date (the "Asbestos Bar Date Notice"). Hilsoft is a nationally recognized leader in providing notice and has experience in some of the largest, most complex, and most significant cases, including litigation arising from the BP oil spill in the Gulf of Mexico.¹⁸ Hilsoft also has experience with asbestos-related bankruptcy and non-bankruptcy cases.¹⁹ The E-side Committee retained its own asbestos noticing expert, Kinsella Media, LLC.²⁰

The E-side Committee provided extensive feedback on the proposed notice plan, virtually all of which the Debtors incorporated into their noticing program.²¹

On July 30, 2015, the Court entered the "Asbestos Bar Date Order" approving the Notice Plan for distributing the Asbestos Bar Date Notice and setting December 14, 2015 as the "Asbestos Bar Date."²² The Asbestos Bar Date Order and Notice Plan were designed to comprehensively address any due process concerns, both by the means of distribution and the content of the notice.²³

Following entry of the Asbestos Bar Date Order, the Debtors provided notice in various forms as set forth in the Notice Plan, which included: (i) direct mailing to known asbestos claimants with "personalized" proof of claim forms; (ii) nearly 75,000 direct mailings to former employees and known asbestos claimants; (iii) extensive publication notice in consumer publications, local newspapers, national newspapers, trade publications, and union labor publications (with a total combined circulation of 69,893,892); (iv) dedicated website and toll-free number; (v) internet banner advertising and sponsored search listings (resulting in 436,346,154 gross online impressions); (vi) informational release to approximately 4,200 print and broadcast media outlets and 5,500 online outlets; and (vii) targeted outreach to labor unions.²⁴

Hilsoft determined that the comprehensive publication notice program would "reach approximately 90.1% of men aged 65+ in the U.S. an average of 3.4 times each, 89.4% of adults aged 45+ in the U.S. an average of 3.5 times each, and approximately 85.7% of adults aged 18+ in the U.S. an average of 3.1 times each."²⁵

In all, the Debtors spent approximately $2.5 million implementing the Notice Plan.²⁶

In addition to the Debtors' efforts, Kazan Law took out Google search advertisements linked to the search terms "efh case info," "efh bankruptcy," and "efh restructuring."²⁷

The notice package attached to the Asbestos Bar Date Order outlined six different methods by which Unmanifested Asbestos Claimants could submit their proofs of claim and clearly explained the substantive requirements for filing a proof of claim.²⁸

Approximately 30,000 proofs of claim were filed in response to notice of the Asbestos Bar Date.²⁹ Of that, approximately 14,000 were Unmanifested Asbestos Claims, of which approximately 10,000 were filed against the EFH/EFIH Debtors.³⁰

D. Challenges to the Asbestos Bar Date and Related Timeline

Two asbestos plaintiffs filed the Motion of Charlotte Liberda and Curtis Liberda To Appoint Legal Representative , requesting that the Court appoint a representative for unmanifested asbestos claimants on all issues before the Court, which motion was denied.³¹ Due process objections were also raised by certain asbestos claimants to one of the Debtors' proposed plans on the basis that the plan did not include a section 524(g) channeling injunction to address the claims of Unmanifested Asbestos Claimants, which objections were also overruled.³² In December 2015, certain unmanifested claimants requested that the Court certify a class of Unmanifested Asbestos Claimants and sought to file a class proof of claim on behalf of all Unmanifested Asbestos Claimants.³³ The Court denied this motion.³⁴ The Court was affirmed in a published opinion, which found that "the class proof of claim would ... negate the bar date."³⁵

Mr. Heinzmann was diagnosed with mesothelioma on July 15, 2016, which was after the Asbestos Bar Date.³⁶ Thereafter, on November 3, 2016, Mr. Heinzmann filed a notice of intent to participate in plan confirmation proceedings for the EFH/EFIH Debtors.³⁷ In December 2016, this Court denied a motion by asbestos claimants, including Mr. Heinzmann, to dismiss the chapter 11 cases of EECI, Inc., EEC Holdings, Inc., LSGT Gas Co. LLC, and LSGT SACROC, Inc. (the "LSGT Debtors").³⁸ The Court also overruled an objection to the NextEra-backed plan filed by asbestos claimants, including Mr. Heinzmann.³⁹

On September 11, 2017, the EFH/EFIH Debtors filed the Plan.

Mr. Bergschneider was diagnosed with mesothelioma on September 14, 2017, almost two years after the Asbestos...