3M Co. faces more than $100 billion in losses and bankruptcy from lawsuits filed by veterans who attribute their hearing problems to faulty earplugs, according to a litigation consultant hired by suing attorneys the industrial conglomerate.
Early results from a handful of test cases show 3M would be overwhelmed with losses if the more than 230,000 lawsuits related to the company’s military earplug business go ahead, the adviser said on Tuesday. plaintiff, JB Heaton, in bankruptcy court.
“It’s increasingly likely that in the next few years we’ll see a 3M bankruptcy, yes,” Heaton told U.S. Bankruptcy Judge Jeffrey J. Graham during a hearing in federal court in Indianapolis.
“We strongly disagree with this unsubstantiated and clearly erroneous speculation,” company communications manager Sean Lynch said in an emailed statement. “3M has pledged to provide $1 billion to a trust for claimants determined to qualify for compensation.”
Some prosecuting soldier advocates want Graham to stop 3M from paying shareholder dividends, repurchasing its stock or disposing of assets, if the judge also decides to stop the lawsuit.
Restricting how 3M spends its money will protect cash and other assets that could be used to compensate soldiers whose hearing was damaged by the earplugs, the attorneys said in court documents.
The company has paid its shareholders a regular dividend for at least a decade. Currently, the quarterly payout is $1.49 per share.
Company attorneys disputed Heaton’s findings during the hearing, arguing that the 19 cases in which juries returned verdicts are outliers and cannot be used to extrapolate the results of other cases. Heaton, a former litigator who now studies corporate litigation, acknowledged that the sample is small and a judge may conclude that $100 billion is unrealistic.
3M is in federal court trying to convince Graham to drop the lawsuits while the company’s earplug subsidiary reorganizes into bankruptcy.
Last month, the company filed its Aearo Technologies unit in Indianapolis for bankruptcy to resolve the claims. Under Chapter 11 rules, Aearo automatically has the right to freeze any lawsuits it faces, but because 3M itself hasn’t filed for bankruptcy, a judge must agree to give the industrial conglomerate the same protection. .
The bankrupt is Aearo Technologies LLC, 22-02890United States Bankruptcy Court for the Southern District of Indiana (Indianapolis).
Photo: Photographer: Andrew Harrer/Bloomberg
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