English Asbestos Victims Support Groups’ Forum

Asbestos Victims Groups Warn Cape on it’s proposed Asbestos Fund

The English Asbestos Victims Support Groups’ Forum [1] has warned Cape plc not to railroad through its proposed scheme to establish an asbestos fund to limit its asbestos liabilities.

The proposed Fund, which will be overseen by a Cape subsidiary [2], will receive £40 million to compensate Cape’s UK asbestos victims [3] for about the next 12 years. Thereafter, the amount in the Fund will be reviewed on a three-yearly basis and topped up only if Cape has sufficient funds. If approved by the Court at the end of July the scheme will protect Cape from asbestos litigation within the UK and remove the threat of insolvency should asbestos claims increase dramatically. Cape considers that asbestos victims’ compensation is best assured by acting now to ring-fence a Fund which will be unaffected by any insolvency.

The Forum has consulted widely on the proposed scheme and has serious reservations about the viability of the proposed Fund and questions Cape’s reassurances.

Tony Whitston, spokesperson for the Forum says:

“The Forum believes that the scheme as currently proposed is unacceptable to Cape’s asbestos victims. Although the scheme is intended to ‘ring fence’ UK asbestos claims, it does not do this, except for the initial £40m. If claims were to increase, there is no guarantee that Cape will top up the Fund and asbestos victims would be left ‘high and dry’. We are not convinced by Cape’s safeguards for the Fund. We will be seeking independent financial advice on the scope for Cape to declare a shortfall in the Fund and limit compensation payments. All previous schemes to cap asbestos companies’ asbestos liabilities have disadvantaged asbestos victims. Much more will be needed to be done by Cape to reassure Cape’s asbestos victims that this scheme is any different.”

Anthony Coombs, asbestos claimants’ solicitor says,

“Cape’s UK asbestos compensation, at around £4m a year, has been manageable, and there is no evidence to suggest that the amount is about to increase significantly. There is a real danger that the proposed scheme may simply substitute a limited fund of £40m for the present open ended commitment to pay compensation. Cape must provide a greater initial investment and give better guarantees that the Fund will be properly topped up. When I was negotiating the settlement for Cape’s South African claimants the deal to pay £10m with a top up of £10m was dishonoured by Cape. The threat of re-starting court action eventually forced Cape to re-negotiate, but Cape never paid the top up, and the initial sum was reduced to £7.5m.

Ian McFall, of Thompsons Solicitors says,

“We are approaching the Court as a matter of urgency to get disclosure of Cape’s actuarial predictions and to uncover the murky history of Cape’s insurance cover. The timetable for voting on the proposed scheme is far too tight and there is a real risk that asbestos victims and their families will be asked to vote without full knowledge of the risks. Claimants’ solicitors will be acting collectively on this issue and we will be asking the Court to establish a realistic timetable.”

To Contact the Forum telephone: 0161 953 4037

[1] Members of the Forum include the following asbestos victims support groups: Bradford; Cheshire; Derbyshire; Greater Manchester; Merseyside; North East England; Ridings; Sheffield & Rotherham.

[2] Cape Claims Services Ltd.

[3] This will include employees, past and present, and their families, and anyone who has worked alongside Cape’s asbestos contractors or lived nearby a Cape asbestos factory.

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English Asbestos Victims Support Groups’ Forum

Statement on the proposed Cape Asbestos Fund

Cape plc has recently announced a proposed Fund to compensate its asbestos victims and soon Creditors will be asked to say Yes or No to the scheme. The English Asbestos Victims Support Groups’ Forum believes that the current proposals are unacceptable as they stand because: there is insufficient initial funding for the scheme as top-up funding is not guaranteed; payments can be reduced or terminated if Cape says it cannot afford them; and, insufficient information has been provided on actuarial predictions on future claims and Cape’s insurance. We think the timescale for voting on the Fund is too short. Claimants’ solicitors are to ask the Court for sufficient time to ensure that Creditors have all the information they need to make a balanced judgment of the scheme.

To date, all such schemes have protected corporate interests at the expense of asbestos victims. As proposed, this scheme is no exception. We have described this scheme below and explained our reservations.

1.What is the Fund? It is a pot of money to be used to pay asbestos related claims against Cape now and in the future.

2. Who is the Fund for? It is for people who have been affected by Cape’s activities in the UK.

3. Why is Cape setting up the Fund? Asbestos claims against Cape are estimated to continue for at least another 45 years. Cape thinks it is more likely to be able to pay these claims if it sets aside a sum of money which cannot be used for any other purposes.

Cape has refused to provide the full actuarial assessment on which it has based estimates of future claims. We think the Court should require Cape to provide this information and information about Cape’s murky insurance history.

4. How will the Fund work? Cape will put £40 million in the Fund to begin with, which it believes should be enough to pay claims for about 12 years. Cape will review the Fund every three years. If there is insufficient money in the Fund Cape will top it up if it has sufficient cash.

Only the initial £40m is guaranteed – there is NO guarantee that top ups will be made. We believe it is essential that Cape significantly increase this initial funding if a scheme is to be accepted.

5. What if there is not enough cash?

Claims in the future may not be paid.

If Cape decides that it does not have enough cash it will limit or end payments. We want independent advice about the opportunities for Cape to simply declare that it has insufficient funds.

6. Who can vote for the Fund? Everyone who is a Creditor: anyone who, either now or at any time in the future, develops an asbestos related disease due to exposure to Cape’s asbestos activities in the UK. – e.g. Cape’s employees, past and present, their families and anyone who has worked alongside Cape’s contractors, or lived nearby a Cape asbestos factory.

7. What will a vote in favour mean? It will mean the Court is asked to approve a legally binding agreement which will substitute the Fund for the right of Cape’s asbestos victims to take legal action to get compensation. If the Fund runs out of money asbestos victims will get nothing, and Cape will continue trading.

Once the Fund has been established, Cape will be absolved from all legal liability. Asbestos victims take the risk that nothing will be paid after 12 year. Cape takes no risk.

8. What will a vote against the Fund mean? Cape will continue to make payments. If it is not able to pay claims it will become insolvent and there will be no ring-fenced money to pay claims.

There is no evidence that Cape is about to go into insolvency. Cape has so far successfully paid claims of about £4m per year and there is no evidence that claims are likely to significantly increase. If, in fact, there is a high risk that claims will increase, the initial payment to the Fund would have to be significantly higher to justify giving up legal rights to compensation.

Asbestos Victims Support Groups’ Forum 0161 953 4037