In re UNR Industries, Inc.

Asbestos manufacturer UNR Industries, Inc. (UNR) (debtor) filed for bankruptcy. The creditor’s committee of asbestos-related plaintiffs and individual asbestos claimant Joseph Newton (collectively, the committee) moved in federal district court for an order allowing 17,000 personal-injury claims against UNR to proceed to trial in district court to estimate the value of the claims. A study by Towers, Perrin, Foster & Crosby (the Towers study) was already underway in the bankruptcy proceeding to estimate the claims’ value. Under 28 U.S.C. § 157(b)(2)(B), bankruptcy courts had jurisdiction over core bankruptcy proceedings, defined to include estimation of claims for purposes such as plan confirmation, but not estimation of personal-injury tort or wrongful-death claims for purposes of distribution. The committee asserted that estimating the personal-injury claims against UNR was not a core proceeding and argued that under 28 U.S.C. § 157(b)(5), personal-injury tort and wrongful-death claims against a debtor must be tried in district court, rather than in bankruptcy court. UNR opposed the motion, arguing, among other things, that bankruptcy judges could act as magistrate judges for noncore proceedings. The committee responded that allowing the bankruptcy court to hold the proceedings required to estimate the claims would not be any more efficient than allowing the district court to hold the same proceedings. The committee also made other arguments, including that it would be unfair to allow the bankruptcy court to estimate the claims because the court might have incentive to undervalue the claims just so a plan could be developed. The court considered the parties’ arguments in ruling on the committee’s motion.