Cyprus Mines insolvency deal under scrutiny in US

Cyprus Mines Corporation which filed for bankruptcy in the United States following hundreds of asbestos lawsuits has rejected accusations that a committee representing claimants was acting in bad faith, but lawyers representing victims are calling on a judge to rework a deal under intense scrutiny.

According to foreign media, a US judge this week delayed approval for sending a “Chapter 11” bankruptcy plan to a creditor vote, demanding more information on how a recent settlement would affect payment of asbestos injury claims.

The plan had been proposed by Imerys Talc America, a supplier to Johnson & Johnson, after the mineral supplier and the healthcare giant received thousands of lawsuits alleging cancer and other diseases were linked to talc.

Imerys acquired talc-related assets from Cyprus Mines in the early 1990’s and then began compensating the mining company for asbestos claims.

But a deal detailed earlier this year between Imerys and Cyprus Mines, a former talc miner, has been brought under intense scrutiny, after lawyers for personal injury plaintiffs cried foul over their clients not being selected to sit on the Official Committee of Tort Claimants.

Delaware Judge Laurie Selber Silverstein reportedly heard from lawyers representing plaintiffs that the committee was filled with potential conflicts, with the attorneys requesting a modification on the tort claimants committee in Cyprus Mines’ bankruptcy application citing overlaps among law firms in the closely-tied cases.

If Imerys’ proposed settlement goes forward with Cyprus Mines Corporation, essentially addressing the legal question over who owns insurance policies, it would release Cyprus' historic company from asbestos claims in exchange for $130 million paid into a personal injury claims trust.

But legal observers and industry experts say Imerys would need to justify the logic behind the deal before the restructuring plan would be put to a vote.

Freeport-McMoRan Inc.'s Arizona-headquartered Cyprus Mines Corporation, which in February filed for bankruptcy under a pact with Imerys, had reportedly listed assets between 10 and 50 million dollars, while liabilities were checked off at the 1 to 10 million bracket on the application form which was submitted in the District of Delaware.

Cyprus Mines, an American mining company established on the island in the early twentieth century, was acquired by Amoco Corporation in the late 1970’s, with spinoff Cyprus Minerals Company created a few years later. It then merged with American Metal Company to form Cyprus Amax Minerals in 1993, with AMAX operating in 24 states and on six continents. The comnpany engages primarily in the mining of copper metal.

Mines left behind in Cyprus became a headache for the Cypriot government, as environmental groups have been calling for clean ups and restoration projects.