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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| SENATE BILL |
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| INTRODUCED BY TOMLINSON, FOLMER, PIPPY, RAFFERTY AND EICHELBERGER, JANUARY 26, 2012 |
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| REFERRED TO JUDICIARY, JANUARY 26, 2012 |
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| AN ACT |
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1 | Providing for successor business entity liability. |
2 | The General Assembly of the Commonwealth of Pennsylvania |
3 | hereby enacts as follows: |
4 | Section 1. Short title. |
5 | This act shall be known and may be cited as the Successor |
6 | Business Entity Liability Act. |
7 | Section 2. Legislative intent. |
8 | (a) Findings.--The General Assembly finds that: |
9 | (1) Asbestos-related claims threaten the continued |
10 | viability of successor business entities which are formed or |
11 | organized under the laws of this Commonwealth or another |
12 | jurisdiction that have never manufactured, sold or |
13 | distributed asbestos or asbestos-containing products. |
14 | (2) It is in the best interest of this Commonwealth to |
15 | ensure the economic viability of the entities under paragraph |
16 | (1). |
17 | (3) The viability of the domestic and foreign business |
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1 | entities under paragraph (1) is threatened due solely to |
2 | their status as successor business entities by merger or |
3 | consolidation based on actions taken prior to the 1972 |
4 | adoption of asbestos regulations by the Federal Occupational |
5 | Safety and Health Administration. |
6 | (4) The cumulative recovery by all asbestos claimants |
7 | from innocent successor business entities should be limited. |
8 | (b) Intent.--It is the intent of the General Assembly to |
9 | expand the protections granted in 15 Pa.C.S § 1929.1 (relating |
10 | to limitations on asbestos-related liabilities relating to |
11 | certain mergers or consolidations) to successor business |
12 | entities which are formed or organized under the laws of this |
13 | Commonwealth or another jurisdiction. |
14 | Section 3. Definitions. |
15 | The following words and phrases when used in this act shall |
16 | have the following meanings: |
17 | "Asbestos claim." A claim, wherever or whenever made, for |
18 | damages, losses, indemnification, contribution or other relief |
19 | arising out of, based on or in any way related to asbestos, |
20 | including property damage caused by the installation, presence |
21 | or removal of asbestos, the health effects of exposure to |
22 | asbestos, including a claim for personal injury, death, mental |
23 | or emotional injury, risk of disease or other injury or the |
24 | costs of medical monitoring or surveillance. The term includes a |
25 | claim made by or on behalf of any person exposed to asbestos or |
26 | a representative, spouse, parent, child or other relative of |
27 | that individual. |
28 | "Asbestos-related liability." Any liability, whether known |
29 | or unknown, asserted or unasserted, absolute or contingent, |
30 | accrued or unaccrued, liquidated or unliquidated or due or to |
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1 | become due, related in any way to an asbestos claim. |
2 | "Business entity." A for-profit corporation, limited |
3 | liability company, partnership, limited liability partnership or |
4 | Subchapter S corporation formed or organized under the laws of |
5 | this Commonwealth or another jurisdiction. |
6 | "Successor asbestos-related liability." Any asbestos-related |
7 | liability that was assumed or incurred by a business entity as a |
8 | result or in connection with a merger or consolidation, or a |
9 | plan of merger or consolidation related thereto, with or into |
10 | another business entity formed or organized under the laws of |
11 | this Commonwealth or another jurisdiction or which are related |
12 | in any way to asbestos claims based on the exercise of control |
13 | or the ownership of stock of the business entity prior to the |
14 | merger or consolidation. The term shall include liabilities |
15 | which, after the time of the merger or consolidation with a |
16 | transferor for which the fair market value of the total gross |
17 | assets of the successor business entity are determined under |
18 | section 5, was paid, committed to be paid or discharged by or on |
19 | behalf of the business entity, successor business entity or |
20 | transferor in connection with a settlement, judgment or |
21 | discharge in this Commonwealth or another jurisdiction. |
22 | "Successor business entity." Any of the following: |
23 | (1) A business entity that has merged or consolidated |
24 | with a transferor prior to January 1, 1972, and that has |
25 | assumed or incurred successor asbestos-related liabilities. |
26 | (2) A business entity that is a successor of a business |
27 | entity that has merged or consolidated with a transferor |
28 | prior to January 1, 1972, and that has assumed or incurred |
29 | successor asbestos-related liabilities. |
30 | "Transferor." A business entity for which successor |
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1 | asbestos-related liabilities are or were assumed or incurred. |
2 | Section 4. Liability. |
3 | (a) Limitation.--Except as provided under subsection (c), |
4 | the cumulative successor asbestos-related liability of a |
5 | successor business entity shall be limited to the fair market |
6 | value of the total gross assets of the transferor as of the time |
7 | of the merger or consolidation with the successor business |
8 | entity. |
9 | (b) Responsibility.--A successor business entity shall have |
10 | no responsibility for successor asbestos-related liabilities in |
11 | excess of the limitation under subsection (a). |
12 | (c) Exception.--If a transferor assumed or incurred |
13 | successor asbestos-related liability in connection with a prior |
14 | merger or consolidation with a prior transferor, the fair market |
15 | value of the total assets of the prior transferor as of the time |
16 | of the prior merger or consolidation shall be substituted for |
17 | the limitation under subsection (a) for purposes of determining |
18 | the liability of the successor business entity. |
19 | Section 5. Fair market value. |
20 | (a) Establishment.--A successor business entity may |
21 | establish the fair market value of total gross assets of the |
22 | transferor as of the time of the merger or consolidation by any |
23 | reasonable method under the circumstances, including the |
24 | following: |
25 | (1) By reference to the going concern value of the |
26 | assets or to the purchase price of the assets in an arm's |
27 | length transaction. |
28 | (2) In the absence of other readily available |
29 | information from which fair market value can be determined, |
30 | by reference to the value of the assets recorded on a balance |
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1 | sheet. |
2 | (b) Intangible assets.--Total gross assets under this |
3 | section shall include intangible assets. |
4 | (c) Prima facie evidence.--A showing by the successor |
5 | business entity of a reasonable determination of the fair market |
6 | value of total gross assets shall be prima facie evidence of |
7 | their fair market value. |
8 | (d) Burden.--Following a reasonable determination of the |
9 | fair market value of total gross assets by the successor |
10 | business entity, a claimant disputing that determination shall |
11 | have the burden of establishing a different fair market value of |
12 | the total gross assets. |
13 | (e) Settlement.--To the extent that total gross assets |
14 | include liability insurance, a settlement of a dispute relating |
15 | to liability insurance coverage entered into by the transferor |
16 | or successor business entity with the insurer of the transferor |
17 | prior to the effective date of this section shall be |
18 | determinative of the total coverage of the liability insurance |
19 | in the calculation of the transferor's total gross assets. |
20 | Section 6. Adjustment of fair market value. |
21 | (a) Annual increase.--Except as provided under subsection |
22 | (c), the fair market value of total gross assets of a transferor |
23 | as determined under section 5 shall increase annually until the |
24 | earlier of: |
25 | (1) The date of the settlement, judgment or other |
26 | discharge to which the limitations under section 4 are being |
27 | applied. |
28 | (2) The date on which the adjusted fair market value is |
29 | first exceeded by the cumulative amounts paid or committed to |
30 | be paid by or on behalf of a successor business entity or a |
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1 | transferor after the time of merger or consolidation for |
2 | which the fair market value of total assets is determined for |
3 | purposes of section 4 in connection with a settlement, |
4 | judgment or other discharge of successor asbestos-related |
5 | liabilities. |
6 | (b) Rate.--Any adjustment under subsection (a) shall be at |
7 | the rate equal to the prime rate listed in the first edition of |
8 | the Wall Street Journal published for each calendar year since |
9 | the merger or consolidation plus 1% not compounded. |
10 | (c) Exception.--No adjustment of the fair market value of |
11 | total gross assets may be applied to any liability insurance as |
12 | determined under section 5. |
13 | Section 7. Applicability and construction. |
14 | (a) Applicability.--This act shall not apply to any of the |
15 | following: |
16 | (1) Workers' compensation benefits paid to an employee |
17 | under the act of June 2, 1915 (P.L.736, No.338), known as the |
18 | Workers' Compensation Act, or a comparable workers' |
19 | compensation law of another jurisdiction. |
20 | (2) A claim against a business entity that does not |
21 | constitute a successor asbestos-related liability. |
22 | (3) An insurance business entity as defined in 15 |
23 | Pa.C.S. § 3102 (relating to definitions). |
24 | (4) Obligations arising under the National Labor |
25 | Relations Act (49 Stat. 449, 29 U.S.C. § 151 et seq.) or |
26 | under a collective bargaining agreement. |
27 | (b) Construction.--Nothing in this act shall affect the |
28 | scope or effect of 15 Pa.C.S. § 1929.1. Limitations under 15 |
29 | Pa.C.S. § 1929.1 shall continue to apply to all asbestos claims. |
30 | Section 20. Effective date. |
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1 | This act shall take effect immediately. |
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