1Amending Title 42 (Judiciary and Judicial Procedure) of the
2Pennsylvania Consolidated Statutes, in particular rights and
3immunities, providing for successor business entity 
4liability.

5The General Assembly of the Commonwealth of Pennsylvania
6hereby enacts as follows:

7Section 1. Chapter 83 of Title 42 of the Pennsylvania
8Consolidated Statutes is amended by adding a subchapter to read:

9SUBCHAPTER F.1

10SUCCESSOR BUSINESS ENTITY LIABILITY

11Sec.

128368.1. Legislative findings and declaration.

138368.2. Definitions.

148368.3. Liability.

158368.4. Fair market value.

168368.5. Adjustment of fair market value.

178368.6. Applicability and construction.

18§ 8368.1. Legislative findings and declaration.

19(a) Findings.--The General Assembly finds that:

1(1) Asbestos-related claims threaten the continued
2viability of successor business entities which are formed or
3organized under the laws of this Commonwealth or another
4jurisdiction that have never manufactured, sold or
5distributed asbestos or asbestos-containing products.

6(2) It is in the best interest of this Commonwealth to
7ensure the economic viability of the entities under paragraph
8(1).

9(3) The viability of the domestic and foreign business
10entities under paragraph (1) is threatened due solely to
11their status as successor business entities by merger or
12consolidation based on actions taken prior to the 1972
13adoption of asbestos regulations by the Occupational Safety
14and Health Administration.

15(4) The cumulative recovery by all asbestos claimants
16from innocent successor business entities should be limited.

17(b) Intent.--It is the intent of the General Assembly to
18expand the protections granted in 15 Pa.C.S. § 1929.1 (relating
19to limitations on asbestos-related liabilities relating to
20certain mergers or consolidations) to successor business
21entities which are formed or organized under the laws of this
22Commonwealth or another jurisdiction.

23§ 8368.2. Definitions.

24The following words and phrases when used in this subchapter 
25shall have the meanings given to them in this section unless the
26context clearly indicates otherwise:

27"Asbestos claim." A claim, wherever or whenever made, for
28damages, losses, indemnification, contribution or other relief
29arising out of, based on or in any way related to asbestos,
30including property damage caused by the installation, presence

1or removal of asbestos, the health effects of exposure to
2asbestos, including a claim for personal injury, death, mental
3or emotional injury, risk of disease or other injury or the
4costs of medical monitoring or surveillance. The term includes a
5claim made by or on behalf of any person exposed to asbestos or
6a representative, spouse, parent, child or other relative of
7that individual.

8"Asbestos-related liability." Any liability, whether known
9or unknown, asserted or unasserted, absolute or contingent,
10accrued or unaccrued, liquidated or unliquidated or due or to
11become due or related in any way to an asbestos claim.

12"Business entity." A for-profit corporation, limited
13liability company, partnership, limited liability partnership or
14Subchapter S corporation formed or organized under the laws of
15this Commonwealth or another jurisdiction.

16"Successor asbestos-related liability." Any asbestos-related
17liability that was assumed or incurred by a business entity as a
18result or in connection with a merger or consolidation, or a
19plan of merger or consolidation related thereto, with or into
20another business entity formed or organized under the laws of
21this Commonwealth or another jurisdiction or which are related
22in any way to asbestos claims based on the exercise of control
23or the ownership of stock of the business entity prior to the
24merger or consolidation. The term shall include liabilities
25which, after the time of the merger or consolidation with a
26transferor for which the fair market value of the total gross
27assets of the successor business entity are determined under
28section 8368.4 (relating to fair market value), were paid,
29committed to be paid or discharged by or on behalf of the
30business entity, successor business entity or transferor in

1connection with a settlement, judgment or discharge in this
2Commonwealth or another jurisdiction.

3"Successor business entity." Any of the following:

4(1) A business entity that has merged or consolidated
5with a transferor prior to January 1, 1972, and that has
6assumed or incurred successor asbestos-related liabilities.

7(2) A business entity that is a successor of a business
8entity that has merged or consolidated with a transferor
9prior to January 1, 1972, and that has assumed or incurred
10successor asbestos-related liabilities.

11"Transferor." A business entity from which successor
12asbestos-related liabilities are or were assumed or incurred.

13§ 8368.3. Liability.

14(a) Limitation.--Except as provided under subsection (c),
15the cumulative successor asbestos-related liability of a
16successor business entity shall be limited to the fair market
17value of the total gross assets of the transferor as of the time
18of the merger or consolidation with the successor business
19entity.

20(b) Responsibility.--A successor business entity shall have
21no responsibility for successor asbestos-related liabilities in
22excess of the limitation under subsection (a).

23(c) Exception.--If a transferor assumed or incurred
24successor asbestos-related liability in connection with a prior
25merger or consolidation with a prior transferor, the fair market
26value of the total assets of the prior transferor as of the time
27of the prior merger or consolidation shall be substituted for
28the limitation under subsection (a) for purposes of determining
29the liability of the successor business entity.

30§ 8368.4. Fair market value.

1(a) Establishment.--A successor business entity may
2establish the fair market value of total gross assets of the
3transferor as of the time of the merger or consolidation by any
4reasonable method under the circumstances, including the
5following:

6(1) By reference to the going-concern value of the
7assets or to the purchase price of the assets in an arms-
8length transaction.

9(2) In the absence of other readily available
10information from which fair market value can be determined,
11by reference to the value of the assets recorded on a balance
12sheet.

13(b) Intangible assets.--Total gross assets under this
14section shall include intangible assets.

15(c) Prima facie evidence.--A showing by the successor
16business entity of a reasonable determination of the fair market
17value of total gross assets shall be prima facie evidence of
18their fair market value.

19(d) Burden.--Following a reasonable determination of the
20fair market value of total gross assets by the successor
21business entity, a claimant disputing that determination shall
22have the burden of establishing a different fair market value of
23the total gross assets.

24(e) Insurance settlement.--To the extent that total gross
25assets include liability insurance, a settlement of a dispute
26relating to liability insurance coverage entered into by the
27transferor or successor business entity with the insurer of the
28transferor prior to the effective date of this section shall be
29determinative of the total coverage of the liability insurance
30in the calculation of the transferor's total gross assets.

1§ 8368.5. Adjustment of fair market value.

2(a) Annual increase.--Except as provided under subsection
3(c), the fair market value of total gross assets of a transferor
4as determined under section 8368.4 (relating to fair market
5value) shall increase annually until the earlier of:

6(1) The date of the settlement, judgment or other
7discharge to which the limitations under section 8368.3 
8(relating to liability) are being applied.

9(2) The date on which the adjusted fair market value is
10first exceeded by the cumulative amounts paid or committed to
11be paid by or on behalf of a successor business entity or a
12transferor after the time of merger or consolidation for
13which the fair market value of total assets is determined for
14purposes of section 8368.3, in connection with settlements,
15judgments or other discharges of successor asbestos-related
16liabilities.

17(b) Rate.--Any adjustment under subsection (a) shall be at
18the rate equal to the prime rate listed in the first edition of
19the Wall Street Journal published for each calendar year since
20the merger or consolidation plus 1% not compounded.

21(c) Exception.--No adjustment of the fair market value of
22total gross assets may be applied to any liability insurance as
23determined under section 8368.4.

24§ 8368.6. Applicability and construction.

25(a) Applicability.--This subchapter shall not apply to any
26of the following:

27(1) An asbestos claim for which the applicable period of
28limitation commenced on or before the effective date of this
29section.

30(2) Workers' compensation benefits paid to an employee

1under the act of June 2, 1915 (P.L.736, No.338), known as the
2Workers' Compensation Act, or a comparable workers'
3compensation law of another jurisdiction.

4(3) A claim against a business entity that does not
5constitute a successor asbestos-related liability.

6(4) An insurance business entity under 15 Pa.C.S. Ch.31
7(relating to insurance corporations).

8(5) Obligations arising under the National Labor
9Relations Act (49 Stat. 449, 29 U.S.C. § 151 et seq.) or
10under a collective bargaining agreement.

11(6) A claim against a successor business entity that,
12after a merger or consolidation, continued in the business of
13mining asbestos, in the business of selling or distributing
14asbestos fibers or in the business of manufacturing,
15distributing, removing or installing asbestos-containing
16products that were the same or substantially the same as
17those products previously manufactured, distributed, removed
18or installed by the transferor.

19(b) Construction.--Nothing in this subchapter shall affect
20the scope or effect of 15 Pa.C.S. § 1929.1 (relating to
21limitations on asbestos-related liabilities relating to certain
22mergers or consolidations). Limitations under 15 Pa.C.S. §
231929.1 shall continue to apply to all asbestos claims.

24Section 2. This act shall take effect immediately.