Receivership 101: Promoting Ethical Business Practices in SC
What happens when a company with massive liabilities disappears into thin air - or, even worse, blatantly refuses to participate in the legal process? This unfortunate scenario has played out often throughout history, and it is particularly relevant in South Carolina, where ongoing asbestos litigation highlights the challenges of holding African mining powerhouses accountable for their actions.
Many asbestos companies filed for bankruptcy or ceased operations long ago, leaving behind a trail of victims suffering from devastating illnesses caused by exposure to their products. In some cases, and as we mentioned in a previous article, several foreign companies have successfully escaped liability entirely - until now. Through a legal mechanism called receiverships, these companies are finally being brought to justice.
The idea of a receivership dates back to medieval times and began as a remedy for creditors to seek assets from debtors unable to meet their obligations. In the United States, receiverships gained prominence in the 1800s and 1900s, particularly for reorganizing railroads and stabilizing businesses during the Great Depression.
Today, receiverships are used for a number of situations where an entity is either unable or unwilling to fulfill its obligations to the creditor.
Perhaps the most notorious example in South Carolina is Alex Murdaugh’s receivership, which was established initially to secure assets tied to his alleged financial crimes, long before his murder trial. State-court-appointed receivers seized Murdaugh’s properties and bank to liquidate his assets and prepare to distribute the funds to plaintiffs in future judgments against him.
Another recent newsworthy receivership was when Sam Bankman-Fried’s crypto exchange platform, FTX, collapsed and went bankrupt costing users billions of dollars. To protect any remaining assets and attempt to distribute them, a receiver was appointed to manage FTX’s assets. In this case, the receiver ensured that as many stakeholders as possible could recover some of their losses during ongoing investigations and legal proceedings.
The receivership created by South Carolina asbestos courts addresses similar situations to these famous examples wherein either companies cannot or will not manage their business before the court.
Currently, South Carolina-court-appointed receiver Peter Protopapas is working to hold Anglo-American, PLC, ESAB Corp. and Billionaire Mohed Altrad responsible for billions of dollars in asbestos-related claims. These entities, along with the shell companies they created to evade liability, are linked to Cape Asbestos, which distributed asbestos to companies in South Carolina for decades – knowingly poisoning countless Americans. Even though some of the shell companies are gone, their insurance policies are still active.
On top of holding these companies responsible, Protopapas is pursuing long overdue justice for victims of asbestos-related diseases, relief for South Carolina businesses who have had the financial burden of paying these liabilities for foreign companies, and compliance from insurance companies who still have active policies. Sounds like a pretty fair scenario, right? The receiver is ultimately asking for people to uphold their end of the bargain – it’s pretty black and white.
Seeing the inevitable consequences of their actions, the defendants have launched a disinformation campaign aimed at undermining the credibility of receiverships, despite these processes being recognized as fair and valid for centuries. This tactic reflects a desperate attempt to divert attention from their own malicious practices and challenge a system designed to ensure accountability.
By allowing South Carolina courts to take control of the affairs of defunct or uncooperative entities, receiverships dismantle the barriers that shield wrongdoers, who in this case made billions off of others’ suffering, from legal retaliation.
The asbestos receiverships in South Carolina underscore the idea that businesses are not above the law and will be held accountable for the deaths of countless victims. No entity, regardless of its resources or efforts to escape responsibility, can operate above the law. If that deters a corporation from investing in South Carolina, and in the case of the numerous foreign asbestos companies that knowingly poisoned South Carolinians, we’re likely better off without them.