Asbestos Corporation Limited Wins Chapter 15 Stay Shielding Insurers From 6,000 Suits

A Quebec chrysotile miner that stopped producing asbestos in the 1980s is testing whether a Canadian insolvency proceeding can stay thousands of U.S. asbestos suits and extend that stay to non-debtor insurers. On October 30, 2025, the U.S. Bankruptcy Court for the Southern District of New York recognized Asbestos Corporation Limited's Canadian restructuring as a foreign main proceeding and extended the automatic stay to the debtor's insurers, their claims administrator, and General Dynamics. Asbestos claimants are now appealing that ruling, and the dispute over how far a chapter 15 stay reaches has spilled into a federal-versus-state control fight with the South Carolina asbestos courts, even as the foreign representative separately asks the New York court to recognize and enforce Quebec's asbestos-claims bar-date framework.

Asbestos Corporation Limited (ACL) filed its chapter 15 petition on May 6, 2025 in the Southern District of New York, Case No. 25-10934, before Chief Judge Martin Glenn. The petition sought recognition of a Companies' Creditors Arrangement Act (CCAA) proceeding then pending in the Superior Court of Quebec, with Raymond Chabot Inc. acting as foreign representative and court-appointed Monitor. The case is not a conventional operating reorganization; it is an effort to move the resolution of decades of asbestos bodily-injury claims out of scattered U.S. courtrooms and into a single court-supervised process in ACL's home jurisdiction.

Debtor	Asbestos Corporation Limited
Court	U.S. Bankruptcy Court, Southern District of New York
Case Number	25-10934
Petition Date	May 6, 2025
Judge	Hon. Martin Glenn
Foreign Proceeding	CCAA, Superior Court of Quebec (Commercial Division), District of Frontenac
Foreign Representative	Raymond Chabot Inc.
Recognition	Foreign main proceeding recognized October 30, 2025
Interim Facility	US$45 million CCAA interim facility (increased from US$20 million)
Claims Bar Date	September 10, 2026

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From Thetford Mines to Chapter 15 Recognition

ACL is a Quebec corporation founded in 1925 and based in Thetford Mines, the historic center of Canada's chrysotile asbestos industry. The foreign representative's declaration submitted by Ayman Chaaban of Raymond Chabot states that ACL mined chrysotile asbestos for decades, stopped asbestos mining in the 1980s, and now operates around mineral recovery from serpentinite waste, property management, restoration, leasing, and newer energy-transition initiatives. By the time of filing the company reported roughly six employees, all in Canada, with its directors, officers, books, records, and strategic decision-making centered in Quebec.

The first-day package framed the chapter 15 case as a response to litigation pressure rather than an operating cash crisis. ACL's recognition motion and supporting declaration described thousands of asbestos bodily-injury suits spread across at least 14 U.S. states, finite insurance assets being drawn down by piecemeal litigation, and a conflict with a South Carolina receiver over control of the company's insurance program. The recognition motion also pointed to a roughly $16.2 million Washington default judgment and argued that part of ACL's sanctions exposure flowed from its adherence to Quebec's Business Concerns Records Act rather than from merits adjudications.

ACL obtained creditor protection under the CCAA from the Superior Court of Quebec in May 2025, with the stated aim of replacing fragmented U.S. litigation with a centralized, court-supervised claims process supervised by the Monitor. A subsequent amended and restated initial order extended the Quebec stay and approved the early tranche of interim financing that funds the proceeding.

Asbestos Liabilities and the London Insurance Policies

The balance sheet ACL presented at recognition was dominated by litigation and intercompany debt rather than operating leverage. The Chaaban declaration described approximately CAD 26.729 million owed to parent Mazarin Inc. on secured debt, about CAD 2.381 million of accounts payable and accrued liabilities, and approximately CAD 29.413 million of litigation-related liabilities as of December 31, 2024. The same filing identified ACL's primary operating assets as eight mines in Quebec, together with related leases, equipment, and other personal property located in the province.

The most contested asset in the case is insurance. ACL described its insurance contracts — including excess liability coverage subscribed to by the CLMI group under what the parties call the London Policies — as the key asset base for funding asbestos defense and indemnity costs. A later declaration from Thomas Ryan reported that CLMI had reimbursed more than $90 million under the London-policy structure and that more than 6,000 asbestos lawsuits were pending when ACL commenced its CCAA case, with approximately 5,700 of those in Louisiana.

The South Carolina receivership sits on the other side of that fight. A receiver appointed in South Carolina litigation filed a response opposing ACL's narrative and defending his authority over ACL's insurance assets, arguing that his receivership powers included administration of those assets and accusing ACL of using an unsupported records-law position to frustrate U.S. litigation. The receivership mechanism traces to a May 21, 2025 South Carolina Supreme Court ruling in Welch v. Atlas Turner, which placed a Quebec-based asbestos manufacturer in default and authorized a special receiver to take control of its insurance assets to satisfy mesothelioma judgments; plaintiffs' counsel identified ACL as a sister company subject to the same approach. That model has itself drawn sustained criticism for placing private attorneys in control of defunct or foreign corporations to pursue insurance assets, a practice that trade and tort-reform groups have flagged in connection with South Carolina's asbestos docket.

Quebec Interim Financing and the CCAA Funding Charge

ACL's case is funded through a Canadian court-approved interim facility rather than U.S. debtor-in-possession financing, a structural feature of the chapter 15 posture. The CCAA proceeding opened with a US$20 million interim facility approved alongside the amended and restated initial order, used to cover professional fees, advisory costs, and the administration of the restructuring rather than ongoing mining operations.

That facility was later enlarged as the claims process expanded. On December 12, 2025, the Canadian court approved an increase of the Interim Facility from US$20 million to US$45 million, secured by the Interim Lender's Charge, as reported in the Monitor's status reporting. Because the facility is secured by a Canadian court charge and serviced through the Quebec proceeding, there is no parallel U.S. DIP facility, adequate-protection package, or budget order in the SDNY case — the chapter 15 court's role is recognition and enforcement, not financing.

Foreign Main Recognition and the Non-Debtor Stay Extension

The relief came in two stages. On May 6, 2025, Chief Judge Glenn entered a temporary restraining order applying section 362-style protection to the defined "Stay Parties" and their U.S. interests, recognizing the petitioner as foreign representative, authorizing control of ACL's U.S. interests, and setting a May 19, 2025 hearing on whether the provisional relief should continue. The provisional-relief motion behind that order sought to stay actions not only against ACL but also against its officers and directors, CLMI, and CLMI's third-party claims administrator Resolute, while authorizing the foreign representative to control the company's U.S. interests, including the London Policies, ahead of the recognition hearing.

Final recognition followed in late October. In a memorandum opinion dated October 29, 2025, the court rejected the argument that ACL's true center of gravity was U.S. litigation management, found that ACL's center of main interests was in Canada, and held that additional relief protecting the non-debtor stay parties was appropriate under sections 1521 and 1522. The opinion treated insurer and related-party litigation as capable of producing an immediate adverse economic consequence for the debtor, and it overruled the asbestos claimants' public-policy and section 524(g)-style objections at the recognition stage.

The recognition order entered October 30, 2025 put that reasoning into operation. It recognized the CCAA proceeding as a foreign main proceeding, applied section 1520, and extended stay and injunction protection to ACL, CLMI, Resolute, additional insurers listed on a schedule, and General Dynamics and certain affiliates insured under the London Policies. That extension of the stay beyond the debtor to a constellation of non-debtor insurers and an insured manufacturer is the central legal feature of the case — and the feature the claimants are challenging on appeal.

Recognition Appeal Before Judge Rakoff

The asbestos claimants moved first on the record rather than the merits. After recognition, the Asbestos Parties filed a motion to alter or amend the judgment, not to relitigate the COMI finding directly, but to force a ruling on the admissibility of transcript designations they said created a gap in the appellate record. The foreign representative responded that the requested evidentiary rulings were immaterial because the challenged testimony had no bearing on the recognition decision, and the court denied the motion on January 16, 2026, noting that the parties could still include the testimony in the record on appeal.

The claimants' statement of issues on appeal raises two questions: whether recognition as a foreign main proceeding was erroneous, and whether the automatic stay was improperly extended to non-debtor third parties. The appeal has been assigned to Judge Jed S. Rakoff of the U.S. District Court for the Southern District of New York (Case No. 25-cv-09889); the U.S. opposing parties filed their opening brief on April 10, 2026, the foreign representative filed its responsive brief on May 26, 2026, and the district court scheduled oral argument for August 12, 2026. The objections that animate the appeal trace back to the recognition hearing, where claimants and a chapter 7 trustee argued that ACL's center of main interests was in the United States and that recognition would strip U.S. claimants of domestic protections.

Stay Enforcement Against the South Carolina Berley and Jenkins Cases

While the appeal was pending, the stay dispute moved to South Carolina courts. On April 24, 2026, the foreign representative and CLMI jointly moved to restate and enforce the stay provisions of the October 30, 2025 recognition order against two cases in the South Carolina Court of Common Pleas: Berley (CA No. 2023-CP-40-02840) and Jenkins (CA No. 2024-CP-40-04703). The movants alleged that the South Carolina court and plaintiffs' counsel Maune Raichle Hartley French & Mudd continued to litigate those proceedings, sought to disburse escrowed insurance settlement funds, and that the state court had ruled the bankruptcy stay inapplicable and treated insurance proceeds as non-debtor assets.

On April 29, 2026, Chief Judge Glenn entered an order restating and enforcing the stay, holding that any activity in the Berley or Jenkins proceedings directing payments to claimants violates the stay, asserting exclusive foreign-representative control over the debtor's U.S. insurance assets, and providing that the Berley settlement funds held in trust by Maune Raichle could be disbursed only on written consent of CLMI and the Monitor or by further court order. When the South Carolina court scheduled May 12, 2026 evidentiary hearings into the settlements, CLMI filed a follow-on motion on May 10, 2026 warning of an imminent stay violation.

The bankruptcy court escalated in response. On May 11, 2026, it entered a second enforcement order declaring the South Carolina court's scheduled hearings and related orders void, prohibiting any further inquiry into the settlement terms, and warning that any party — including CLMI or other Stay Parties — that complied with the void state-court orders rather than the federal stay order would face contempt. According to ACL's notice of South Carolina litigation status, Acting Chief Justice Jean Toal proceeded with the Berley and Jenkins hearing on May 12, 2026 anyway, directing CLMI's local counsel Theodore Manos to attend in his personal capacity, while CLMI and Resolute counsel did not appear in adherence to the federal stay. The standoff was resolved consensually: counsel for the Berley plaintiffs, CLMI, and the foreign representative agreed to an order distributing the Berley settlement proceeds in line with the bankruptcy court's April 29 order, which the South Carolina court "so-ordered" on May 20, 2026. As of its June 15, 2026 update, CLMI stated it sought no further relief from the bankruptcy court at that time.

Quebec Claims Process and the U.S. Recognition Fight

In parallel, the Quebec proceeding moved into active claims work. The CCAA court built the claims process on two bar-date orders — a Non-Asbestos Claims Order approved on December 12, 2025 and an Asbestos Claims Order approved on January 7, 2026 — as described in the Monitor's sixth status report. Holders of "Existing Asbestos Claims," defined as asbestos-related disease diagnosed before the 60th day after issuance of the Asbestos Claims Order, were given six months to file a proof of claim from the date of the Asbestos Claims Order.

The bar date is now fixed. The Monitor served its Claims Bar Date Certificate on March 6, 2026, establishing September 10, 2026 at 5:00 p.m. Eastern as the bar date for both Existing Asbestos Claims and Non-Asbestos Claims. The publicly circulated claims notice identifies Kroll Restructuring Administration LLC and Raymond Chabot Inc. in the claims-administration role and states the same September 10, 2026 bar date.

The adjudication framework that follows the bar date is itself contested. The Co-Applicants filed a Claims Adjudication Order Application on May 4, 2026, which the Canadian court heard over four days before granting the Asbestos Claims Review and Adjudication Order on June 19, 2026. That order establishes a multi-stage process: an initial Monitor review of proofs of claim for procedural compliance and eligibility, a substantive review of liability and allowed amount, the potential appointment of court-approved claims officers, and notices of determination or disallowance subject to a 30-day right to appeal or refer the matter to a claims officer. The order incorporates a damages table prepared by Dr. Stephanie Plancich summarizing ACL's inflation-adjusted U.S. asbestos settlement values from 2015 to 2024, and the court authorized the Canadian Opposing Parties to file a competing expert report by July 10, 2026 challenging those historical settlement values.

The shape of any eventual distribution remains open. In the same June 2026 ruling, the Canadian court denied an application to compel unconditional disclosure of ACL's internal documents, instead requiring claimants to sign a "Restricted Use Undertaking" to prevent unauthorized use of those documents in U.S. litigation, and it rejected the objectors' demand to "opt out" of the CCAA process to pursue direct actions against ACL's insurers. The Co-Applicants told the court that whether they will propose a plan or hold a creditor vote is difficult to determine without visibility into the full universe of claims, and the court observed that while it would be "surprising" not to ask creditors to vote, it could approve distributions without a vote if they contemplate full payment of finally proven claims.

On July 8, 2026, the foreign representative moved under sections 105(a), 1501, 1507, and 1521 for an order recognizing and enforcing four Canadian orders directly in the chapter 15 case: the December 12, 2025 Non-Asbestos Claims Bar Date Order, the January 7, 2026 Asbestos Claims Bar Date Order, the May 12, 2026 Non-Asbestos Claims Review and Adjudication Order, and the June 19, 2026 Asbestos Claims Review and Adjudication Order. The motion seeks U.S. enforcement of the Canadian bar-date mechanism so that late claimants are barred from pursuing claims, voting, or receiving distributions, while the Monitor continues to review eligibility and value and contested claims proceed to a claims officer or the Canadian court.

On July 16, 2026, the bankruptcy court entered a scheduling order that superseded the initial hearing notice, setting objections due August 7, 2026 at 5:00 p.m., replies due August 14, 2026 at 5:00 p.m., and an in-person hearing limited solely to the proposed bar-date orders for August 24, 2026 at 9:00 a.m. in Courtroom 523. The motion asks the court to make the Quebec bar-date consequence — that untimely claims are forever barred against ACL, General Dynamics, their affiliates, and insurers — directly enforceable in the United States, a question now pending alongside the SDNY appeal and the still-open question of whether the Co-Applicants will propose a plan.

Key Timeline

Date	Event
May 5, 2025	ACL commenced its CCAA proceeding in the Superior Court of Quebec
May 6, 2025	ACL filed its chapter 15 petition in SDNY; court entered a TRO and set a provisional-relief hearing
Aug. 19, 2025	Thomas Ryan declaration describing CLMI's claims-administration role and the scale of pending asbestos suits
Oct. 29–30, 2025	Court issued its memorandum opinion and entered the order recognizing the CCAA case as a foreign main proceeding
Dec. 12, 2025	Canadian court approved the Non-Asbestos Claims Order and increased the interim facility to US$45 million
Jan. 7, 2026	Canadian court approved the Asbestos Claims Order
Jan. 16, 2026	Bankruptcy court denied the motion to alter or amend the judgment
Mar. 6, 2026	Monitor served the Claims Bar Date Certificate, fixing September 10, 2026 as the bar date
Apr. 10, 2026	U.S. opposing parties filed their opening appeal brief (before Judge Rakoff, Case No. 25-cv-09889)
Apr. 29 – May 11, 2026	Bankruptcy court entered two orders restating and enforcing the stay against the South Carolina cases
May 20, 2026	South Carolina court "so-ordered" an agreed Berley settlement-distribution order consistent with the federal stay
June 19, 2026	Canadian court granted the Asbestos Claims Review and Adjudication Order
July 8, 2026	Foreign representative moved to recognize and enforce the Canadian bar-date and claims-adjudication orders in the chapter 15 case
July 10, 2026	Deadline for Canadian Opposing Parties to file a competing expert report on the Plancich damages table
July 16, 2026	Bankruptcy court set Aug. 7 objections, Aug. 14 replies, and an Aug. 24, 2026 hearing limited to the bar-date orders
Aug. 12, 2026	Oral argument scheduled on the recognition/stay-extension appeal before Judge Rakoff
Aug. 24, 2026	Hearing scheduled on recognizing and enforcing the Canadian bar-date orders in the U.S.
Sept. 10, 2026	Asbestos and non-asbestos proof-of-claim bar date

Frequently Asked Questions

Who is the claims agent for Asbestos Corporation Limited?

Kroll Restructuring Administration LLC and Raymond Chabot Inc. handle claims administration and noticing for the CCAA proceeding. Raymond Chabot's public case record identifies the court-supervised process and its asbestos and non-asbestos claims bar dates; the publicly circulated claims notice identifies Kroll and Raymond Chabot in the claims-administration role and states a September 10, 2026 proof-of-claim bar date for both categories.

What is the claims bar date in the ACL case?

The Monitor's Claims Bar Date Certificate, served March 6, 2026, fixed September 10, 2026 at 5:00 p.m. Eastern as the bar date for both Existing Asbestos Claims and Non-Asbestos Claims. That deadline governs both categories of claims in the Quebec proceeding.

Why did a Canadian company file chapter 15 in New York?

Chapter 15 lets the foreign representative of a non-U.S. insolvency proceeding obtain U.S. recognition and a stay of U.S. litigation. ACL used it to have its Quebec CCAA proceeding recognized as a foreign main proceeding so that thousands of U.S. asbestos suits — and the insurance assets behind them — would be administered through the centralized Quebec process.

What is being appealed?

The asbestos claimants are appealing the October 2025 recognition ruling on two grounds: whether recognition as a foreign main proceeding was correct, and whether the automatic stay was properly extended to non-debtor third parties such as the insurers, the claims administrator, and General Dynamics. The appeal is before Judge Jed S. Rakoff, with oral argument scheduled for August 12, 2026.

For related cross-border and mass-tort restructuring coverage, see ElevenFlo's analysis of the Chesswood Group chapter 15 recognition of a Canadian CCAA proceeding, the Rokstad Holdings cross-border chapter 15 sale, and the Valves and Controls US asbestos trust case.