Presperse Corporation, a New Jersey supplier of specialty cosmetic ingredients owned by Sumitomo Corporation of Americas, filed for chapter 11 on September 9, 2024 in the U.S. Bankruptcy Court for the District of New Jersey (case no. 24-18921) with a deal already in hand. The filing was a prenegotiated, solvent restructuring built to resolve roughly 275 pending talc personal-injury lawsuits through a trust established under section 524(g) of the Bankruptcy Code — the channeling mechanism normally associated with asbestos manufacturers, not a parent-funded ingredient supplier.
The structure separated Presperse's litigation liability from its operating business. Rather than reorganize through new third-party capital, the debtor entered chapter 11 backed by a March 30, 2024 term sheet with its sole shareholder and the prepetition talc claimant constituencies, and used the case to channel all present and future talc claims to a trust funded primarily by a $49 million cash contribution from Sumitomo Corporation of Americas. Every other creditor class — secured, priority, general unsecured, and intercompany — rode through unimpaired. The case ran to a fully consensual confirmation on July 29, 2025 and a final decree on October 23, 2025, with the sole impaired class voting unanimously to accept.
U.S. Bankruptcy Court, District of New Jersey (Trenton)
Case Number
24-18921
Petition Date
September 9, 2024
Plan Type
Joint Prenegotiated Plan of Reorganization (section 524(g) talc trust)
Confirmation Date
July 29, 2025
Effective Date
August 25, 2025
Final Decree
October 23, 2025
Judge
Hon. Michael B. Kaplan
Equity Sponsor
Sumitomo Corporation of Americas (sole shareholder)
Debtor's Counsel
Duane Morris LLP
Claims Agent
Kroll Restructuring Administration LLC
Case Snapshot
Sumitomo Ownership and the Cosmetic-Ingredient Business
Presperse Corporation was founded in 1981 by Alan B. Black and supplies specialty raw materials to the cosmetics and personal-care industry, selling more than 400 products to over 300 corporate customers — including L'Oréal, Estée Lauder, and Avon — across the skin, color, and sun-care segments. The company operates as a standalone business with its own board and management and employed approximately 50 people as of the petition date. Presperse remained a going concern throughout the bankruptcy and emerged intact, with the chapter 11 confined to resolving its talc liability rather than restructuring its business.
Sumitomo Corporation of Americas, the U.S. arm of Japan's Sumitomo Corporation, is the debtor's sole equity holder. SCOA first invested in Presperse in 2007 with a 20% stake and, through a series of mergers ending with the March 31, 2017 merger of former parent SGMA into SCOA, became the sole shareholder. SCOA funded the talc trust, and the confirmed plan reinstated and reissued Presperse's equity to SCOA, leaving the parent in place as owner of the reorganized debtor.
Rising Talc Claims and the Prenegotiated Term Sheet
Presperse was first named as a defendant in talc personal-injury lawsuits in 2015, in actions alleging mesothelioma and other diseases from exposure to asbestos-contaminated talc in cosmetic products. The pace of new filings remained low through 2021, then increased sharply in late 2021 and 2022. By the petition date, approximately 275 talc lawsuits were pending against the company, and no matter had ever reached trial — every prior case had been dismissed or settled.
Litigation and settlement costs became unsustainable for a business of Presperse's size. The company reported a net loss of approximately $4.9 million for fiscal year 2023, a figure that included $5.4 million of litigation costs and $2.2 million of settlement payments. Presperse discontinued sales of talc-containing products in the summer of 2023, recording its final talc sale on August 15, 2023, but the legacy exposure remained. By fiscal year 2024, talc losses had driven a $40.57 million net loss, reducing net assets to negative $14 million and pushing total liabilities to $59.2 million at the time of filing.
After 2023 negotiations failed to produce a resolution, Presperse, SCOA, the prepetition Talc Claimants' Committee, and the prepetition Future Claimants' Representative executed a term sheet dated March 30, 2024 that became the basis for a prenegotiated, fully consensual chapter 11 plan resolving present and future talc claims through a section 524(g) trust. The term sheet fixed the basic economics before the filing, leaving insurance recoveries and plan mechanics as the open items.
Capital Structure and the SCOA Financing Facility
Presperse entered chapter 11 with no funded third-party debt. Its prepetition obligations consisted of an unsecured intercompany credit facility and ordinary trade payables. The SCOA Financing Facility, an unsecured credit facility entered October 31, 2023 and amended in May and June 2024 to fund operations and bankruptcy-preparation costs, carried an aggregate borrowing capacity of $15.0 million, of which $10,293,061.13 was outstanding as of the petition date — $10,249,820 in principal plus $43,241.13 of accrued interest. Trade debt totaled approximately $4.75 million, of which roughly $2.1 million was owed to SCOA-affiliated entities.
Because the only secured or funded exposure ran to its own parent, Presperse did not seek a third-party DIP facility. Instead, the debtor moved on the petition date for authority to continue performing under the SCOA facility and to obtain post-petition financing on an unsecured, administrative-priority basis under section 364 of the Bankruptcy Code. The case ran on that intercompany financing plus going-concern cash flow, with the debtor operating its cosmetic-ingredient business uninterrupted through confirmation.
The Section 524(g) Talc Trust and Class Treatment
The confirmed Joint Prenegotiated Plan of Reorganization establishes a Talc Personal Injury Trust under sections 105(a) and 524(g) of the Bankruptcy Code that channels all current and future talc personal-injury claims away from Presperse, SCOA, and the other Protected Parties to the trust, where they are resolved under Trust Distribution Procedures. Upon the effective date, a permanent channeling injunction issues, with Protected Parties including the debtor, the reorganized debtor, SCOA, any settling insurer, and their respective representatives and successors. The court found that the plan proponents satisfied the elements of section 524(g) by a preponderance of the evidence.
Future claimants and the bar date. A 524(g) channeling injunction can only bind future claimants if their interests are independently represented, and Presperse built that representation into its first-day relief. The debtor moved at the outset to appoint a Future Claimants' Representative to protect individuals who might assert talc claims only after confirmation, and the court installed Heather Barlow in that role; Barlow was advised by Young Conaway Stargatt & Taylor as counsel and Legal Analysis Systems, Inc. as consultant. The debtor separately moved to establish bar dates and related procedures for present claims, fixing the deadlines that governed the present-claims pool channeled to the trust. The prepetition Talc Claimants' Committee and the Future Claimants' Representative — the same constituencies that signed the March 30, 2024 term sheet — carried their roles into the case as the negotiating counterparties for the trust.
The plan left every non-talc class unimpaired. Allowed priority non-tax claims, other secured claims, general unsecured claims, and the SCOA Financing Facility claim are paid in full; intercompany claims are reinstated and paid in the ordinary course; and existing Presperse equity interests are reinstated and deemed reissued to SCOA. Class 4 talc personal-injury claims — the sole impaired class — are channeled to the trust, leaving the talc tort liability as the only impaired claim pool in the case.
The trust is funded from three sources. The largest is the Presperse Contributed Cash, inclusive of a $49 million cash contribution from SCOA, reduced by certain pre- and post-petition bankruptcy fees and costs incurred by Presperse and SCOA. The second is a $1 million Trust Note executed by Presperse and SCOA, bearing 4% interest per annum with a six-month maturity. The third is the talc personal-injury insurance assets and their proceeds, including the recoveries described below. The plan supplement filed before confirmation provided the operative trust documents, the Trust Note, and the identification of the trustees who would administer distributions under the Trust Distribution Procedures.
The plan carried no contested valuation proceeding, no equity cancellation, and no competing plan. SCOA agreed to fund a defined cash amount, the present and future claimant representatives agreed to channel their claims to the trust, and the reorganized debtor continued operating under the same ownership.
Hartford Settlement and Insurance Recoveries
During the case, Presperse identified approximately twelve policy years spanning 1991 to 2003 underwritten by The Hartford with potentially material coverage — occurrence limits totaling roughly $13 million and aggregate limits of roughly $23 million. Following mediation, the debtor entered into a settlement agreement with The Hartford for a policy buyback under sections 363(f) and (m) of the Bankruptcy Code. The Hartford Settlement Agreement, approved by separate order, increased recoveries to Class 4 talc claimants by approximately $8 million, and The Hartford became a settling insurer and Protected Party from and after its settlement deposit.
Not every insurer produced coverage. Travelers (as successor to USF&G) and Allianz/Fireman's Fund were also contacted regarding coverage but were determined not to provide material indemnity coverage for the talc claims based on their prepetition responses. The Hartford buyback therefore stood as the principal insurance recovery folded into the trust, and its mid-case addition was the substantive change that distinguished the final plan from the version originally solicited. Trade and legal coverage of the case described the overall package as a roughly $50 million talc-asbestos settlement, reflecting the combined SCOA cash contribution, Trust Note, and insurance recoveries available to Class 4 claimants.
Plan Modifications and Consensual Confirmation
The Joint Prenegotiated Plan moved through four modifications between solicitation and confirmation. The Modified Plan filed May 23, 2025 carried clean-up changes alongside a modified disclosure statement. The Second Modified Plan filed May 30, 2025 was the solicitation version, filed with the order conditionally approving the disclosure statement and establishing solicitation procedures. The Third Modified Plan filed July 14, 2025 incorporated the Hartford Settlement and its roughly $8 million of additional Class 4 recoveries, together with modifications responsive to informal comments, including comments from The Hartford. The Fourth Modified Plan filed July 28, 2025 made final, non-material technical changes.
The court found that none of the modifications materially and adversely affected the treatment of any class and that re-solicitation was not required. The case was largely consensual: the only meaningful objection on the docket was a supplemental objection to the debtor's solicitation procedures motion, filed before entry of the solicitation order. Class 4, the sole impaired voting class, voted unanimously to accept the plan, satisfying the consensual-vote element of section 524(g) and leaving no contested confirmation objections at the July 22, 2025 combined hearing. The bankruptcy court confirmation order was subsequently affirmed by the U.S. District Court for the District of New Jersey on August 1, 2025, and the plan went effective on August 25, 2025. Practitioners and the case professionals have described the result as the first consensual confirmation of a chapter 11 plan resolving talc-related personal-injury claims through a 524(g) trust.
Professional Retentions and Final Fee Awards
Duane Morris LLP served as the debtor's lead counsel, with Getzler Henrich & Associates LLC serving as financial advisor and Kroll Restructuring Administration LLC as claims and noticing agent. The talc claimant constituencies were separately represented: the Talc Claimants' Committee retained Robinson & Cole LLP, with Gilbert LLP as special counsel, while Heather Barlow served as the Future Claimants' Representative with Young Conaway Stargatt & Taylor, LLP as counsel and Legal Analysis Systems, Inc. as consultant.
The court entered final fee orders on October 23, 2025. Among the approved awards, Robinson & Cole received $975,019.50 as TCC counsel and Duane Morris received $867,911.50 as debtor's counsel, with Gilbert LLP approved for $511,720.00 in talc-claimant special-counsel work. Special counsel Covington & Burling LLP was awarded $206,935.75 and auditor KPMG, LLP received $256,324.80. Legal Analysis Systems, Inc., the consultant to the Future Claimants' Representative, was approved for more than $87,000, and the court entered separate final orders for Getzler Henrich, Kroll, NERA Economic Consulting, Young Conaway, and Barlow as Future Claimants' Representative. The final fee orders were entered the same day as the order granting the motion for a final decree, closing the case roughly thirteen and a half months after the petition date.
Key Timeline
Date
Event
2015
First talc personal-injury lawsuit filed against Presperse
August 15, 2023
Final talc product sale; Presperse discontinues talc sales
October 31, 2023
SCOA Financing Facility executed
March 30, 2024
Term sheet executed among Presperse, SCOA, TCC, and FCR
U.S. District Court affirms confirmation order (3:2025-cv-13835)
August 25, 2025
Effective Date
October 23, 2025
Final fee orders entered; final decree closing the case
Frequently Asked Questions
Who is the claims agent for Presperse Corporation?
Kroll Restructuring Administration LLC serves as the claims and noticing agent. The firm administered the claims bar date process established in the first-day proceedings and maintains the official claims register for the District of New Jersey case.
What is a section 524(g) trust, and why did Presperse use one?
Section 524(g) of the Bankruptcy Code allows a debtor with asbestos-related liability to channel present and future personal-injury claims to a trust, protected by a permanent channeling injunction. Presperse used the mechanism to resolve roughly 275 pending talc claims and all future claims through a single trust, funded primarily by a $49 million contribution from its parent, while keeping its operating business and non-talc creditors unimpaired.
Did Presperse's equity holders retain ownership?
Yes. The confirmed plan reinstated and reissued Presperse's equity to Sumitomo Corporation of Americas, leaving SCOA as the sole shareholder of the reorganized debtor.
roughly $50 million talc-asbestos settlement https://www.asbestos.com/news/2025/08/15/judge-approves-presperse-50m-talc-asbestos-bankruptcy-deal/
first consensual confirmation https://www.lowenstein.com/news-insights/firm-news/lowenstein-helps-secure-confirmed-talc-related-ch-11-plan-for-sumitomo-subsidiary-presperse-corporation
lead counsel https://www.duanemorris.com/pressreleases/duane_morris_advises_presperse_corp_chapter_11_approval_bankruptcy_code_talc_litigation_0825.html
serving as financial advisor https://www.prnewswire.com/news-releases/hilco-global-turnaround-and-restructuring-practice-serves-as-financial-advisor-to-presperse-corporation-in-successful-524g-talc-restructuring-302572770.html
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. See the disclaimer.