3rd Circ. Panel Once Again Backs Talc Co. Whittaker’s Ch. 11

The Third Circuit on Monday upheld its decision that Whittaker Clark & Daniels was authorized to file for Chapter 11 and certain claims against the defunct talc supplier’s corporate successor belong to the debtor, not personal injury claimants.

The unanimous Third Circuit Court of Appeals panel, which first sided with Whittaker in September, upheld its earlier ruling in spite of a rehearing request by the official committee of talc claimants. The committee argued that successor liability claims against Brenntag North America, which bought most of Whittaker’s operations, belong to personal injury creditors.

U.S. Circuit Judge Thomas L. Ambro in the precedential opinion published Monday affirmed that the former talc supplier’s board of directors had the authority to place it into Chapter 11 in New Jersey, even though it was in a South Carolina receivership at the time, and that the bankruptcy estate owns and can settle third-party tort claims against its corporate successor.

“Whittaker filed for bankruptcy after its board exercised its power to authorize the petition. The South Carolina court could not unilaterally divest Whittaker’s board of that authority, and, once appointed, the South Carolina receiver had to convince a New Jersey court to displace the board. Because that did not occur, Whittaker properly entered bankruptcy. And, once there, Section 541(a)(1) of the Bankruptcy Code brought the product-line claims into the debtor’s estates,” Judge Ambro wrote in the decision, affirming rulings by a New Jersey bankruptcy court and district court.

The Third Circuit ruling bolsters a proposed $535 million settlement Whittaker reached that would release debtor claims against certain third parties, including its corporate parent tied to Berkshire Hathaway and Brenntag. The official committee of tort claimants, which represents the interests of thousands of creditors who allege the former talc manufacturer’s products had cancer causing asbestos, has opposed the Chapter 11 deal.

Whittaker and three affiliates filed for Chapter 11 in New Jersey in April 2023, reporting at least $1 billion in liabilities.

The former talc supplier at the time of the filing had been fending off personal injury lawsuits across the country tied to its old products after it sold substantially all its operating assets along with indemnification rights to Brenntag North America in 2004.

A South Carolina state jury about a month before the bankruptcy filing awarded a 35-year-old woman and her husband more than $29 million in damages in one such case and successfully moved to have a receiver, Peter Protopapas, appointed to oversee Whittaker.

Protopapas, joined by the official committee of talc injury claimants, had moved to dismiss the Chapter 11, contending that Whittaker’s board lacked authority to start Chapter 11 proceedings following the receivership. A judge denied that motion, which was affirmed on appeal to the district court.

Whittaker filed an adversary action seeking a court determination that it owned certain successor liability claims against Brenntag, not talc claimants asserting personal injury claims.

U.S. Bankruptcy Judge Michael B. Kaplan agreed, and in August 2024 ruled that they were estate property under a 2014 Third Circuit decision, In re: Emoral. The judge held that the successor liability claims were general enough that Whittaker could assert them on behalf of creditors, are based on the debtor’s own conduct and Brenntag was implicated only through its business dealings with Whittaker.

Shortly after that decision, Whittaker asked the court to approve a $535 million settlement that would release estate claims against several third parties, including Brenntag.

The talc claimants committee and Protopapas appealed the bankruptcy court’s decisions, which were upheld by a New Jersey district court judge. They appealed again, this time to the Third Circuit.

A unanimous Third Circuit panel in September 2025 upheld both lower courts’ rulings.

The South Carolina receivership did not strip the Whittaker board’s authority to place the company into bankruptcy, it held. It also backed the lower courts’ decisions regarding successor liability claims against Brenntag, holding the claims belonged to the bankruptcy estate and were therefore Whittaker’s to prosecute or settle.

The talc claimants committee filed a petition for reconsideration, asking the full en banc Third Circuit to take the case or for the panel to review its decision. The talc claimants focused on the panel’s decision regarding successor liability claims against Brenntag, arguing that the ruling effectively allowed for third party liability releases without creditor consent, which are generally not permitted under the Bankruptcy Code.

The Third Circuit declined to rehear the case en banc, but the panel granted the reconsideration petition.

In its decision published Monday, the Third Circuit panel arrived at the same conclusions it did in September, backing the board’s authority to initiate the Chapter 11 case and holding that the claims were estate property and did not belong to individual talc claimants.

Counsel for the committee, the debtor and the receiver did not immediately respond to requests for comment Monday.

U.S. Circuit Judges Thomas L. Ambro, Cheryl Ann Krause and Paul B. Matey sat on the panel for the Third Circuit.

The official committee of talc claimants is represented by Cullen D. Speckhart, Michael Klein, Jeremiah P. Ledwidge, Elizabeth B. Prelogar, Carlton E. Forbes, Matthew Kutcher, Allison W. O’Neill, Benjamin B. Sweeney and Matthew Oliver of Cooley LLP, Kevin C. Maclay, Todd E. Phillips, Kevin M. Davis and Serafina A. Concannon of Caplin & Drysdale Chartered and Arthur J. Abramowitz and Ross J. Switkes of Sherman Silverstein Kohl Rose & Podolsky PA.

Appellant Peter Protopapas in his capacity as court-appointed receiver is represented by Bryan Killian and Andrew J. Gallo of Morgan Lewis & Bockius LLP.

Appellee Whittaker Clark & Daniels Inc. is represented by Michael D. Sirota, Warren A. Usatine, Felice R. Yudkin, G. David Dean, Seth Van Aalten and Anthony De Leo of Cole Schotz PC.

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