Principal Paul Hinton and Senior Associate Dr. Adrienna Huffman authored a recent ABI Journal article on the mass torts gap in contingent-liability valuation guidance.

Litigation-liability often plays a significant role in the assessment of proposed plan funding, third-party contributions, indemnification, and settlements in mass torts. While neither the Bankruptcy Code nor accounting standards provide specific guidance on how mass tort claims should be valued, courts have adopted a framework of estimating mass tort litigation claims at their expected present value.

In their article, the authors discuss how the available literature on estimating future claims, along with expert analyses in prior cases – including in major asbestos bankruptcies and fraudulent-transfer cases – that rely on these authorities and associated court decisions can provide valuation guidance. This guidance is crucial for determining the most appropriate methodology in each case, how to use past empirical evidence to calibrate forecasts, and how to account for changing conditions or distortions in the tort system that affect the value of mass tort liabilities.

The full article, “Mass Torts Gap in Contingent-Liability Valuation Guidance,” is available below.

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