NEW YORK (CNNfn) - Dow Corning Corp. Tuesday proposed a new $4.4 billion settlement to compensate its creditors and the thousands of women allegedly injured by silicon-gel breast implants.
However, the proposal -- which still needs the approval of U.S. Bankruptcy Judge Arthur Spector, who oversees Dow Corning's nearly three-year-old bankruptcy -- received mixed reaction and could potentially cause a row between the creditors and the female plaintiffs, collectively known as the tort claimants.
Under the plan, the Midland, Mich.-based Dow Chemical Co./Corning Inc. venture proposed to put up its own equity to finance the tort group's claims. The latest offer tops an August offer by at least $640 million.
The proposal also would split up the tort claimants into two groups: those women who wish to settle and those who wish to litigate. The plan would establish a litigation trust -- financed with the help of Dow Corning's equity value -- as well as a settlement trust, with $3 billion targeted primarily at resolving breast implant claims.
About $1.4 billion of the $4.4 billion would be used to satisfy the claims of commercial creditors, a group that is encouraged by the proposal.
"I'm very encouraged because I think this is a serious proposal that warrants a serious response from the [tort] claimants and it represents a substantial step forward in the case," said Donald Bernstein, a lawyer at Davis Polk & Wardwell, who represent a key group of creditors.
Creditors were evaluating the proposal and declined to issue an official comment.
However, the proposal received harsh criticism from the tort claimants. Based on initial evaluations, the plan would pay most of the women $10,000 or less if they choose to settle, a spokeswoman said. In addition, final payment could take as much as 10 years.
"Instead of real compensation to these women, Dow is offering token payments years down the road," said Ed Blizzard, plaintiffs' counsel.
-- by staff writer Robert Liu