Case Alert: Creditors Committee Victorious in Dismissing Aearo Technologies Bankruptcy Case
On June 9, 2023, the United States Bankruptcy Court for the Southern District of Indiana entered an order dismissing the chapter 11 bankruptcy cases of 3M Company subsidiary Aearo Technologies LLC and its affiliated debtors as bad faith bankruptcy filings. The Official Committee of Unsecured Creditors for Tort Claimants – Related to the Use of Combat Arms Version 2 Earplugs (the “CAE Committee”) moved to dismiss the bankruptcy cases, as did another Official Committee and the United States Trustee. The CAE Committee, which is represented by co-lead counsel KTBS Law LLP and Otterbourg P.C., as well as special counsel Caplin & Drysdale and Brown Rudnick LLP, successfully argued that the bankruptcy cases were filed in bad faith, including because the Aearo entities are financially healthy and therefore their bankruptcy cases serve no valid reorganizational purpose. Following a five-day evidentiary hearing, Judge Graham agreed, concluding: “From the very beginning of these cases, Aearo made clear that the filings were not prompted by concerns over financial distress or impending insolvency but were initiated to manage the MDL process, a process that Aearo insisted was ‘broken.’ These cases were and are a litigation management tactic and not a rehabilitative effort.” KTBS attorneys are proud to have obtained this remarkable result for creditors, including more than 200,000 military service members, veterans, contractors, and civilians harmed by 3M’s earplugs.