Company found in civil contempt

Press, 18 June 1986, Page 8

Company found in civil contempt

By

TOM BRIDGMAN

Washington A. H. Robins Company, the firm being sued for millions of dollars by former users of the Daikon Shield intra-uterine contraceptive device, has been found in civil contempt for “knowingly violating court orders”. At Richmond last Saturday, Judge Robert Merhige said the bankrupt company had “flouted” the law and at a later time he would impose sanctions on the company and possibly on unnamed "certain persons” — penalties of sufficient severity “to impress all that the law is the law.” The Judge refused to appoint a trustee to run the company, as had been sought by the committee representing women users of the Daikon Shield and the Government.

Instead, the Judge said, he would approve appointment of a guardian who would function as an investigator for the Court. Those wanting a trustee had argued, according to a a report in the “Washington Post,” that the present management of the family controlled company could not be trusted because it made an estimated SUS 9 million (SI6M) in improper payments and engaged in improper transactions totalling about another SUSIB million ($33.84 million). Judge Merhige said he feared the appointment of a trustee could jeopardise the opportunity of creditors to ultimately be paid in full. The "Washington Post” reported that the rejection of a trustee — or an examiner with equivalent extraordinary powers —

was a victory for the company and for committees representing trade creditors and stockholders. Robins had filed for protection under the United States bankruptcy laws last August, saying it had to do so because its financial viability was threatened by costs associated with Daikon Shield claims. Under the applicable bankruptcy .provisions, the company cannot, without court approval, pay debts incurred before filing. The Government, involved because of a SUS 62 million tax claim against Robins, and the Daikon Shield Committee contended the company violated this provision.

More than 300 New Zealand women have lodged claims against A. H. Robins.