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Dalkon Shield Maker Files Proposal to Settle Claims

April 17, 1987

RICHMOND, Va. (AP) _ The maker of the Dalkon Shield intrauterine birth control device has proposed a $1.75 billion settlement of claims against the IUD in a reorganization plan that would end the company’s bankruptcy case.

However, the chief attorney for women who have filed claims against Richmond-based A.H. Robins Co., which sold the Dalkon Shield between 1972 and 1974, expressed doubts about Robins’ plan, which was submitted Thursday to U.S. Bankruptcy Court.

″It is not even-handed. It is not fair,″ said Murray Drabkin, a Washington attorney representing women who claim injuries from using the birth control device.

Drabkin said the company’s plan to settle its Chapter 11 bankruptcy filing of August 1985 ″is going to have a hard struggle getting confirmed.″

Robins, which has received several extensions of the deadline for filing a reorganization plan, submitted the document less than an hour before a hearing on a request by the company’s court-appointed examiner, Ralph Mabey. Mabey asked the court for the authority to file his own reorganization plan, including a possible buyout of the pharmaceutical company.

Just as the hearing began, Robins attorney James C. Roberts of Richmond informed the court of the filing. ″We think that it is a fair plan, a plan that will bring certainty of payment,″ he said.

Roberts said the plan calls for a Dalkon Shield trust fund of $1.75 billion to settle claims against the IUD. Robins would pay $75 million in cash to start the trust, whose administrators would be appointed by the court; the remainder would come as needed from a $1.67 billion line of credit from a group of banks headed by Manufacturers Hanover Trust Co. of New York.

But Drabkin, Mabey and assistant U.S. Attorney S. David Schiller, representing the government as a Robins creditor, questioned the arrangement with the banks and the extent of their commitment to the trust fund.

″It ain’t cash and it isn’t certain,″ Drabkin said.

Schiller said the banks might impose conditions on the credit that some parties in the case would find unacceptable.

Mabey called the $1.75 billion settlement figure an acceptable amount but, like Drabkin, questioned its not being in cash and the ability of the banks to sell the bonds necessary to raise the money.

U.S. District Judge Robert R. Merhige Jr., who has been hearing the Robins case with U.S. Bankruptcy Judge Blackwell N. Shelley, hailed the reorganization filing as a step toward an eventual settlement.

″We’ve still got a way to go, but we’re moving,″ Merhige said.

He took Mabey’s request under advisement and gave attorneys in the case until April 24 to agree on a procedure for settling differences over the reorganization proposal.

The question of a cash settlement for Dalkon Shield claimants apparently stemmed from a Feb. 3 offer by American Home Products to buy Robins. A $1.75 billion cash settlement was discussed then, but the buyout offer was withdrawn after nine days of negotiations.

Mabey revealed in court that a subsequent Robins buyout proposal also had been discussed but fell through.

He did not identify the potential buyer. But H.A. Johnson, a senior Robins vice president, said at a press conference after the court hearing that Robins had been talking about a buyout with the Rorer Group Inc., a Fort Washington, Pa., holding company which subsequently withdrew its offer.

Johnson said Robins has no plans to seek other buyers, but that could change.

″If Tokyo Pharmaceutical came along and offered us $85 billion for the company, I’m sure someone would want to talk to them,″ he said, using a fictitious company name. ″But that is not our intent. Our intent is to reorganize.″

″I think all of us have been on a tremendous emotional roller coaster over the last 20 months,″ Robins President E. Claiborne Robins Jr. said at the press conference. ″It is a chapter in the history of our company that we need to close.″

Robins filed for Chapter 11 protection from creditors in August 1985 as claims of injuries, ranging from infection to sterility, mounted against the Dalkon Shield. The company sold 4.5 million of the IUDs in the United States and some 90 other countries before withdrawing the device from the market.

More than 330,000 claims were filed against Robins last year during a court-ordered worldwide notification program for Dalkon Shield users.

Robins has contended that more than half those claims are invalid, either because subsequent follow-up questionnaires ordered by the court were not returned or because claimants used products other than those sold by Robins.

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