It appears that Bankrupt Blitz USA Inc. and its former top customer, Wal-Mart Stores Inc., will be able to complete the settlement of the personal injury litigation over the defunct company’s gasoline containers. This comes after several Plaintiffs agreed to withdraw their objections to a nearly $162 million settlement. The hold-out Plaintiffs — whose lawsuits in Texas were part of a wave of litigation claiming Blitz’s plastic gas cans were prone to catching fire or exploding — signed on to an agreement backing Blitz’s bankruptcy plan based on the settlement, which is being covered by Wal-Mart and Blitz’s insurers.
The so-called “plan support agreement,” filed in Delaware bankruptcy court, indicated that Wal-Mart and the insurers have agreed to pay up to an additional $650,000 to bring the dissenting Plaintiffs on board. This would bring the total settlement amount to $161.9 million. There have been at least 36 wrongful death and personal injury lawsuits filed around the country alleging Blitz’s gas cans were defective. Blitz USA filed for Chapter 11 protection in November 2011. Many of the lawsuits, which were filed on behalf of at least 80 Plaintiffs, also named Wal-Mart as a Defendant.
In addition to claiming the gas cans were defectively designed or manufactured, the suits alleged that Blitz’s quality control testing was inadequate and that the alleged explosions could have been prevented by a metal flame arrestor. Miami, Okla.-based Blitz, however, held that many of the incidents resulted from Plaintiffs pouring gas on a fire or embers, according to court documents. In July, after 10 months of mediation with U.S. Bankruptcy Judge Kevin Gross and retired Judge Richard Cohen, Blitz agreed to a $161.3 million deal with its insurers and Wal-Mart to fund a trust set up under its bankruptcy wind-down plan to compensate the personal injury Plaintiffs.
But two groups of Plaintiffs in Texas, who sued Blitz after it entered bankruptcy, objected to the settlement, complaining they were not included in the negotiations and that the settlement unfairly denied them their right to a jury trial, where they could potentially obtain a much better recovery than through the trust. One group of objecting Plaintiffs was the family of Leiya Jones, a 5-year old girl who died of severe burns that allegedly resulted from a Blitz gas container explosion. The Jones family, joined by eight other Texas Plaintiffs who had opposed the deal, have now agreed to vote in favor of Blitz’s liquidation plan and the associated settlement, according to the plan support agreement.
A hearing was scheduled before U.S. Bankruptcy Judge Peter J. Walsh for Jan. 27. We hadn’t received a report on the hearing when this issue was sent to the printer. But it’s anticipated that the Blitz liquidation plan will be approved.