Toxic Justice, Part 2: The Receivership Enterprise

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by JENN WOOD

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When asbestos victims in South Carolina file lawsuits, their claims don’t just target living corporations. Increasingly, they reach into the graves of long-dead companies — reviving them through court-appointed receiverships that critics say represent a complex litigation racket.

These receiverships, often created without a hearing, allow well-connected plaintiffs’ lawyers to drag dissolved corporations back into court — not to resurrect their operations, but to unearth long-forgotten insurance policies. Once a receiver is appointed, the search begins for assets that can be converted into settlement funds. Those settlements, however, are almost always sealed – hidden from public scrutiny despite the millions of dollars at stake.

To supporters, this system ensures victims have a pathway to justice even though the companies that allegedly exposed them to asbestos are long gone. To critics, it’s something else: an opaque legal assembly line where the same small circle of judges, receivers, and politically connected law firms repeatedly profit from “zombie” corporations — all behind closed doors.

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THE MECHANICS OF POWER

At the center of South Carolina’s asbestos machine sits the court-appointed receiver – Columbia, S.C. attorney Peter Protopapas. Once installed in this capacity, Protopapas wields sweeping authority: locating and liquidating insurance assets of “dead” corporations, hiring law firms to represent them, and negotiating settlements that remain sealed from public view.

In theory, a receiver is an officer of the court – standing in the shoes of a dissolved company to ensure fairness in the distribution of assets. In practice, critics say Protopapas has become something else entirely — a central figure in what they call a “receivership racket.” His repeated reliance on the politically powerful law firm of South Carolina House speaker Murrell Smith creates what detractors have described as a closed ecosystem of influence and profit – one far removed from fairness and completely insulated from accountability.

That influence extends well beyond the asbestos docket. Protopapas sits on the influential S.C. Judicial Merit Selection Commission (JMSC) — the legislatively controlled body that screens judicial candidates and determines which ones advance to a vote of the S.C. General Assembly. Smith, as a legislative leader, appoints four of the commission’s twelve members, giving him significant sway over who ascends to the bench. South Carolina is one of only two states in America where lawmakers elect judges, and the JMSC — an incestuous, secretive panel that is currently the focus of a major reform push — remains the gateway to the bench.

The commission is currently comprised of twelve members: four appointed by the Senate, four by the House, and four by the governor. This balance means Smith not only controls half of the legislature’s appointments – but also wields disproportionate influence over any vote to confirm judges once candidates’ nominations reach the floor. Protopapas’ appointment by the governor gives him a direct role in shaping the very judiciary that oversees asbestos litigation – even as he profits handsomely from it in his role as receiver.

Critics say this structure embodies the state’s corrupt legal culture, where lawyer-legislators, political leaders, and courtroom insiders operate in a tight loop of influence. Representative Jordan Pace recently described it as “a horrible cycle of back scratching at the expense of the general public,” pointing out how judges owe their jobs to the same lawmakers and powerbrokers who often appear before them.

As we reported in the first installment of this series, former S.C. chief justice Jean Hoefer Toal runs the Palmetto State’s asbestos docket – having been empowered by then-chief justice Donald Beatty to exclusively oversee it. Toal’s repeated appointment of Protopapas as a receiver — and Smith’s law firm profiting from those appointments — feed directly into that “closed loop” cycle.

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RELATED | TOXIC JUSTICE, PART 1

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THE COST OF SECRECY

So far, the only asbestos settlement amount publicly revealed in South Carolina came from a 2020 filing that disclosed a $44.5 million deal (.pdf). Protopapas, in his role as receiver, along with the three law firms he chose to represent him – Morgan Lewis Bockius, LLP, Smith Robinson Holler DuBose and Morgan, LLC, and Rikard & Protopapas, LLC – received a third of that total (nearly $15 million) as a “contingency fee.”

Since then, every other settlement has been sealed — leaving the public in the dark about the sums at stake, the disbursements made, and the beneficiaries of the process.

The power doesn’t stop at the payouts, either. Court orders reviewed by FITSNews show Protopapas was given near-total control over Qualified Settlement Funds (QSFs), including the authority to invest, disburse, and advance legal fees. While nominally required to provide annual reports, those accountings are not filed publicly and are inaccessible to anyone outside the litigation. There are no statutory reporting requirements, no independent audits, and no meaningful oversight of how settlement money is distributed.

Critics argue that this combination of secrecy and unchecked discretion has turned the asbestos docket into a “receivership racket.” Insurers cut private deals, receivers with political connections manage the proceeds, and the same plaintiffs’ lawyers who secure those appointments ultimately share in the payouts.

The issue isn’t confined to South Carolina. In a 2024 ruling (.pdf), London’s High Court described the problem through the lens of agency law, citing Bowstead on Agency to warn that anyone purporting to act for a company without real authority can be deemed an “impostor.”

That principle became more than theoretical when the same court found Protopapas’ appointment as judicial administrator of Cape Intermediate Holdings Limited (CIHL) “irregular,” barring him from acting in the company’s name anywhere in the world. The French courts reinforced that finding in April 2025 (.pdf), formally recognizing and enforcing the U.K. judgment on their own soil — a rare international rebuke of South Carolina’s receivership model.

Despite these international rulings, Protopapas has continued to aggressively pursue asbestos-related claims in Richland County under Cape’s name. That persistence prompted Altrad Investment Authority (AIA) — the French parent company that acquired Cape in 2017 — and its billionaire founder, Mohed Altrad, to file suit against him personally in Montpellier (.pdf). Their September 2025 filing accused Protopapas of “manifestly abusive” litigation in South Carolina – arguing he is dragging them into lawsuits under an appointment authority that has already been struck down abroad. The complaint seeks damages for the costs and risks imposed by what they describe as an illegitimate receivership carried on in defiance of both English and French law.

That same concern has now crossed the Atlantic. In September 2025, the U.S. Court of Appeals for the Third Circuit blocked Protopapas from using his South Carolina receivership appointment to stop the bankruptcy of Whittaker, Clark & Daniels (WCD) – a New Jersey talc supplier facing more than 2,700 asbestos lawsuits. After a South Carolina jury awarded a $29 million verdict against WCD, Toal appointed Protopapas as the company’s receiver — essentially giving him authority to act in WCD’s name and pursue its insurers. But when WCD’s board filed for bankruptcy in its home state, Protopapas claimed he, not the board, had the final say.

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The Third Circuit rejected that claim outright (.pdf), holding that only a court in WCD’s state of incorporation could vest a receiver with decision-making authority.

“So it is no surprise that the Constitution limits the authority a state court can exercise over a corporation incorporated in a sister state,” judge Thomas Ambro wrote, underscoring the doctrine that domicile — the state where a company is incorporated or based — determines which courts control its fate.

The ruling reinforced constitutional limits on South Carolina’s reach, warning that attempts to project receivership power across state lines collide with the Commerce Clause and Due Process Clause. Defendants in other asbestos cases have already filed the decision in the South Carolina supreme court – arguing it proves Toal and Protopapas have been exceeding their lawful authority.

Nonetheless, in the Palmetto State receivers like Protopapas remain clothed in judicial authority – facing almost no adversarial challenge or resistance. Motions to appoint receivers are often granted without hearings, insulating the process from challenge – and public scrutiny. And once appointed, the settlements the receiver negotiates are quietly sealed, their legal teams hand-picked, and their decisions shielded from scrutiny.

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A BATTLE ACROSS BORDERS

There are other cases in which Protopapas has come under fire for trying to extend his authority beyond state lines. In 2023, a South Carolina judge appointed him as receiver over Asbestos Corporation Limited (ACL) — a Canadian company long targeted in U.S. asbestos litigation. When Protopapas sought to wield his authority as the company’s receiver in cases outside South Carolina, foreign courts pushed back hard.

In November 2024, the High Court in London ruled his appointment “irregular” and barred him from acting in ACL’s name worldwide. France’s courts enforced that decision in April 2025. Despite those rulings, Protopapas continued pursuing asbestos claims in Richland County under ACL’s name — prompting ACL and its insurers to run to Canadian bankruptcy court for cover.

That maneuver triggered an extraordinary international fight. In May 2025, Quebec’s Superior Court placed ACL into restructuring (.pdf) under Canada’s Companies’ Creditors Arrangement Act (CCAA), immediately staying all asbestos cases against it in the United States — including those being pushed by Protopapas. The Canadian orders went further, declaring ACL remained in possession of its assets “whether or not purportedly administered by the South Carolina Receiver.”

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To make those protections effective south of the border, ACL’s court-appointed monitor asked the U.S. Bankruptcy Court in Manhattan to recognize the Canadian case under Chapter 15 of the Bankruptcy Code. Recognition would extend the Canadian stay to U.S. courts, cutting off the lawsuits Protopapas has been pressing in South Carolina.

That recognition fight is currently underway. Asbestos victims and the bankruptcy trustee for another insolvent U.S. company have objected, calling the Canadian proceeding a scheme by insurers to shield themselves from liability. They point to the South Carolina receivership as proof ACL can be held accountable in U.S. courts — while ACL and its backers insist only Canada has authority over its restructuring.

The outcome, now pending before chief bankruptcy judge Martin Glenn in New York, could decide whether South Carolina’s receivership model can reach across borders – or whether foreign courts can shut the door.

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INSURANCE POLICIES AS COMMODITIES

Adding another layer of complexity, these old insurance contracts don’t just generate litigation — they can also be sold. When a receiver uncovers policies issued to a long-defunct corporation, those contracts can be auctioned off to investors or even law firms. The buyers then step into the shoes of the dissolved company, using the policies to pursue asbestos claims for profit.

It turns insurance into a commodity: policies once written for a few thousand dollars in premiums during the 1960s or 1970s can be traded decades later for the chance to unlock multimillion-dollar recoveries. With Toal’s expansive “all sums” rulings, even a single year of coverage can be stretched to pay for decades of asbestos exposure — dramatically increasing the value of these policies on the secondary market.

Critics argue that this shadow marketplace — fueled by secrecy, sealed settlements, and unchallenged judicial discretion — keeps “zombie” corporations alive on paper long after they’ve ceased to exist in reality. Instead of closing the book on defunct companies, policy sell-offs ensure they remain perpetual engines of litigation.

The result is a system where, to critics, the receiver looks less like a neutral fiduciary and more like the “impostor” described in the U.K. ruling — a figure empowered by the court but unaccountable to the defendants whose corporate shells he inhabits.

The secrecy, the sealed settlements, the unchecked power of receivers — all of it feeds into one larger goal: tapping insurance money. And in that pursuit, South Carolina’s asbestos bar has turned litigation into an industry. Coming up in the third installment of this series, we’ll pull back the curtain on the insurance fishing expedition — and the extraordinary lengths this system goes to keep the cash flowing.

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ABOUT THE AUTHOR …

As a private investigator turned journalist, Jenn Wood brings a unique skill set to FITSNews as its research director. Known for her meticulous sourcing and victim-centered approach, she helps shape the newsroom’s most complex investigative stories while producing the FITSFiles and Cheer Incorporated podcasts. Jenn lives in South Carolina with her family, where her work continues to spotlight truth, accountability, and justice.

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