§ 149.004.Establishing Fair Market Value of Total Gross Assets

The valuation rules, and each one enlarges the cap rather than restricting it.

Subsection (a): value may be established through any method reasonable under the circumstances, including by reference to going concern value or the purchase price in an arm’s-length transaction — or, absent other readily available information, the value recorded on a balance sheet.

The flexibility is a practical necessity. These mergers took place before 1968, and the records are often gone.

Subsection (b): total gross assets include intangible assets. Goodwill, trademarks and intellectual property count, which for many acquisitions is where much of the value sat.

Subsection (c) is the most consequential: total gross assets include the aggregate coverage under any applicable liability insurance issued to the transferor that has been collected or is collectable to cover successor asbestos liabilities.

That can dwarf the tangible assets. Historic liability policies frequently had no aggregate limits for these exposures, so including collectable coverage may raise the cap substantially.

The subsection excludes coverage for liabilities arising from workers’ exposure solely during employment by the transferor, matching the workers’ compensation exclusion. And a coverage settlement entered into 10 or more years before the chapter is determinative of the aggregate coverage to be included.

Subsection (d) forbids the obvious deduction: the fair market value shall reflect no deduction for any liabilities arising from any asbestos claim.

Without that, the asbestos liabilities would reduce the assets that measure the cap on those same liabilities — a circle that would shrink the ceiling toward nothing.