South Carolina’s Asbestos Receivership System: A Crisis of Justice and Accountability

A pivotal court hearing this week will test whether South Carolina’s unique receivership scheme can survive mounting legal challenges and Supreme Court restrictions.

On August 12th, Judge Jean H. Toal will preside over what could be a defining moment for South Carolina’s controversial asbestos litigation system. The hearing comes as defense lawyers push for the removal of a receiver who was improperly appointed and in violation of the express rulings of the South Carolina Supreme Court.

The stakes are enormous. Judge Toal faces a legal and political dilemma: comply with recent South Carolina Supreme Court restrictions that could invalidate the receivership scheme and potentially unravel the system she has fostered now for more than five years, or risk further defying higher court rulings that have already sharply curtailed her authority.

When private property can be seized without proper legal safeguards, who really benefits?

South Carolina finds itself at the center of a growing legal controversy that raises fundamental questions about justice, due process, and the reliable application of the rule of law in our society. At issue is a unique “receivership scheme” that has allowed private assets to be improperly seized from companies—including solvent, international businesses—to pay asbestos-related claims and attorney fees. Recent South Carolina Supreme Court rulings have exposed serious flaws in this system, prompting urgent questions about whether it serves justice or special interests.

Understanding the Problem

A receiver is typically appointed by a court to seize private assets of a debtor, in or outside of bankruptcy, in order to satisfy the class of creditors. Given the obvious risks of wrongly taking private property, the remedy is allowed sparingly and only in extraordinary circumstances. Yet in South Carolina, retired Chief Justice Jean H. Toal has developed a system that repeatedly appoints Columbia attorney Peter Protopapas as receiver over companies that he claims distributed asbestos products at some time in their past.

Initially, this system targeted defunct companies, with Protopapas authorized by Judge Toal to sue former insurers to recover funds from old insurance policies. It is believed that he keeps more than thirty percent of any recovery, while the rest goes into Delaware trusts to pay plaintiff lawyers and fund other settlements. While controversial, this approach, at least on the surface, complied with the South Carolina receivership statute by assigning the receiver over insolvent entities.

 South Caroline Puts Solvent Companies at Risk

The controversy escalated dramatically when Judge Toal began appointing Protopapas as receiver over solvent, operating companies – including international businesses, like Cape Intermediate Holdings, which has no operations in or connections to South Carolina. This fundamental shift violated South Carolina law by appointing receivers without judgments in place and without evidence that these entities were insolvent or unable to satisfy future judgments.

The international implications became clear when a U.K. court issued a global injunction against Protopapas and later awarded Cape over $4 million in costs for his interference in the company’s operations. These rulings highlight how South Carolina’s receivership system has created legal chaos that extends far beyond state borders.

The Supreme Court Steps In

In May and June 2025, the South Carolina Supreme Court issued several decisions that fundamentally challenged Judge Toal’s approach. The Court ruled that receivers can only be appointed to collect assets for a single plaintiff, in the same case where the receiver was appointed, and only in the “rarest” and “most extraordinary cases.” The Court also limited receivers’ powers, preventing them from making decisions reserved for corporate boards of viable companies, like the decision to sue other third parties.

These rulings directly call into question the system Judge Toal established across more than 20 different cases, where she allowed receivers to operate outside the case in which they were assigned and in direct violation of the South Carolina Supreme Court’s instruction. Even more troubling, evidence suggests that in at least one case, the receiver was appointed at the request of someone who, at the time, no longer had legal authority to represent the plaintiff. The complete lack of standing or authority nullifies the original appointment and raises questions about the legitimacy of the entire process.

The Power Behind the Bench: How Judicial Selection Fuels South Carolina’s Receivership Scheme

Why does this system exist only in South Carolina? The answer may lie in the state’s unique judicial selection process. Unlike federal judges who receive lifetime appointments, South Carolina judges are elected by the General Assembly for specific terms after being approved by the Judicial Merit Selection Commission.

Remarkably, 25% of the current Judicial Merit Selection Commission members have been directly involved in the receivership scheme: Peter Protopapas (the receiver), John T. Lay (one of his lawyers), and Leon Stavrinakis (another former receiver lawyer). Even more significantly, House Speaker Murrell Smith, (R) who controls judicial appointments and nearly 75% of legislative votes for judgeships, also serves as one of the receiver’s lawyers.

This web of relationships suggests that the receivership system is backed by the very political powerbrokers who control judicial appointments in South Carolina.

What’s at Stake

The implications extend far beyond South Carolina’s borders. When courts can seize private property without proper safeguards, when international businesses can be subjected to questionable legal proceedings, and when political influence appears to shape judicial behavior, the integrity of our entire legal system and the reliable application of the rule of law is at risk.

The current system raises troubling questions:

• How can solvent, foreign companies defend themselves when subjected to receiverships without proper legal basis?
• Does this system incentivize excessive litigation and settlements that harm business confidence?
• What message does this send to international companies considering investment in South Carolina?

The Path Forward

Judge Toal now faces a critical choice: comply with the Supreme Court’s restrictions, which could invalidate years of receiverships and unravel the system she created, or continue down a path that increasingly appears to violate established legal principles.

The broader question for South Carolina is whether we will tolerate a system that appears designed to benefit a select few at the expense of due process, property rights, and judicial integrity.

The August 12th hearing before Judge Toal will be a crucial test of whether South Carolina’s courts will prioritize justice over special interests. The eyes of the legal world are watching, and the stakes couldn’t be higher.

The future of South Carolina’s legal system, and its reputation as a place where businesses can operate under fair and predictable rules, hangs in the balance.