The USD 5.2 billion agreement resolving current and future asbestos claims with Owens Corning has been voted and approved by all classes of creditors. The tabulated results were announced on 13 Septem…
The USD 5.2 billion agreement resolving current and future asbestos claims with Owens Corning has been voted and approved by all classes of creditors. The tabulated results were announced on 13 September 2006 after two months of balloting. The bankruptcy court confirmation hearing was scheduled for 18 September 2006, and confirmation will permit the company to emerge from bankruptcy with no further obligations for asbestos liability. “The fact that all types of creditors of Owens Corning have voted to approve the plan underscores the importance of this settlement to the victims of asbestos cancer and to Owens Corning. The nearly unanimous approval of the claimants should allow the Bankruptcy Court to swiftly confirm the plan and speed settlement monies to victims who have waited years to see justice served,” said John D. Cooney, of the Chicago law firm Cooney & Conway. “Countless families have been needlessly destroyed as a result of the sale and use of asbestos products.” Cooney is the chairman of the official Asbestos Claimants Committee. The committee was formed by the United States Trustee to represent asbestos plaintiffs after Owens Corning filed for bankruptcy protection in October of 2000. As per the terms of the agreement, Owens Corning is required to make an initial cash payment of approximately USD 2.9 billion in cash into a trust for asbestos victims. A further payment of USD 1.39 billion to the asbestos victims“ will be paid to the trust within 10 days of the end of the Congressional session of 2006. The company will also deliver 28.6 million shares of equity in the reorganized company to the trust. These payments and equity total in excess of USD 5.2 billion. If the plan is confirmed, it will resolve all asbestos liability of Owens Corning and its wholly owned subsidiary, the Fiberboard Corporation. Creditors eligible to vote on the plan included persons previously exposed to Owens Corning products, and now suffering from asbestos disease, including mesothelioma, lung cancer and asbestosis, or their survivors. Holders of bank debt and bond debt incurred by Owens Corning were also eligible to vote. As per agreement terms, the bondholders have an option to purchase for cash, certain equity from the trust in exchange for cash payments. The settlement“s key feature is the creation of a trust fund that will operate and pay claimants into the future. “Unfortunately, people continue to be diagnosed with mesothelioma every week and people are still becoming sick from asbestos exposure. This settlement enables the company to reorganize and retain all of their employee workforce and businesses, which will provide a stream of income to the trust enabling it to pay settlements to those who are diagnosed in the years to come” Cooney added. If federal legislation is passed by the United States Congress this year, he terms of the settlement could be altered, meaning that payment obligations of the over USD 5.2 billion Owens Corning liability would shift from Owens Corning to taxpayers or other companies. John D. Cooney is also the chairman of the USG Asbestos Claimants Committee, which announced a similar settlement of a USD 4 billion asbestos liability in February 2006.