Building materials maker Owens Corning has delayed until 10 May 2006 a planned hearing on its disclosure statement, which outlines its plan to reorganize and come out of Chapter 11.
A hearing on the …
Building materials maker Owens Corning has delayed until 10 May 2006 a planned hearing on its disclosure statement, which outlines its plan to reorganize and come out of Chapter 11. A hearing on the statement, the document that creditors review before deciding how to vote in Chapter 11, was originally scheduled for 5 April 2006. However, talks that began after important court rulings in 2005 called for a delay in the hearing schedule, Owens Corning spokesman Jason Saragian said 3 April 2006. “We will continue very productive discussions with our creditors aimed at developing a consensual plan of reorganization,” Saragian said. Owens Corning was preparing for a contentious hearing on 5 April, with shareholders and major creditors ready to challenge the adequacy of the disclosure statement. The legal standard for court approval of the disclosure statement is not severe: the court merely has to find that the document contains adequate information for creditors. Once approved, the disclosure statement is sent out as part of the Chapter 11 balloting process. Once the votes are received, the real legal test of a reorganization plan is at confirmation hearings. However, disclosure statement hearings are often a forum to preview disputes that can impede confirmation hearings later on. An ad hoc committee representing shareholders filed a number of objections to Owens Corning“s disclosure statement, saying the company has abandoned equity holders to make peace with creditors. Shareholders and some other creditors want Owens Corning to wait for legislation that would set up a national trust to absorb asbestos liabilities from companies. However, the bankruptcy court turned down requests to give a shareholder committee official status in the Chapter 11 case, saying the prospect of national asbestos trust legislation is not enough to give shareholders real hope. The Ohio company is one of the largest attempting to use Chapter 11 bankruptcy to resolve asbestos liabilities. The latest version of its reorganization plan would create a trust to deal with claims for asbestos damages. Owens Corning expects to pay bank creditors about USD 2.2 billion when it come out of bankruptcy, a sum destined mostly for hedge funds that scored key litigation victories during the case. The official representatives of Owens Corning“s bondholders and trade creditors objected to the disclosure statement partly on the grounds that the report does not say exactly where the money is coming from to pay the banks. Under the plan, bondholders and trade creditors will get an estimated 49.3% recovery if they vote to support Owens Corning“s plan, but only 39.9% if they vote no, bondholder lawyers say.