The federal judge supervising the bankruptcy of Owens Corning rejected a request on 13 April 2005 from financial creditors to reconsider his USD 7 billion estimate of the company“s liabilities for as…
The federal judge supervising the bankruptcy of Owens Corning rejected a request on 13 April 2005 from financial creditors to reconsider his USD 7 billion estimate of the company“s liabilities for asbestos damages. Judge John P. Fullam of the U.S. District Court in Philadelphia said he would not change the USD 7 billion figure, which will be the central fact of Owens Corning“s plan to exit Chapter 11. The greater the asbestos liability estimate, the smaller the funds Owens Corning will have available to pay holders of bank and bond debt. Fullam acted quickly on the motion for reconsideration, which was filed 11 April 2005 by holders of bank debt. They asked Fullam to set Owens Corning“s asbestos liabilities at USD 4.8 billion to USD 5.1 billion, a figure they say is more in line with evidence. At estimation hearings earlier in 2005, holders of Owens Corning“s bank debt had argued for USD 3 billion or less to be allocated to pay claims for asbestos related health problems. A group of bondholders on 12 April 2005 filed papers joining in the call for a reconsideration of the issue, a move that put back the deadline for appealing the ruling to a higher federal court. Until Fullam ruled on the motion for reconsideration, the 30-day period within which the bank debt holders must appeal the asbestos estimate did not start to run down. Fullam ruled on the asbestos estimate on 31 March 2005, setting a figure that is mid-way between the USD 3 billion wanted by bank debt holders and the USD 11 billion called for by asbestos claimants. No move for reconsideration has been forthcoming from asbestos claimants. An earlier ruling from Fullam on another crucial point in the Chapter 11 case, whether Owens Corning should be viewed as a single company or many different companies, is already on appeal to the Third Circuit Court of Appeals. The judge“s finding that Owens Corning is one company for purposes of the bankruptcy was challenged by Credit Suisse First Boston, acting as agent for a group of bank debt holders. Credit Suisse also filed the motion for reconsideration on the asbestos estimate, again as agent for holders of Owens Corning“s bank debt. Some of the bondholders who filed papers support the request for reconsideration, namely King Street Capital Management LLC, D.E. Shaw Laminar Portfolios LLC, Harbert Distressed Master Fund Ltd., Canyon Capital Advisors LLC and Lehman Brothers Inc., are believed to also hold large amounts of bank debt, lawyers have said at hearings in the case. Two of the bondholders who joined in on the asbestos estimate, Harbert and Lehman Brothers, are also major equity stake holders in Owens Corning, according to court documents.