Building materials maker Owens Corning is seeking to close off another bid by its shareholders to form an official panel in its Chapter 11 case.
The company accused shareholders of refusing to give u…
Building materials maker Owens Corning is seeking to close off another bid by its shareholders to form an official panel in its Chapter 11 case. The company accused shareholders of refusing to give up hope in the revival of the Asbestos Injury Resolution Act of 2005. The passing of the bill, currently immobile in the US Senate, could make it possible for them to receive payments under Owens Corning“s reorganization plan. “The economic reality of these cases is there is no reasonable prospect for any recovery by Owens Corning equity holders,” the company said. “An undisputed fact, which only the ad hoc committee stubbornly and self-servingly refuses to acknowledge”. In the week ending 12 March 2006 Owens Corning filed an objection in the US Bankruptcy Court in Wilmington, Delaware, to block another attempt by an ad hoc committee of preferred and equity security holders from gaining official status in the case. An official committee has the right to be informed on every issue affecting the case and to have professional fees incurred by lawyers acting on its behalf paid by the bankrupt company. In January 2006, the bankruptcy court denied the shareholders“ request for an official panel. The group is seeking an appeal of that decision. Bankruptcy Judge Judith K. Fitzgerald said shareholders failed to demonstrate that Owens Corning is solvent and that there was no reason to negate a federal district court“s assessment that asbestos liabilities in the case will be less than USD 7 billion. Shareholders argued that if the asbestos bill became law it would cut the company“s liability by billions of dollars and preserve millions of dollars for equity value. The asbestos bill would create a USD 140 billion trust, funded by contributions from companies with asbestos liabilities and their insurers. Workers would receive claims based on the severity of their injuries. Contributors would be exempt from future civil liabilities. The bill came before the Senate in February 2006, but a vote on whether it broke Senate budget rules returned the legislation to the Senate Judiciary Committee. Senate Majority Leader Bill Frist, has said he intends to bring the bill back for a vote when there are enough votes for passage. In her decision, Fitzgerald did not exclude a reconsideration of the shareholders“ request were the asbestos act passed and the Owens Corning case still being heard. However, shareholders do not time on their side: a hearing on Owens Corning“s disclosure statement has been scheduled for 5 April 2006. The document is a non-legal explanation of the company“s proposal to pay creditors. If approved, the document will be sent to creditors for a vote; a confirmation hearing is planned for 10 July 2006.