OC resists move to switch judges

12/13/2003

Attorneys for Owens Corning argued yesterday before an appeals court in Philadelphia that removing the current judge from the case would push back the company s bankruptcy reorganization plan by at least a year.

The nation s largest insulation maker urged the 3rd U.S. Circuit Court of Appeals to allow U.S. District Judge Alfred Wolin to continue to oversee the asbestos-related bankruptcies of Owens Corning and four other companies.

OC creditors, W.R. Grace & Co. creditors, and USG Corp., claim Judge Wolin cannot be impartial because two lawyers advising him may have conflicts from their work on behalf of asbestos-exposure victims.

The creditors petition has halted the Toledo company s three-year-old Chapter 11 bankruptcy case until the appeals court makes a ruling. When that ruling will come isn t known.

“It s anticipated that the decision won t be very long in coming, because this is a high-profile matter,” said Dave Dimmer, an OC spokesman who attended yesterday s hearing. “This needs to be resolved before anything else can be.”

The three-judge panel had a number of questions for attorneys, Mr. Dimmer said, particularly about the consequences of removing Judge Wolin, appointed in November, 2001.

They raised the possibility of letting him first decide whether to disqualify himself. The judge has said in court papers that the appellate court should decide the issue.

“If you appoint another judge, we are going to be put back a year,” Charles Monk II, an OC attorney, told the court.

At issue is the judge s hiring of consultants David R. Gross, a former New Jersey judge, and C. Judson Hamlin, who has represented other companies in asbestos-related bankruptcies. The men, hired in 2001, meet with insurers, defendants, and asbestos plaintiffs, mediating disputes, and holding hearings as special masters.

Kensington Limited and Springfield Associates LLC, which hold $275 million of Owens Corning s debt, are upset that Mr. Hamlin and Mr. Gross represent asbestos claimants in the G-I Holdings, Inc., bankruptcy case in New Jersey, according to court papers.

Those pushing the motion say they re entitled to a judge “who doesn t have an appearance of bias.” OC said the motion is a ploy to delay a ruling that might consolidate the cases and possibly mean less money for bond-holders and others.

OC filed for bankruptcy protection in 2000 because of mounting asbestos-liability claims. The company has submitted a plan for emerging from bankruptcy, but it has to be approved by the creditors or the judge. That plan would give the most money to the asbestos claimants and their attorneys and relatively little to bond-holders and other creditors.

Bloomberg News Service contributed to this report.