Just nine days before the sixth anniversary of Owens Corning's bankruptcy filing, a judge yesterday cleared the way for the Toledo company to emerge from Chapter 11 protection next month.
Judge Judith Fitzgerald, of U.S. Bankruptcy Court in Wilmington, Del., signed a 68-page confirmation order approving the Fortune 500 company's plan of reorganization.
To meet the firm's goal of exiting Chapter 11 by Oct. 31, U.S. District Judge John Fullam, of Philadelphia, must sign off on the plan by the end of the week, and the firm must then pass a 30-day waiting period without serious objections arising to the $8.6 billion settlement of the asbestos-driven case. His approval is expected.
The plan has wide support from creditors, and previous objections have either been withdrawn or overruled.
Shortly after Judge Fitzgerald ruled, OC Chief Executive Dave Brown issued a written statement thanking employees, suppliers, and customers for their patience during the long ordeal.
He also expressed relief that confirmation of the plan will allow for resumption of payments to asbestos victims.
"Throughout the Chapter 11 process, Owens Corning has remained committed to fairly compensating individuals who were made sick by exposure to asbestos-containing products that we produced until 1972," Mr. Brown wrote.
"This plan allows us to achieve that objective through the funding of a trust that will allow those affected by asbestos to be compensated in the near future." The trust fund will absorb the firm's more than $9 billion in asbestos liability and pay victims.
OC filed Chapter 11 on Oct. 5, 2000, to deal with tens of thousands of asbestos claims.
The judge's order came three years later than company officials originally expected and followed a bruising legal fight.
Judge Fitzgerald yesterday authorized company officials to "take any and all actions necessary or appropriate to implement, effectuate, and consummate the plan .•.•.
When the plan becomes effective, the firm will cancel existing stock and distribute or sell 131 million newly issued shares to creditors, who will recover from 49 to 58 cents on the dollar, except for banks, which will be paid in full.
If OC fails to meet its Oct. 31 target for exiting bankruptcy, it won't derail the case, but the firm will face a $30 million penalty payment in connection with financing of the reorganization plan.
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