Judge Nixes Armstrong Reorganization Plan Extensio

Philadelphia, PA, November 29--A district court judge said he won't hold up confirmation of a reorganization plan for flooring maker Armstrong World Industries Inc., which has been in bankruptcy for almost four years, in order to see if asbestos reform legislation passes in Congress, according to The Deal.com. At the hearing on Tuesday, Nov. 23, Judge Eduardo Robreno of the U.S. District Court Judge for the Eastern District of Pennsylvania in Philadelphia also set a Dec. 15 confirmation hearing for Armstrong's plan. Armstrong's unsecured creditors committee had asked the court to delay a hearing on the company's proposed reorganization as Congress revisits asbestos reform legislation. With Republicans gaining seats in both the Senate and the House, expectations have risen about an asbestos reform bill passing next year. Robreno said if legislation were imminent he might consider it as a factor, but the unsecured creditors committee's lawyers told him they expect Congress to take the matter up in the first half of 2005, said Debra Dandeneau of debtor counsel Weil, Gotshal & Manges LLP. The unsecured creditors committee filed a conditional objection to the plan in September 2003, arguing that the company should wait for asbestos legislation to pass, which would enable it to contribute $1 billion less to cover its asbestos liabilities than the debtor's plan would. The plan, which Armstrong and its asbestos creditors devised, gives asbestos plaintiffs two-thirds of the enterprise value of the company, and the bank and bond debt holders will get one-third in cash, shares and notes. Armstrong's enterprise value is estimated at $2.4 billion to $3 billion. Roughly one year ago, Randall Newsome, then a visiting judge in the U.S. Bankruptcy Court for the District of Delaware in Wilmington, approved Armstrong's plan. But it never received the approval of Alfred Wolin, then the U.S. District Court judge on the case, because Wolin became ensnared in a fight over alleged conflicts of interest. The Third Circuit Court recused Wolin from the case on May 17, and Robreno replaced him. Robreno has yet to rule on the Armstrong plan. In a vote in November 2003, holders of 69% of Armstrong's unsecured debt rejected the plan. Armstrong has $1.7 billion in notes and bank debt. The Lancaster, Pa., company filed for Chapter 11 on Dec. 6, 2000.

Related Topics:RD Weis, Armstrong Flooring

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