Armstrong Seeks To Toss Bankruptcy Plan Objections
Lancaster, PA, Oct. 29--Two-thirds are down; the other third ought to go. So says Armstrong World Industries, as it deals with objections to its bankruptcy reorganization plan, according to the Lancaster New Era.
Facing a U.S. bankruptcy court hearing next month where it hopes to win confirmation of the plan, enabling the company to emerge from bankruptcy by year-end, Armstrong says it "has been working diligently to resolve such objections, to the extent possible."
That effort has gotten 12 of the 18 objections resolved, the Lancaster-based manufacturer said in a court filing Friday.
But apparently that's as far as Armstrong believes it'll get, because the company is asking the court to throw out nearly all the rest.
For instance, Armstrong says an objection filed by one of its insurers, ACE USA, should be overruled by the court because it's "not supported by any evidence" and it's based on "fundamental misconceptions about the terms of the plan."
ACE USA, one of Armstrong's insurers against asbestos personal-injury claims, had complained the Armstrong plan failed to specify how those insurance policies would be handled.
Armstrong maintains its intentions are stated precisely and within the law.
Armstrong also wants an objection from the California Franchise Tax Board overruled because the company is not obligated to set aside money for paying disputed claims, which the board wants the company to do.
Armstrong says it expects to have funds available anyway, if needed.
The board is challenging a court ruling that threw out its claim alleging Armstrong owes more than $3 million in taxes. The board contends Armstrong needs to set aside the money in case the board wins its appeal.
The sole objection Armstrong wants to let stand is a conditional one from a committee representing the case's unsecured creditors, who've endorsed the plan.
While continuing to support the plan, the committee is asking the court to hold off on confirming the plan until Congress acts on legislation to resolve the asbestos-injury quagmire that has pushed Armstrong and dozens of other firms into bankruptcy.
The unsecured creditors note that, under the bill proposed by U.S. Sen. Orrin Hatch (R-Utah), Armstrong's cost to resolve its asbestos claims would be less than half of the $1.8 billion price tag that its own plan carries.
That difference would leave more money available for the unsecured creditors, who now stand to get just 59.5 percent of what Armstrong owes them.
Armstrong is asking a discussion of the unsecured creditors' objection be saved until the confirmation hearing, set for Nov. 17 in Newark, NJ.
As the New Era has reported previously, the resolved objections include those from the Center for Claims Resolution and ten of its members, which Armstrong had termed "the most significant obstacles" to confirmation.
Armstrong had helped form the CCR 15 years ago to litigate and pay claims alleging personal injury from exposure to its asbestos insulation, but ended up owing the CCR money due to its bankruptcy.
The pact settled a dispute over how Armstrong's $294 million in debts to the CCR were categorized under the plan and, as a result, how much the CCR and its members would receive. Among other provisions, the complex deal provides up to $20 million to the CCR for paying asbestos claims.
Armstrong entered bankruptcy in December 2000. Its reorganization plan calls for dissolving the current corporation and canceling the current stock, replacing them with a new corporation and new stock. About two-thirds of the new Armstrong would be owned by a trust established to pay the asbestos claims; one-third by Armstrong's unsecured creditors.
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