Armstrong Bankruptcy Update

Lancaster, PA, May 26--May 25--Once upon a time, Armstrong World Industries thought it would be out of bankruptcy last summer, according to the Lancaster New Era. Now, following recent actions by two courts, it's still unclear when Armstrong might get its reorganization plan approved and emerge from bankruptcy. The Armstrong plan is supposed to go before U.S. District Judge Alfred M. Wolin for final approval. Wolin has been overseeing the Armstrong case and four other large asbestos bankruptcies. But creditors in one of the other cases, the Owens Corning bankruptcy, challenged his impartiality last year. That led Wolin to stop handling Armstrong issues, too. Last week, the 3rd U.S. Circuit Court of Appeals took Wolin off the Owens Corning case. The 3rd Circuit ruled that while the judge had done nothing wrong, his hiring of a pair of aides who represented asbestos-injury claimants in another case might lead to questions about his impartiality. In its 54-page ruling issued May 17, the 3rd Circuit said it would decide at some unspecified later time whether the Newark, NJ judge can remain on the Armstrong case. So, for the time being, Armstrong doesn't know who will decide the fate of its plan or when that decision might come. Last November, following a two-day hearing, a bankruptcy court judge recommended that the plan be approved. But key provisions of the plan need a district court judge's action. In the meantime, another bankruptcy court judge agreed to keep any outsiders from submitting their own plan for reshaping the company. U.S. Bankruptcy Court Judge Judith Fitzgerald granted Armstrong a seventh extension of the so-called "exclusive period," when only Armstrong can submit a plan. This latest extension, approved by Fitzgerald on May 14, lengthens the exclusive period by six months to Oct. 4. Armstrong, a maker of floors, ceilings and cabinets, is among the county's largest employers, with about 2,500 workers here. It filed for bankruptcy in December 2000 to resolve more than 170,000 asbestos-injury lawsuits. Its reorganization plan, which would turn ownership of the company over to an asbestos trust and unsecured creditors, was unveiled in November 2002. Armstrong initially hoped to emerge from bankruptcy in July 2003.