Armstrong Settles Remaining Property Damage Cases

Lancaster, PA, Aug. 29--One of the oldest--and thorniest--issues in the protracted Armstrong World Industries bankruptcy case finally was laid to rest Wednesday. A bankruptcy court judge approved a $7 million settlement between Armstrong and its last 79 property-damage claimants. The claimants had alleged that old Armstrong asbestos floors in their buildings posed a threat to the health of the buildings' occupants and to the buildings' value, necessitating costly asbestos-remediation procedures. Armstrong filed for bankruptcy reorganization in December 2000 to solve a different problem--the tens of thousands of claims alleging personal injury from exposure to old Armstrong asbestos insulation. But once the property-damage claimants' contentions in the case surfaced publicly in July 2001, they became one of Armstrong's biggest challenges, sparking numerous, complicated legal actions. Armstrong initially faced 600 property-damage claims that sought $852 million in compensation. Through a host of objections, Armstrong got hundreds of claims thrown out for a lack of evidence, then in February reached a $2 million settlement with 360 others. In May, the company disclosed a proposed settlement with the remainder, completing those negotiations and sending the deal to Judge Randall J. Newsome for his approval earlier this month. Newsome, in an order entered Wednesday, determined that the settlement "is a reasonable and proper exercise of (Armstrong's) sound business judgment." In court papers seeking approval of the settlement, Armstrong continued to dispute the validity of the claims, doubting whether the floors in question are actually Armstrong products and whether they caused contamination. But Armstrong said it opted to settle at the suggestion of the court. A settlement, noted Armstrong, would "avoid the complexities associated with litigating the merits" of the claims. It also would avoid the need to include a property-claim payment mechanism in its reorganization plan. Armstrong further pointed out that the settlement would resolve the claims "for a fraction of their alleged value," a figure in tens of millions of dollars. Some of these claims had been filed against Armstrong decades ago. The Los Angeles Unified School District, for instance, started its case against the company in 1983. Verizon New York's case began in 1987. Court documents show the state of Illinois will receive the biggest sum, $2.2 million. The Los Angeles schools will get $1.2 million and Verizon New York, $84,000. Some 52 of the claimants will receive $1,000 apiece, including Albright College in Reading. Armstrong hopes to emerge from bankruptcy by the end of the year.