Armstrong’s Bankruptcy Red Tape Continues

Lancaster, PA, November 7, 2006--Armstrong World Industries has gotten out of bankruptcy, but the paperwork keeps rolling in, according to the Lancaster New Era. The newspaper reported that the number of court filings in the nearly 6-year-old case hit 10,000 last Monday, illustrating the complexity, size and cost of the proceeding. As luck would have it, the U.S. Bankruptcy Court filing was a bill from the law firm representing Armstrong's nemesis, its unsecured creditors. By law, Armstrong has to pay the legal bills of all parties in the case. The amounts are subject to court approval. Docket No. 10,000 went to an invoice from Paul, Weiss, Rifkind, Wharton & Garrison for $18,000 worth of time, plus $233 in expenses, for its work during September. The New York-firm already has been paid $3.8 million in fees plus $579,000 for representing the unsecured creditors since December 2000, the month Armstrong entered bankruptcy, the filing shows. That total probably will rise sharply, as the new bill is the third from Paul Weiss awaiting court approval. It joins an August bill for $25,000 in fees plus $550 in expenses, and a bill for $1.8 million in fees and $338,000 in expenses for work related to Armstrong's plan-confirmation hearing earlier this year. The September bill includes 15.8 hours of work by Paul Weiss partner Andrew N. Rosenberg, who charges $740 per hour, and 25.4 hours by associate attorney Jeremy S. Gladstone, who charges $415 per hour. In addition, the firm charged for 1.1 hours of paralegal time, bringing the firm's September total to 42.3 hours. The majority of that time -- 29.2 hours, or $13,000 worth -- was devoted to preparing its own bills, the filing shows. Armstrong emerged from bankruptcy Oct. 2 as a new corporation with a new stock after its reorganization plan was confirmed by a federal judge in August. The achievement cost Armstrong tens of millions of dollars in legal fees. And Armstrong is still paying legal bills for itself, its friends and foes. The unsecured creditors were Armstrong's ally-turned-adversary. Helping to draft the company's reorganization plan and initially supporting it, the unsecured creditors broke ranks in 2003. Their opposition, aimed at increasing the $982 million earmarked for them under the plan's $2.8 billion payout, led to one significant victory. It forced Lancaster-based Armstrong to eliminate a provision that would have given Armstrong's old shareholders some options to buy new stock. But a federal judge confirmed the rest of Armstrong's reorganization plan in August, rejecting the unsecured creditors' argument that it unfairly discriminated against them. While Armstrong's bankruptcy is behind it, the court filings continue; the tally was at 10,021 this morning. Among the recent filings are routine matters such as bills and notices that copies of filings have been served to various parties, and objections by Armstrong to claims for payment.