While Hughes Tool Co. is waging a court battle to stay on the creditors' committee overseeing the bankruptcy restructuring of Newport Beach-based Smith International Inc., seven of Smith's other creditors on Tuesday voluntarily resigned from the panel.
With the consent of Bankruptcy Judge James R. Dooley, the size of the creditors' committee was reduced to make its operation less cumbersome, said Bernard Shapiro, a lawyer representing the committee. The committee now consists of 11 of Smith's unsecured creditors, including banks and vendors.
Houston-based Hughes, which is Smith's largest unsecured creditor after being awarded a $205-million judgment in a patent infringement suit, is appealing in federal court Judge Dooley's decision earlier this month to remove Hughes from the creditors' committee. Dooley at that time contended that Hughes' continued presence on the committee would create a potential conflict of interest because Hughes and Smith are direct business competitors.
In other action Tuesday, Dooley approved Smith's request to spend up to $1.2 million to reimburse medical claims from about 2,200 Smith employees who were involved in recent massive layoffs at the company.