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Owens May Soon Exit Bankruptcy

September 19, 2006|From the Associated Press

PITTSBURGH — A federal bankruptcy judge indicated Monday that she approved of Owens Corning's plan for emerging from bankruptcy, almost six years after the building materials maker sought protection from creditors over health claims related to its asbestos products.

Judge Judith Fitzgerald congratulated the parties from the bench Monday after overruling sometimes-impassioned objections from alleged asbestos victims and a bondholder's lawyer.

Some asbestos claimants, who spoke via speakerphone, broke down as they asked that their claims be expedited and that they not have to wait for the establishment of a special trust.

The judge said that if each claim were handled individually through the court system, the company would never emerge from bankruptcy and many claimants would never receive compensation.

The plan shifts Owens Corning's $7 billion in asbestos liabilities off company books and into a trust to be established for the plaintiffs. As part of the plan, the Toledo, Ohio-based company would pay more than $5 billion to asbestos claimants and as much as $2.27 billion to holders of bank debt.

The plan has an effective date of Oct. 30. Existing equity would be wiped out and millions of new stock shares would be issued. "It's been a long road," said Owens Corning attorney Stephen Krull. "We're very proud of this plan."

He said the plan was fair to creditors and asbestos victims and allowed the company to move forward.

The plan, filed in December, follows years of litigation between asbestos claimants, owners of the company's bank debt and others.

Owens Corning sought Chapter 11 bankruptcy protection in 2000 to shield itself from claims for billions of dollars in health-related damages linked to asbestos products it made decades ago.

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