Creditors of USG Corp. with asbestos claims asked a bankruptcy judge to let them propose a recovery plan for the world's largest wallboard maker that would make them owners of the company and leave shareholders empty-handed.
USG, maker of Sheetrock brand wallboard, filed for bankruptcy reorganization in June 2001 to cope with more than 100,000 asbestos-related lawsuits against its U.S. Gypsum unit. The Chicago-based company has been in court-ordered mediation since May with personal-injury claimants, bondholders and other creditors in an attempt to settle disputes. ''The breakdown of the mediation and the impasse in negotiations illustrate that there is no reasonable prospect of a consensual plan of reorganization,'' an official panel of asbestos-injury claimants said in a Nov. 12 filing in U.S. Bankruptcy Court in Wilmington, Del.
The claimants' panel asked U.S. Bankruptcy Judge Judith Fitzgerald to end USG's right to propose a plan. The panel and a representative of future claim-ants want shares of the new company and proceeds of an $860 million tax credit put in a victims' trust. Bondholders and other creditors would be fully paid, shareholders will get nothing and all shares and stock options will be canceled, according to the filing.
David Heiman of Jones Day, USG's bankruptcy lawyer, said the company will fight the asbestos-injury claimants' request for permission to file their plan.
''We believe all parties will continue to be better served by an extension of our exclusive plan-filing period and we will strongly oppose their motion,'' Heiman said.
Shares of USG, W.R. Grace & Co. and other companies forced into bankruptcy by asbestos debt have climbed this year on speculation they might reach legal settlements. They rose further on optimism that Republican victories in the elections this month would boost prospects for creation of a nationwide trust funded by companies and insurers to end the lawsuits.
Companies in Chapter 11 face a 120-day deadline for filing a plan to exit bankruptcy, though judges typically extend the so-called plan-exclusivity period in large cases. Creditors sometimes win the right to file competing proposals, which can limit the company's control of the process.
USG's exclusive plan-filing period has been extended six times during the company's 3-1/2 years in bankruptcy, court papers show.
A Dec. 20 hearing on the matter has been postponed until late January, when the court will consider USG's request for a seventh extension, Heiman said.
"A lawyer for future asbestos claimants, and representatives for other asbestos victims, proposed submitting their own plan to the court, saying it would get broad acceptance, according to documents filed with a U.S. bankruptcy court in Delaware on Friday.
These claimants are proposing that stockholders in USG would get no recovery under their plan and that the stock and options would be canceled. USG shares closed at $31.20, down 39 cents, on the New York Stock Exchange."
Who do these thieves, I mean lawyers think they are?