Keystone Consolidated insurers object to disclosure statement

By Caroline Salls

Pittsburgh, June 17 - Keystone Consolidated Industries Inc.'s disclosure statement for its plan of reorganization drew objection from insurers Westchester Fire Insurance Co. and Century Indemnity Co., according to a Thursday filing with the U.S. Bankruptcy Court for the Eastern District of Wisconsin.

The insurers said the plan does not provide adequate information and is misleading.

According to the objection, holders of allowed general unsecured claims against Sherman Wire are entitled to receive cash distributions from the Sherman Wire liquidating trust.

However, according to the insurers, the class of general unsecured creditors includes "otherwise covered claims," but neither the statement nor the plan, describes how these claims will be liquidated and paid.

"Considering the plan appears to depend on the availability of insurance proceeds to fund the payment of otherwise covered claims, it fails to provide basic and meaningful information about the mechanics and the risks for doing so," the filing said.

The insurers said the statement also fails to disclose which executory insurance policies will be rejected and what affect the rejection will have on coverage available to pay the claims.

The hearing on plan confirmation will be held Monday.

Keystone, a Dallas-based fencing and wiring company, filed for bankruptcy on Feb. 26, 2004. Its Chapter 11 case number is 04-22422.

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