Quigley's creditors committee asks court to refuse motions to name trustee, to convert case to Chapter 7

By Reshmi Basu

New York, June 6 - Quigley Co. Inc.'s unsecured creditors committee asked the bankruptcy judge to refuse a motion to name a Chapter 11 trustee and to reject a motion to convert the case to Chapter 7, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

According to the committee's objection, significant progress has been made toward the confirmation of a reorganization plan.

Since the filing of a modified plan, the future claimants' representative, representatives of the debtors, Pfizer and the committee have continued with talks over fine tuning to the plan, the creditors said.

If the motions were approved, this would jeopardize the interests of present and future asbestos personal injury claimants, noted the creditors committee.

On the other hand, if the case were dismissed, "a return to the tort system would result only in a scramble for the debtor's limited assets and uncertainty regarding recovery."

Furthermore, neither the ad hoc committee nor the U.S. Trustee have offered any evidence as to the "apparent lack of progress in formulation a confirmable plan," which has been cited as one of the reasons as to why the motions have been brought forward.

As previously reported, on May 13, Quigley's U.S. Trustee asked the court to dismiss the company's Chapter 11 case or convert it to Chapter 7 bankruptcy for liquidation because the fourth amended plan could not be confirmed and the company had not yet filed a new plan for court consideration.

According to the disclosure statement for the fifth amended plan, Quigley believes that there will be substantially more money available to pay claimants under the plan than would be the case if there were no plan and Quigley were forced to pay claims solely from its own assets.

Specifically, Quigley said it estimated that only $385 million would be available for distribution in a liquidation, while under the plan of reorganization, $845 million will be available, partially because parent company Pfizer plans to contribute substantial assets to the asbestos trust as part of the plan.

In addition, without the settlements and distribution procedures included in the plan of reorganization, Quigley said there likely would be years of costly and time-consuming litigation involving insurance companies, creditors and others that could be avoided through the plan's orderly administrative process.

Without a plan, the company said distributions to creditors would be delayed and litigation costs would substantially reduce the amount of cash actually available for creditors.

Meanwhile the informal committee of tort victims asked the court to appoint a Chapter 11 trustee for the case, arguing that an independent entity must be brought in to look after the interests of all creditors, not just those chosen by parent Pfizer.

According to the motion, Pfizer is enjoying protections afforded to it by a preliminary injunction issued in December 2004, and Pfizer "continues to demonstrate an unwillingness to move this case toward a resolution, or even discuss what it would take to reach a compromise."

As a result, the committee said Pfizer is now hopelessly conflicted because it stands to gain substantially more from maintaining the status quo than it does from a successful plan of reorganization. The committee said Pfizer secured the protection for its own asbestos liability it sought by having Quigley file bankruptcy.

A hearing on approval of the disclosure statement is scheduled for July 12, and the plan confirmation hearing will begin on Oct. 11.

Quigley, a unit of Pfizer Inc., filed for bankruptcy on Sept. 3, 2004. Its Chapter 11 case number is 04-15739.

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