Quigley: tort victims agree to settle with Pfizer, support fifth plan

By Caroline Salls

Pittsburgh, March 21 - Quigley Co. Inc. requested court approval to enter into a plan of reorganization support agreement with parent company Pfizer Inc. and an informal committee of tort victims, according to a Monday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The company said it has been working with Pfizer to formulate a new plan since the court denied confirmation of Quigley's fourth amended plan in September 2010 and the tort victims asked the court to dismiss its bankruptcy case.

In addition, Quigley said Pfizer has been negotiating with the tort victims group, the primary objectors to the fourth amended plan, to try to reach a global resolution of their alleged claims against the parent company.

According to the motion, Pfizer and the tort victims committee entered into an agreement on Sunday that results in the full settlement of Pfizer personal injury claims, the withdrawal of the motion to dismiss and related motions and resolution of the committee's asserted rights to payment of their professional fees.

Quigley said the tort victims have agreed to vote in favor of a plan that is based on the settlement and fixes the problems that plagued the previous plan.

The company said terms of a revised plan will be satisfactory to the committee if they include distributions to futures and non-settling claimants and "reasonable improvements regarding the feasibility of Quigley's business beyond a five-year period."

Trust contributions

Quigley and Pfizer will each make contributions to an asbestos personal injury trust under the fifth amended plan.

Quigley's contribution will consist of an insurance rights transfer, excess cash and Quigley's execution and delivery of an AIG assignment agreement.

Pfizer's contribution will consist of Pfizer's execution and delivery of an insurance relinquishment agreement to reorganized Quigley, its execution and delivery of the AIG assignment agreement to the trust, an agreement to forgive its secured claim, unsecured claim and debtor-in-possession financing claim on the plan effective date, a $264.9 million cash contribution and the transfer of 100% of the common stock of reorganized Quigley to the trust, provided that any dividends that are declared on the stock be used to fund the trust.

Creditor treatment

Treatment of creditors under a draft version of the fifth amended plan:

• Administrative expense claims, priority tax claims and priority claims will be paid in full in cash;

• The Pfizer secured claim will be forgiven as part of a Pfizer contribution;

• Holders of the Reaud, Hatchett and Sherry secured claims can proceed with the pending appeals of the judgment underlying their claims to final judgment. If the final claims are ultimately entered against Quigley or reorganized Quigley, the claimants will be entitled to seek payment from their bonds;

• Holders of other secured bond claims will be entitled to the same treatment as holders of the Reaud, Hatchett and Sherry secured claims;

• Holders of unsecured claims will receive cash equal to the allowed amount of the claim multiplied by a payment percentage;

• Asbestos personal injury claims will be channeled to a trust and treated in accordance with trust provisions.

Pfizer has waived any and all obligations or requirements of holders of asbestos personal injury claims who become settling plaintiffs under Pfizer claimant settlements to reduce the amount of distributions they are entitled to receive from the trust, provided, however, that the waiver will be null and void if the effective date does not occur; and

• Pfizer, the holder of Quigley's equity interests, will transfer the common stock of reorganized Quigley to the asbestos personal injury trust.

Fourth plan denied

As previously reported, judge Stuart M. Bernstein denied confirmation of the fourth amended plan in September 2010, agreeing with the tort victims group argument that Quigley's case was actually designed to benefit parent Pfizer Inc.

Bernstein said the tort victims contended that "Pfizer manufactured this entire bankruptcy for its own benefit and bought the votes through the Pfizer settlements to ensure its success."

Bernstein agreed with the tort victims group.

In addition, Bernstein said it would cost Pfizer roughly $613 million outside of bankruptcy to settle the $2.667 billion in future claims that would have been channeled to a trust under the fourth amended plan.

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.