Asbestos claimants: Expect Specialty Products' reorganization plan

By Jim Witters

Wilmington, Del., March 28 - The Specialty Products Holding Corp.'s official committee of asbestos personal injury claimants and the future claimants representative said Wednesday they are formulating a joint plan of reorganization for the debtors and are pursuing other tactics to accelerate the progress of the case.

Natalie Ramsey, representing the committee, said her motions will seek to narrow the scope of issues, expedite evaluation of the mesothelioma claims and determine whether the holding company is solvent and belongs in bankruptcy.

The debtor is a holding company with no operations, and its only reason for being in bankruptcy is to manage the asbestos claims, she said.

Other entities of the holding company are "operating profitably outside of bankruptcy," Ramsey said.

The statements came during a status conference on potential settlements in the case in the U.S. Bankruptcy Court for the District of Delaware.

Mediation unfruitful

Debtors attorney Gregory M. Gordon read a report from the court-appointed mediator, who concluded that further negotiations were unlikely to produce a settlement.

Gordon said the debtors remain "hopeful for a settlement" and wished to continue the monthly discussions ordered by the court.

The issue separating the parties is the creation and funding of a trust to settle the claims of mesothelioma litigants, which comprise about 85% of the debtor's liabilities, Gordon said.

Committee plans

Ramsey said the case is unlikely to result in the creation of a trust.

The committee, joined by the future claimants representative, intends to file a creditor plan of reorganization that includes placing all the debtor's assets into a trust, Ramsey said.

In addition, the committee intends to seek termination of the injunction that has been protecting the debtor's affiliates from litigation and to seek to determine whether the debtor is solvent or insolvent.

"The question is simple: Do the company's assets exceed its liabilities?" Ramsey said.

If the company is solvent, the litigation belongs in the tort system, not bankruptcy court, she said. If the company is insolvent, the assets should be placed into a trust.

The committee also is concerned about mounting expenses in the case, which now amount to about $25 million, she said.

Process in place

Gordon said the debtor is proceeding with the collection of information about the asbestos claimants and hopes to complete the process in July. The information will be used to provide an estimate of the potential liabilities the holding company faces.

A hearing on the status of that process is scheduled for June 18.

Following the schedule previously approved by the court, an estimation hearing could not be scheduled before January 2013, Gordon said. Previously, the court had reserved July 9-13 for the estimation hearing.

Ramsey agreed that the collection of information must move forward to determine the amount of the claims.

Judge Judith K. Fitzgerald gave the parties two weeks to revise the case management order and submit it to her for approval.

The judge said that, if the committee submits a plan of reorganization, she will allow the plan process and the collection of information and estimation processes to continue simultaneously.

"Having a plan on the table may actually help by focusing the process," Fitzgerald said. "This case is getting very old to be stuck at the level it is at now."

Specialty Products and Bondex International are subsidiaries of RPM International Inc., a Medina, Ohio-based producer of specialty chemicals. The subsidiaries filed for bankruptcy on May 31, 2010, and their Chapter 11 case number is 10-11780.

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