Specialty Products: Debtor's Chapter 11 plan expected before July 16

By Jim Witters

Wilmington, Del., June 18 - Specialty Products Holding Corp. expects to file a Chapter 11 plan before the next scheduled hearing in the case on July 16, the company's attorney said during a status conference June 18 in the U.S. Bankruptcy Court for the District of Delaware.

The statement by Gregory M. Gordon came in response to judge Judith K. Fitzgerald's urging that the debtors and Specialty Products' successor, RPM International Inc., "explain the nature of their relationship going forward and what RPM is going to put on the table."

RPM attorney William M. Wycoff said his client intends to participate.

RPM's involvement was raised by Natalie Ramsey, representing the official committee of asbestos personal injury claimants, who requested that the court lift an injunction halting existing asbestos litigation.

"Will International contribute to a plan and repurchase the debtor? Or is it International's intention not to fund a plan?" Ramsey asked.

The case is more than two years old, a mediation proved unsuccessful, and there are no ongoing discussions regarding funding for a Chapter 11 plan, Ramsey said.

The existing claims litigation has been stayed since the 2010 inception of the bankruptcy case to allow Specialty Products to estimate its potential liability with regard to those claims and to any future claims.

A four-day trial on the claims estimation is scheduled for January.

Gordon said at a March 28 status conference that the issue separating the parties was the creation and funding of a trust to settle the claims of mesothelioma litigants, which comprise about 85% of the company's liabilities.

Ramsey said she doesn't believe a trust will be created.

Fitzgerald denied an immediate end to the litigation injunction.

The judge said allowing the existing litigation to proceed against the companies would trigger an estimation of the claims in the court where the litigation was filed. The reason the companies are in bankruptcy is to allow them to develop that estimate.

But, she said, if evidence emerges that the debtors - Specialty Products Holding Corp. and Bondex International, Inc. - are insolvent and RPM has not "stepped up" with funding for a Chapter 11 plan, "I may dissolve the stay."

Ramsey said the debtors have stated that Bondex has been insolvent and nonoperational since 1999.

As previously reported, the official committee of asbestos personal injury claimants and the future claimants' representative filed a plan of reorganization and related disclosure statement for the company's Chapter 11 case in May.

The plan offers two options, which are dependent on the outcome of the January trial.

Specialty Products is a subsidiary of RMP International, a Medina, Ohio-based producer of specialty chemicals. The subsidiary filed for bankruptcy on May 31, 2010 under Chapter 11 case number 10-11780.

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