Longacre Master Fund, Montana object to W.R. Grace disclosure statement

By Jeff Pines

Washington, Dec. 22 - Longacre Master Fund objected to W.R. Grace & Co.'s proposed disclosure statement because it favors some creditors over others in the same class.

Longacre filed its objection with the U.S. Bankruptcy Court for the District of Delaware Wednesday.

General unsecured claims are estimated to be $951 million, which includes $573 million of principal and interest as of Sept. 30. For the remaining amount, W.R. Grace is not planning to pay interest unless the claimant can prove interest accrued before the default, Longacre said.

Banks, which also have general unsecured claims, will get interest, but other general unsecured creditors will not, which according to Longacre means members of the same class will be treated differently, which is a violation of the bankruptcy code.

The disclosure statement hearing is scheduled for Jan. 21.

In a separate Wednesday filing with the court, the state of Montana objected because the disclosure statement does not mention how the company potentially plans to deal with their lawsuit or reimburse the state's Medicaid program for treating the miners who worked at W.R. Grace's asbestos-contaminated vermiculite mine.

Montana assumes that its claims will be in class 9, or general unsecured claims. The reorganization plan calls for the claimants to have 85% of their claim paid in cash and take the remaining 15% in stock. However, Montana's position is that it cannot accept stock as payment for debt.

W.R. Grace filed for bankruptcy on April 2, 2001. Its Chapter 11 case number is 01-01139.

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