O-I Glass unit Paddock statement draws objection from U.S. trustee

By Sarah Lizee

Olympia, Wash., Feb. 10 – Paddock Enterprises, LLC’s disclosure statement for its Chapter 11 plan of reorganization drew an objection on Thursday from Regions 3 and 9 U.S. trustee Andrew R. Vara, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

Vara said the statement lacks information and the plan isn’t confirmable in its present form.

The debtor, formerly Owens-Illinois, Inc., has maintained that the “primary purpose” of its case is to address its asbestos liabilities, which arise from certain products manufactured before 1958.

The debtor and its affiliates engaged in a series of eve-of-bankruptcy transactions that effectively separated the assets and liabilities of Owens-Illinois into different corporate entities. As a result, Paddock Enterprises inherited all of Owens-Illinois’ legacy asbestos and environmental liabilities, but not its principal assets, which were transferred to a non-debtor affiliate in exchange for certain contractual rights.

The U.S. trustee said the disclosure statement fails to fully disclose whether and to what extent non-consensual third-party releases will extinguish direct claims parties may pursue with respect to these prepetition transactions.

In addition, Vara said the plan impermissibly imposes on creditors third-party releases in favor of non-debtors and embodies a related-parties clause that brings into scope of the releases many vague categories of persons and entities.

Also, the plan contains an overly broad and inclusive exculpation provision that provides exculpation to non-estate fiduciaries, Vara said.

The disclosure statement hearing is scheduled for Feb. 16.

Paddock is a subsidiary of Perrysburg, Ohio-based bottle and jar manufacturer O-I Glass. Paddock filed bankruptcy on Jan. 6, 2020 under Chapter 11 case number 20-10028.

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