Congoleum Corp. seeks to resolve asbestos liability
Congoleum Corp. recently announced its strategy for resolving current and future
asbestos claims liability. The strategy involves negotiating a global
settlement with current asbestos plaintiffs. In furtherance of this strategy,
Congoleum has begun preliminary settlement negotiations with attorneys
representing the majority of plaintiffs with asbestos claims pending against
Congoleum. Upon successful completion of these negotiations, Congoleum
intends to file a prepackaged plan of reorganization under Chapter 11 of the
United States Bankruptcy Code.
Congoleum expects that the plan of reorganization would provide for an assignment of applicable Congoleum insurance to a trust that would fund both the settlement of pending asbestos claims as well as future asbestos claims,
and that the plan would leave Congoleum's trade creditors unimpaired and protect the company from any future asbestos-related litigation. By reaching an agreement in advance of filing with the plaintiffs that leaves other classes of creditors unimpaired, Congoleum
expects that the post-filing process would result in a swifter and less costly reorganization than would be the case with a non-prepackaged bankruptcy.