Owens Corning received approval from the judge overseeing its Chapter 11 case to proceed with a USD 8 million intercompany loan between certain of the company“s non-debtor units in China, saving one …
Owens Corning received approval from the judge overseeing its Chapter 11 case to proceed with a USD 8 million intercompany loan between certain of the company“s non-debtor units in China, saving one of them from the threat of insolvency. Bankruptcy Judge Judith Fitzgerald signed an order on 20 December 2005 authorizing Owens-Corning (Guangzhou) Fiberglass Co. to take the intercompany loan from several of the company“s other China-based affiliates, none of which are involved in the parent company“s Chapter 11 case, which dates back to October 2000. The intercompany loan will allow Guangzhou to pay off a loan due 31 December 2005, avoiding a potential insolvency proceeding and the risk of take over by a competitor, according to court papers filed 9 November 2005 by Owens Corning. The company, which owns about 97.57% of Guangzhou, said the firm is “strategically important” to its long-term business strategy in China. Guangzhou, 2.43% owned by the Industrial Development Corp. Guangzhou Economic & Technological Development Zone, was set up as a joint venture in 1994 to make and sell fiberglass insulation products. Owens Corning said the joint venture has a state-of-the-art plant in south China that provides valuable production support to its worldwide insulation business and improves its ability to meet demand for insulation products both inside and outside China. The company said Guangzhou is expected to have sufficient profitability and cash flow to pay back the intercompany loan.