Following the removal of U.S. District Judge Alfred Wolin from the asbestos related aspects of Owens Corning“s bankruptcy proceedings, some of the creditors who sought the disqualification of the Jud…
Following the removal of U.S. District Judge Alfred Wolin from the asbestos related aspects of Owens Corning“s bankruptcy proceedings, some of the creditors who sought the disqualification of the Judge are now targeting the mediator in the case. A motion was filed on 24 May 2004 asking that mediator Francis E. McGovern be removed from the case. The motion cites federal appellate court findings on the conduct of Wolin and his advisers as they tried to move the cases forward. McGovern, one of five advisers Wolin named to help him manage the Wilmington Chapter 11 asbestos proceedings, was not one of the advisers whose conflicts of interest were raised in the successful move to recuse the judge. But papers filed in connection with a motion to disqualify McGovern cite a series of partisan links to representatives of the asbestos claimants, who are competing with Owens Corning“s banks and other creditors for favorable treatment under its reorganization plan. In a separate action, McGovern“s role in the Owens Corning case is also cited in a motion filed by Owens Corning“s banks, creditors Kensington International Ltd., Springfield Associates LLC and Angelo Gordon, which calls for an examiner to look at alleged breaches of fiduciary duty by Owens Corning managers. This motion says the appellate ruling in the recusal matter revealed more irregularities in the management of the Owens Corning case and calls for the appointment of an independent examiner to look carefully at the network of relationships for signs of impropriety and conflict. U.S. Bankruptcy Chief Judge Judith Fitzgerald of Pittsburgh has been asked to address the examiner and mediator motions at hearings in July 2004. Fitzgerald is in charge of the bankruptcy-specific issues of the Owens Corning case while Wolin was responsible for the personal injury aspects, which are outside the purview of bankruptcy judges. In the week ending 23 May 2004, Fitzgerald set a 19 July 2004 hearing date to consider a long-delayed motion to appoint a trustee to take the Chapter 11 case out of the hands of company managers. In addition to the Owens Corning case, Wolin was asked by the Third Circuit Court of Appeals in Philadelphia to step down from the cases of W.R. Grace & Co. and USG Corp. because the same advisers were involved in those cases. According to the web site of Duke University, where he teaches law, McGovern has participated as special master, court expert or neutral party in several large bankruptcy cases. Norman Pernick, attorney for Owens Corning, said there was no merit to allegations in the motion that the company and its management had aligned themselves with the asbestos claimants. He said the company would oppose the motion to appoint an examiner, just as Owens Corning has opposed the attempt by some creditors to have a trustee appointed. McGovern, he said, “is sought out by everyone with complicated issues that need to be mediated, and he has a pretty good success record. So I think it“s a shame that they“re questioning his integrity.” In a prepared statement, the company that manages Kensington and Springfield said the motions were filed because the removal of Wolin left people in charge of the case who were involved in “dubious practices.” Elliott Management, which controls Kensington and Springfield, said the practices “prolonged and tarnished” the case.