Owens Corning: reorganization plan for asbestos claims

Building insulation manufacturer Owens Corning said 17 January 2003 it filed a bankruptcy reorganization plan to settle asbestos claims which provides for partial payments to creditors and cancels its…

Building insulation manufacturer Owens Corning said 17 January 2003 it filed a bankruptcy reorganization plan to settle asbestos claims which provides for partial payments to creditors and cancels its existing common stock. Current shareholders will receive no distribution or other consideration. Under the plan, Owens Corning, based in Ohio, north-east USA, will make partial payment of USD 16 billion in asbestos injury claims, mostly through the distribution of new common stock and notes of the reorganized company. The company filed for Chapter 11 bankruptcy protection in October 2000, as a result of growing demands on cash flow from the costs of asbestos personal injury claims. David T. Brown, chief executive officer said “The filing of this Plan is an important milestone for Owens Corning. I am proud that we are taking these steps to resolve our asbestos liability once and for all,” He added “This Plan advances our objective of emerging from Chapter 11 as quickly as possible as a strong and competitive company well positioned to serve our customers.” Asbestos was widely used for fireproofing and insulation until the 1970s, when it was linked to cancer and other diseases.The company said its existing common stock will be canceled.