Owens Corning filed for Chapter 11 protection on Oct. 5, 2000, because of mounting asbestos-liability claims. OC made a product containing asbestos, and workers who used the products developed illnesses, including mesothelioma, and have sued for damages. When the Toledo, Ohio firm filed for Chapter 11, it had $7 billion in assets and $5.7 billion in liabilities.

This week bondholders, shareholders, and other creditors largely voted for Owens Corning’s plan to exit bankruptcy, another landmark in its six-year-old Chapter 11 case. In voting on this latest version of the exit plan – earlier plans had too much opposition – 94 percent of the bondholders approved it. The action was key, because some bondholders had been among the critics of previous bankruptcy-exit plans. Voting in favor were 322 bondholders with more than $1.1 billion in OC debt. Just 18 bondholders with nearly $65.7 million in debt rejected it, according to court documents filed Monday. Other non-asbestos creditors also approved the plan, according to court documents. Approval was needed by half of respondents to the roughly 250,000 ballots sent out and by holders of two-thirds of monetary claims,

The remaining big creditor group, the asbestos-injury claimants, ,including mesothelioma victims, is expected to approve OC’s reorganization plan Friday. Seventy-five percent of the asbestos claimants have to accept the plan. If they do, that should clear the way for a court hearing Monday in Pittsburgh after which a judge could give the building products maker approval to emerge from bankruptcy.

OC’s reorganization plan calls for paying $5.2 billion to asbestos victims, including the mesothelioma victims, and banks and some other creditors $2.5 billion. One major dispute in the case was how much the asbestos claimants were entitled to, particularly how much was needed to cover future claims. Under the plan, trusts established to pay asbestos claims would be funded by $4.3 billion in cash and 28.6 million in new company stock.

In all, the company would pay $8.6 billion on $13.6 billion in claims. Banks would be paid in full, asbestos claimants 50 cents on the dollar and bondholders 58 cents on the dollar.


The exit plan does have opponents. Schultze Asset Management LLC, which holds more than $60 million in OC bonds, has said the firm’s reorganization plan does not treat bondholders equally and was not proposed in good faith. Other entities have filed objections to OC’s reorganization plan. The U.S. Trustee’s Office alleges that OC’s distribution plan may discriminate against creditors that reject the firm’s reorganization plan. and that Kensington International Ltd. and Springfield Associates LLC , two hedge funds, intend to appeal a dismissed lawsuit against some company leaders that alleged they breached their fiduciary duties before the bankruptcy filing. They said in a court filing that OC’s bankruptcy-exit plan could unlawfully protect officers and directors from their lawsuit.