ASBESTOS LITIGATION: Judge Thwarts ACandS Reorganization Plan
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Published January 30, 2004


A federal bankruptcy judge has refused to confirm the Chapter 11 
reorganization plan of asbestos defendant ACandS Inc. after 
finding that the plan was unduly influenced by asbestos 
plaintiffs' lawyers and would treat some asbestos claimants 
unfairly, Business Insurance reports.

U.S. Bankruptcy Judge Randall J. Newsome recently rejected 
ACandS's prepackaged Chapter 11 plan after hearing objections 
from units of Travelers Property Casualty Corp., which is the 
longtime liability insurer of the former Armstrong World 
Industries insulation-contracting unit, the article said. 

Judge Newsome found that a committee dominated by asbestos 
plaintiffs' lawyers largely dictated the terms of a trust fund 
for claimants, chose its trustee and created several categories 
of secured claimants, many of whom were represented by lawyers 
on the committee. 

The result was a "fundamentally unfair" plan that would treat 
claimants with similar conditions differently, discriminate 
between current and future claimants and conceivably could pay a 
claimant with no symptoms of disease in full while denying any 
payment to a claimant with asbestos-related cancer, the judge 
ruled. 

"Given the unbridled dominance of the committee in the debtor's 
affairs and actions during the pre-petition period... and the 
obvious self-dealing that resulted from control of the debtor, 
it is impossible to conclude that the plan was consistent with 
the objectives and purposes of the bankruptcy code," the judge 
found. 

Claimants "should be compensated based on the nature of their 
injuries, not based on the influence and cunning of their 
lawyers," Judge Newsome wrote. 

According to Business Insurance, representatives of ACandS could 
not be reached for comment. 

Unless the ruling is overturned on appeal, ACandS will have to 
start over in developing a new Chapter 11 plan, said Barry R. 
Ostrager, a lawyer with Simpson, Thacher & Bartlett in New York, 
representing Travelers, reports the Business Insurance.



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