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November 21, 2007 |
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FEDERAL MOGUL: District Court Affirms Chapter 11 Plan The Honorable Joseph H. Rodriguez of the U.S. District Court for the District of Delaware affirmed on November 13, 2007, the order of U.S. Bankruptcy Court Judge Judith Fitzgerald, confirming the Fourth Amended Joint Plan of Reorganization of Federal-Mogul Corporation and its debtor affiliates. To recall, the Bankruptcy Court confirmed the Federal-Mogul Plan on Nov. 8, 2007, on a wholly consensual basis without objections. The District Court and Bankruptcy Court approvals of the Fourth Amended Plan will allow the Company's emergence from Chapter 11 before year end, Federal-Mogul stated in a press release. "We are extremely pleased to have reached this significant milestone signaling the emergence of the Company from Chapter 11 proceedings," Federal-Mogul Chairman, President and Chief Executive Officer Jose Maria Alapont said in a press release. "The Federal-Mogul team worldwide is devoted to exceeding employee, customer and stakeholder expectations through service and operational excellence, leading technology and the Company's sustainable global profitable growth strategy." Federal-Mogul voluntarily filed for bankruptcy in 2001 for Chapter 11 in the United States and Administration in the UK in order to separate its asbestos liabilities from its true operating potential. The Company reported, in a regulatory filing with the Securities and Exchange Commission, that the Fourth Amended Plan provides that: (a) present and future asbestos personal injury claimants will be permanently channeled to a trust established pursuant to Section 524(g) of the Bankruptcy Code, thereby protecting the Company from existing and future asbestos liability; and (b) all currently outstanding stock of the Company will be cancelled, 50.1% of newly issued common stock of reorganized Federal-Mogul will be distributed to the asbestos trust, and 49.9% of the newly issued common stock of reorganized Federal-Mogul will be distributed pro rata to the noteholders and holders of unsecured claims against the U.S. Debtors that elected to have their claims satisfied by receiving shares of common stock of reorganized Federal-Mogul rather than cash. The holders of currently outstanding common and preferred stock of the Company, at the time those shares are canceled, will receive warrants that may be used to purchase shares of common stock of reorganized Federal-Mogul at a predetermined exercise price. The Plan also provides that the U.S. asbestos trust will: (i) make a payment to the reorganized Company, or pay a portion of the common stock of reorganized Federal-Mogul to be issued to the U.S. asbestos trust in lieu thereof, for the agreed amounts that will be used by the U.K. Administrators to provide distributions on account of U.K. asbestos personal injury claims; and (ii) provide an option to an affiliate of Carl Icahn for the purchase of the remaining shares of common stock of reorganized Federal-Mogul held by that trust. If the affiliate of Mr. Icahn does not exercise such option, an affiliate of Mr. Icahn will provide certain financing to the U.S. asbestos trust. The Federal-Mogul Plan intends to resolve approximately US$9.4 billion in asbestos claims, according to Bloomberg News. Furthermore, unsecured creditors of the U.S. Debtors have the option to either receive shares of common stock of reorganized Federal-Mogul or receive cash distributions under the Plan equal to 35% of their allowed claims, payable in three annual installments, provided that the aggregate payout of all allowed unsecured claims against the U.S. Debtors does not exceed US$258,000,000. About Federal-Mogul Based in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/ -- is an automotive parts company with worldwide revenue of some $6 billion. Federal-Mogul also has operations in Mexico and the Asia Pacific Region, which includes, Malaysia, Australia, China, India, Japan, Korea, and Thailand. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl & Jones, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan. They submitted a Disclosure Statement explaining that plan on April 21, 2003. They submitted several amendments and on June 6, 2004, the Bankruptcy Court approved the Third Amended Disclosure Statement for their Third Amended Plan. On July 28, 2004, the District Court approved the Disclosure Statement. The estimation hearing began on June 14, 2005. The Debtors submitted a Fourth Amended Plan and Disclosure Statement on Nov. 21, 2006, and the Bankruptcy Court approved that Disclosure Statement on Feb. 6, 2007. The Bankruptcy Court confirmed the Fourth Amended Plan on Nov. 8, 2007. |
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