Congoleum Corporation, a manufacturer of resilient flooring, serving both residential and commercial markets, has obtained the asbestos claimant votes necessary for approval of its pre-packaged Chapter 11 plan of reorganization, and has proceeded with its bankruptcy filing in Trenton, N.J.
Congoleum will now reportedly seek bankruptcy court confirmation of the plan as promptly as possible. Congoleum is pursuing a pre-packaged bankruptcy proceeding as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago.
The balloting agent tabulating the votes on the proposed plan of reorganization reportedly advised Congoleum that the overwhelming majority of votes cast were cast in favor of the plan and were more than sufficient to satisfy the requirements of the bankruptcy code.
Under the terms of the plan, when confirmed, Congoleum will reportedly contribute certain insurance rights and a note for approximately $2.7 million (subject to a future revaluation) to a trust to be formed pursuant to the plan for the benefit of asbestos personal injury claimants. All current and future asbestos claims against Congoleum will be channeled to the trust and Congoleum will have no further liability for such claims.
The terms of the plan also provide that Congoleum’s other creditors will be paid in full and its shareholders will maintain their equity holdings in Congoleum. Congoleum also indicated that it expects to record a charge of approximately $3.7 million in the fourth quarter of 2003 to increase its reserve for estimated costs required to complete its reorganization.
Roger Marcus, Chairman of the Board, commented “This filing marks another major milestone in resolving our asbestos problem. Our next challenge is to get our plan confirmed by the court as quickly as the process allows. We believe the steps taken over the past year to prepare for this filing will be extremely helpful in accomplishing this. Until then, we expect to conduct business as usual. I thank our employees, suppliers, customers, and investors for their continued support through this endeavor.”
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