In re Owens Corning
| Decision Date | 02 February 2004 |
| Docket Number | No. 01-1163.,No. 01-1200.,No. 01-2098.,No. 01-1176.,No. 00-3843.,No. 01-1180.,No. 00-3842.,No. 01-1197.,No. 00-3848.,No. 01-1161.,No. 01-1185.,No. 00-3853.,No. 01-1144.,No. 01-1192.,No. 01-1196.,No. 01-1182.,No. 01-1174.,No. 01-1195.,No. 01-1147.,No. 00-3838.,No. 01-1188.,No. 01-1149.,No. 01-1159.,No. 01-1166.,No. 01-1145.,No. 01-2094.,No. 01-2099.,No. 01-1170.,No. 01-1171.,No. 00-3846.,No. 01-1179.,No. 01-1155.,No. 01-2102.,No. 01-1146.,No. 01-1187.,No. 01-1153.,No. 01-1164.,No. 01-1186.,No. 01-1142.,No. 01-2103.,No. 01-1162.,No. 01-1169.,No. 01-1139.,No. 00-3852.,No. 01-2095.,No. 01-1184.,No. 00-3851.,No. 01-1191.,No. 01-1181.,No. 01-1178.,No. 01-1141.,No. 00-3840.,No. 01-2104.,No. 01-2101.,No. 00-3845.,No. 01-1158.,No. 01-1150.,No. 01-1189.,No. 00-3839.,No. 00-3847.,No. 01-1154.,No. 01-1167.,No. 01-1172.,No. 01-1151.,No. 01-1177.,No. 01-2100.,No. 00-3844.,No. 01-1156.,No. 01-1173.,No. 00-3837.,No. 01-1183.,No. 01-1198.,No. 01-1143.,No. 00-3850.,No. 01-2097.,No. 01-1157.,No. 01-2096.,No. 01-1194.,No. 01-1193.,No. 01-1160.,No. 01-1165.,No. 01-1190.,No. 00-3849.,No. 00-3854.,No. 01-1148.,No. 01-1199.,No. 01-1175.,No. 01-1168.,No. 01-1140.,No. 00-3841.,No. 01-1152.,00-3837.,00-3838.,00-3839.,00-3840.,00-3841.,00-3842.,00-3843.,00-3844.,00-3845.,00-3846.,00-3847.,00-3848.,00-3849.,00-3850.,00-3851.,00-3852.,00-3853.,00-3854.,01-1139.,01-1140.,01-1141.,01-1142.,01-1143.,01-1144.,01-1145.,01-1146.,01-1147.,01-1148.,01-1149.,01-1150.,01-1151.,01-1152.,01-1153.,01-1154.,01-1155.,01-1156.,01-1157.,01-1158.,01-1159.,01-1160.,01-1161.,01-1162.,01-1163.,01-1164.,01-1165.,01-1166.,01-1167.,01-1168.,01-1169.,01-1170.,01-1171.,01-1172.,01-1173.,01-1174.,01-1175.,01-1176.,01-1177.,01-1178.,01-1179.,01-1180.,01-1181.,01-1182.,01-1183.,01-1184.,01-1185.,01-1186.,01-1187.,01-1188.,01-1189.,01-1190.,01-1191.,01-1192.,01-1193.,01-1194.,01-1195.,01-1196.,01-1197.,01-1198.,01-1199.,01-1200.,01-2094.,01-2095.,01-2096.,01-2097.,01-2098.,01-2099.,01-2100.,01-2101.,01-2102.,01-2103.,01-2104. |
| Citation | 305 B.R. 175 |
| Parties | In re OWENS CORNING, et al., Debtors. In re W.R. Grace & Co., et al., Debtors. In re USG Corporation, a Delaware Corporation, et al., Debtors. |
| Court | U.S. Bankruptcy Court — District of Delaware |
Lawrence S. Robbins, Roy T. Englert, Jr., Gary A. Orseck, Arnon D. Siegal, Robbins, Russell, Englert, Orseck & Untereiner LLP, Washington, DC, David L. Finger, Finger & Slanina, PA, Wilmington, DE, John J. Gibbons, Gibbons, Del, Deo, Dolan, Griffinger & Vecchione, Newark, NJ, Isaac M. Pachulski, K. John Shaffer, Stuntman, Treister & Glatt PC, Los Angeles, CA, Counsel for Movants Kensington & Springfield.
Stephen C. Neal, Scott D. Devereaux, Cooley Godward LLP, Palo Alto, CA, David G. Heiman, Jones Day, Cleveland, OH, Daniel J. Defranseschi, Paul Health, Richards, Layton & Finger PA, Wilmington, DE, Paul R. De Filippo, Wollmuth, Maher & Deutsch, Newark, NJ, Counsel for Movant USG Corp.
Joanne B. Wills, Jennifer L. Scoliard, Klehr, Harrison, Harvey, Branzburg & Ellers LLP, Wilmington, DE, Richard Mancino, Marc Abrams, Christopher J. St. Jeanos, Nisha Menon, Wilkie, Farr & Gallagher, LLP, New York City, Counsel for Movants DK Acquisition Partners, Fernwood Assoc., & Deutsche Bank Trust.
Charles O. Monk, Matthew G. Dobson, Saul Ewing LLP, Baltimore, MD, Norman L. Pernick, Saul Ewing LLP, Wilmington, DE, Counsel for Respondent Owens Corning.
David M. Bernick, Michelle H. Browdy, Janey Baer, Samuel Blatnick, Kirkland & Ellis LLP, Chicago, IL, Christopher Landau, Kirkland & Ellis LLP, Washington, DC, Laura Davis Jones, David W. Carickhoff, Jr., Pachulski, Stang, Zeihl, Young, Jones & Weinstraub PC, Wilmington, DE, Counsel for Respondents W.R. Grace & Co.
Elihu Inselbuch, Peter Van N. Lockwood, Nathan D. Finch, Caplin & Drysdale, New York City, Marla Eskin, Campbell & Levine, Wilmington, DE, Counsel for Respondents the Official Committees of Asbestos Claimants in In re Owens Corning, In re W.R. Grace & Co. and In re USG Corp.
Michael J. Crames, Jane W. Parver, Aaron Stiefel, Edmund M. Emrich, Kaye Scholer LLP, New York City, James L Patton, Jr., Young, Conaway, Stargatt & Taylor LLP, Wilmington, DE, Counsel for Respondents the Representatives of Future Asbestos Claimants.
This matter has been opened before the Court upon the several motions of a number of interested parties for an Order recusing this Court from further participation in the above-captioned, jointly administered chapter 11 cases (the "Motions"). In In re Owens Corning, the movants are Kensington International Limited and Springfield Associates, L.L.C., joined by Credit Suisse First Boston ("CSFB") and amicus Washington Legal Foundation (with CSFB the "Owens Corning Movants"). In In re W.R. Grace, the movants are D.K. Acquisition Partners, L.P., Fernwood Associates, L.P., and Deutsche Bank Trust Company America the ("W.R. Grace Movants"). In In re USG Corp., the movants are the debtor-in-possession and the Official Committee of Unsecured Creditors (the "USG Movants").1 Respondents opposing recusal are the debtors-in-possession Owens Corning and W.R. Grace & Co., the Official Committees of Asbestos Tort Claimants in all three cases and the Representatives of Future Claimants in the Owens Corning and USG cases (no futures representative has been appointed in W.R. Grace).
The proceedings on the Motions have been governed by the Order to this Court dated December 18, 2003, by the United States Court of Appeals for the Third Circuit to develop a factual record and issue an Opinion on the Motions by January 31, 2004. In re Kensington Int'l Ltd., 353 F.3d 211 (3d Cir.2003). Reference to the Bankruptcy Court of the above-captioned chapter 11 cases has been withdrawn with respect to the Motions by the prior Orders of the Court.
There is much that is extraordinary about these proceedings and their culmination, insofar as this Court's involvement is concerned, with this Opinion. This Court has previously been afforded the opportunity to address the Court of Appeals directly pursuant to their invitation under Federal Rule of Appellate Procedure 21(b)(4). This Court has the benefit of the thinking of the Court of Appeals as expressed in its formal Opinion and in the transcript of oral argument. Rarely does a district court have the opportunity to engage in so direct a dialog with its appellate brethren. The Court considers this a salutary feature of this litigation and will avail itself of the opportunity to address directly concerns or omissions in the record identified by the Court of Appeals.
The Court has reviewed the evidentiary record, including transcripts of testimony, and heard the arguments of counsel. What follows is the Opinion of the Court, constituting its findings of fact and conclusions of law. It is neither practicable nor desirable, notwithstanding the length of this Opinion, to address each of the Movants' accusations and set forth a point-by-point rebuttal. Each has been carefully considered and discussed below in accordance with its merits. More generally, the Court has attempted to set forth for the Court of Appeals the rationale and practice of case management this Court has brought to the above-captioned chapter 11 cases, and In re Federal-Mogul, and In re Armstrong World Industries (collectively the "Five Asbestos Cases") pursuant to the mandate of Chief Judge Becker.
As the District Court emerges from the stormy waters of litigation, its course is steady and its grasp of the helm is firm. Through this simple maritime metaphor, the District Court signals its intention to continue, with the Circuit Court's approval, the stewardship of the jointly administered bankruptcy estates. The Movants say recusal is the right thing to do. The District Court disagrees. The right thing to do is to resolve all the outstanding claims, whatever their nature, and, should the facts and the law so indicate, to return the debtors to that which they do best — the conduct of their business. Careful consideration of the applicable legal standard and the context in which the Motions arise only confirm this view. Therefore, and for the reasons set forth below, the Motions will be denied.
While some of the history of the Motions has been recounted elsewhere by the Court, it is summarized here for convenient reference on appeal and for emphasis because it is relevant to the Court's disposition of the Motions. Roughly speaking, the grounds advanced for the Motions are twofold. First, the Movants contend that certain of the five advisors to the Court appointed by its Order of December 28, 2001, (JA2176)(the "Advisors"), are biased through their involvement in the chapter 11 case In re G-I Holdings, Inc., Bankr.No. 01-30135 pending in the District of New Jersey before the Honorable Rosemary Gambardella. Other allegations of bias of the Advisors are also raised. In addition, the Movants contend that recusal is required due to certain ex parte communications that they claim were improper.
The Court believes that the seed from which the present controversy grew was planted in December 2002. It was represented to the Court at that time that a key issue in the Owens Corning bankruptcy was the resolution of a claim by the debtor and other potential plan proponents that the various subsidiaries of Owens Corning should be substantively consolidated for the purposes of the reorganization. It was represented at that time, and repeated since in papers filed with the Court, that substantive consolidation put certain bank creditors of Owens Corning (the "Banks") at risk for their recovery of well in excess of $1 billion in debt guaranteed by these subsidiaries. Conversely, in the course of the substantive consolidation litigation counsel have represented to the Court that the Banks' recovery may approach 100 cents on the dollar if they defeat the substantive consolidation motion, making these claimants unique among the numerous other classes of commercial and personal injury claimants who will receive only a fraction of their claims.
By Order dated December 23, 2002, this Court withdrew the reference to the Bankruptcy Court of the substantive consolidation issue and appointed the Honorable Judith K. Fitzgerald, U.S.B.J., as settlement judge and Professor Francis E. McGovern as mediator to explore the possibility of settlement. The Order also contemplated that the debtors and the other parties intended to file a proposed plan of reorganization and that the motion for substantive consolidation was a part of that plan. It is, of course, "not at all unusual for a plan proponent ... to seek a determination prior to the...
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In re Kensington Intern. Ltd.
...and order on February 2, 2004 denying the recusal motions both on the merits and on timeliness grounds. See generally In re Owens Corning, 305 B.R. 175 (D.Del.2004). As noted, we retained jurisdiction over the Mandamus Petitions. These Petitions were joined by USG Corp., the debtor in the U......
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In re Kensington International Limited, No. 03-4212 (Fed. 3rd Cir. 5/17/2004)
...and order on February 2, 2004 denying the recusal motions both on the merits and on timeliness grounds. See generally In re Owens Corning, 305 B.R. 175 (D. Del. 2004). As noted, we retained jurisdiction over the Mandamus Petitions. These Petitions were joined by USG Corp., the debtor in the......
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