In re G-I Holdings, Inc.

• Decision Date: 19 January 2006
• Docket Number: Bankruptcy No. 01-30135(RG).,Adversary No. 04-2192(RG).
• Parties: In re G-I HOLDINGS, INC. and ACI INC., Debtors. Official Committee of Asbestos Claimants of G-I Holdings Inc. f/k/a GAF Corp., Plaintiffs, v. Building Materials Corp. of America, et al., Defendants.
• Court: U.S. Bankruptcy Court — District of New Jersey

338 B.R. 232

In re G-I HOLDINGS, INC. and ACI INC., Debtors.

Official Committee of Asbestos Claimants of G-I Holdings Inc. f/k/a GAF Corp., Plaintiffs, v. Building Materials Corp. of America, et al., Defendants.

Bankruptcy No. 01-30135(RG).

Adversary No. 04-2192(RG).

United States Bankruptcy Court, D. New Jersey.

January 19, 2006.

COPYRIGHT MATERIAL OMITTED

Mark E. Hall, Esq., Riker, Danzig, Scherer, Hyland & Perretti LLP, Morristown, Co-Attorneys for the Debtors and Building Materials Corporation of America.

Jeffrey D. Prol, Esq., Scott Cargill, Esq., Lowenstein Sandler, PC, Roseland, NJ, Trevor W. Swett, Esq., Caplin & Drysdale, Chartered, Washington, DC, Co-Counsel to Official Committee of Asbestos Claimants.

Brian P. Muething, Esq., Keating, Muething & Klekamp, P.L.L., Cincinnati, OH, Co-Counsel for the Legal Representatives of Present and Future Holders of Asbestos-Related Demands.

James J. DeLuca, Esq., Okin Hollander & DeLuca, LLP, Fort Lee, NJ, Leo T. Crowley, Esq., Pillsbury Winthrop, LLP, New York, NY, Co-Counsel for the Bank of New York in its capacity as Indenture Trustee.

Richard M. Meth, Esq., Pitney Hardin LLP, Morristown, NJ, Gregory W. Nye, Esq., Donald J. Marchesseault, Esq., Bingham McCutchen LLP, Hartford, CT, Co-Counsel for Certain Noteholder Defendants.

Michael F. Hahn, Esq., Duane Morris, LLP, Newark, NJ, Co-Counsel for the Bank of New York.

Rosalia Niforatos, Esq., KirkPatrick & Lockhart, Nicholson Graham LLP, Newark, NJ, for HSBC USA Inc., Manufactures & Traders Trust Co. and Mizuho Trust and Banking Co. USA.

Charles N. Panzer, Esq., Reed Smith LLP, Newark, NJ, for Defendants Mellon Trust of New England, N.A., Standish Mellon Asset Management Company LLC, f/k/a Standish, Ayer and Wood, Inc. and Pareto Partners.

Leda Dunn Wettre, Esq., Robinson & Livelli, Newark, NJ, Michael J. Dell, Esq., Kramer, Levin, Naftalis & Frankel, LLP, New York, NY, Co-Counsel for Defendants Goldman Sachs Group, Morgan Stanley & Co., Spear Leads & Kellogg, LP, Piper Jaffray Companies, and CIBC World Markets, Inc.

Rebecca Bjork, Esq., O'Melveny & Myers, Washington, D.C., for Alliance Capital Management and Sanford Bernstein.

Joshua A. Zielinski, Esq., McElroy Deutsch Mulvaney & Carpenter, LLP, Morristown, NJ, for Morgan Keegan & Co., Waddell & Reed, and Union Planters.

John A. Bougiamas, Esq., Otterbourg, Steindler, Houston & Rosen, P.C., New York, NY, for Wachovia Bank NA and Wachovia Securities.

Gus A. Paloian, Esq., Seyfarth Shaw LLP, Chicago, IL, for Northern Trust Co.

Brian H. Mukherjee, Esq., Goodwin Procter LIT, Boston, MA, for State Street Bank & Trust Company.

Eric E Wohlforth, Esq., Gibbons, Del-Deo, Dolan, Griffinger et al, Newark, NJ, for Dresdner Kleinwort Wasserstein Securities.

Frances S. Margolis, Esq., Tompkins, McGuire & Wachenfeld, Newark, NJ, Co-Counsel for Angelo Gordon & Co. L.P.

Carolyn Miller, Esq., Juan A. Skirrow, Esq., Willkie Farr & Gallagher, New York, NY, Co-Counsel for Angelo Gordon & Co. L.P.

James C. Creel, III, Esq., Janney Montgomery Scott, LLC, Philadelphia, PA, for Janney Montgomery Scott, LLC.

Katherine Scovin, Esq., Seward & Kissel, LLP, New York, NY, for Royal Bank of Canada.

Mary P. Miras, Esq., Duval & Stachenfeld LLP, New York, NY, for Swiss American Securities.

Thomas A. Martin, Esq., Putney, Twombly, Hall & Hirson, LLP, Iselin, for St. Paul Guardian Insurance Company.

Douglas J. McGill, Esq., Drinker, Biddle & Reath LLP, Florham Park, NJ, for

Citibank, N.A., Citibank Private Banking Division and Citigroup Global Markets, Inc.

Gary M. Sarno, Esq., Newman & Simpson, LLP, Hackensack, NJ, for PNC Bank, N.A.

Amish R. Doshi, Esq., Pitney Hardin LLP, New York, NY, for Fifth Third Bank.

Tonya A. Trumm, Esq., Godfrey & Kahn, S.C., Milwaukee, WI, for Marshall & Isley Bank.

Trevor R. Hoffmann, Esq., Luskin, Stern & Eisler, LLP, New York, NY, for Societe Generale.

David C. McGrail, Esq., Dechert LLP, New York, NY, for Stein Roe Investment Council, Inc.

OPINION

ROSE MARY GAMBARDELLA, Bankruptcy Judge.

Before the Court is a motion to dismiss an adversary proceeding brought on behalf of the Debtor, G-I Holdings, Inc. (hereinafter "G-I Holdings"), by the Official Committee of Asbestos Claimants of G-I Holdings, Inc. (hereinafter the "Committee") against Building Materials Corporation of America (hereinafter "BMCA") and a multitude of financial institutions. More particularly, the following financial institutions filed the present motion to dismiss the adversary complaint: A.G. Edwards & Sons, Inc.; AIG Life Insurance Company; American General Life Companies, LLC; AIG SunAmerica Asset Management Corp.; Amerus Capital Management Group, Inc.; Banc of America Securities LLC, Bank of America, N.A., Bear Stearns Corporate Lending, Inc., As Lender; Bear Stearns Asset Management; Bear Stearns Securities Corp.; Caywood-Scholl Capital Management, LLC; Charles Schwab & Co., Inc.; Comerica Bank; Delaware Investment Advisers, A Series of Delaware Management Business Trust; Deutsche Bank Trust Company Americas; Fidelity Investments Life Insurance Company; Forstmann Leff Associates L.P.; GE Financial Assurance Holdings, Inc.; The Guardian Life Insurance Company of America; ING Investment Management Co.; ING Ghent Asset Management LLC; Equitable Life Insurance Company of Iowa; JPMorgan Chase Bank, N.A.; Bank One Trust Company, N.A.; Liberty National Life Insurance Company; Thrivent Financial for Lutherans; Mass Financial Services Company; Massachusetts Investors Trust; Massachusetts Mutual Life Insurance Company; Merrill Lynch Investment Managers, Limited Partnership; Merrill Lynch Professional Clearing Corp.; Metropolitan Life Insurance Company; Neuberger Berman LLC; OppenheimerFunds Distributor, Inc.; ORIX USA Corporation; PPM America Inc.; Pacific Investment Management Company LLC; Putnam Investment Management, LLC; The TCW Group, Inc.; UBS AG; UBS Financial Services; UBS Securities AG; U.S. Bank National Association; Union Bank of California, N.A.; and Wells Fargo Bank, National Association (hereinafter collectively the "Noteholders" or "Noteholder Defendants").

Subsequent to the filing of the motion to dismiss, the following financial institutions have formally joined in the motion filed by the Noteholders: Fifth Third Bank; Angelo Gordon & Co.; Mellon Trust of New England, N.A.; Standish Mellon Asset Management Company LLC, f/k/a Standish, Ayer and Wood, Inc.; Pareto Partners; PNC Bank, N.A.; Amalgamated Bank; Waddell & Reed, Inc.; Morgan Keegan & Co.; Union Planters, N.A.; Union Planters; Union Planters Trust; Societe Generale, New York Branch; Mizuho Trust & Banking Co. (USA); HSBC USA, Inc.; Manufacturers and Traders Trust Company; Dresdner Bank AG; Dresdner Kleinwort Wasserstein Securities, LLC; Northern Trust Company; Wachovia Bank, NA; Wachovia Securities; Stein Roe Investment Counsel, Inc.; Pershing LLC; BNY Capital Markets, Inc.; Citibank, N.A.; Citibank Private Banking Division; Citigroup Global Markets, Inc.; Credit Suisse Asset Management, LLC; Royal Bank of Canada; DLJ Capital Corp.; Credit Suisse First Boston, LLC; Investors Bank & Trust Company; Delaware Management Business Trust; First Southwest Company; SunTrust Bank; National Financial Services LLC; and Mercantile-Safe Deposit and Trust Company.¹ The Bank of New York, as Indenture Trustee and former collateral agent, also filed a response to the motion to dismiss.²

The Committee formally opposed the motion to dismiss and the Court conducted a hearing with respect to the motion on April 5, 2005, at which time the Court reserved decision. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334, 28 U.S.C. § 157(a), and the Standing Order of Reference from the United States District Court for the District of New Jersey dated July 23, 1984. See 28 U.S.C. § 1334 (West 2005); see also 28 U.S.C. § 157(a) (West 2005). This matter is a core proceeding in accordance with 28 U.S.C. § 157(b). See generally 28 U.S.C. § 157(b) (West 2005). Venue is proper pursuant to 28 U.S.C. § 1409(a). See 28 U.S.C. § 1409(a) (West 2005). The following constitute the Court's findings of fact and conclusions of law as required by Federal Rule of Bankruptcy Procedure 7052. See Fed. R. Bankr.P. 7052 (West 2005).

I. arties Involved In This Motion³

On January 5, 2001, G-I Holdings, which is a holding company, filed a voluntary petition under Chapter 11 of the Bankruptcy Code. On August 3, 2001, ACI, Inc., a subsidiary of G-I Holdings, filed a voluntary Chapter 11 petition. On October 10, 2001, this Court entered an Order directing the joint administration of the G-I Holdings and ACI, Inc. bankruptcy cases. Since the filing of its bankruptcy petition, G-I Holdings has been operating its business as a debtor-in-possession pursuant to §§ 1107(a) and 1108 of the Bankruptcy Code. See 11 U.S.C. § 1107(a)(West 2005); see also 11 U.S.C. § 1108 (West 2005). G-I Holdings is the successor-in-interest to GAF Corporation (hereinafter "GAF"), an entity named in approximately 500,000 asbestos actions prior to merging into G-I Holdings. The Committee submits that as successor-in-interest to GAF, G-I Holdings remains liable for approximately 150,000 asbestos lawsuits filed, but unresolved, as of the petition date and for unknown numbers of asbestos claims that will be filed in the future.

BMCA is an indirect subsidiary of G-I Holdings, and is also the primary operating subsidiary and principal asset of G-I Holdings. Significantly, BMCA is not a "debtor," as defined in § 101(13) of the Bankruptcy Code, in any bankruptcy proceeding. Established in 1994, BMCA received substantially all the assets of GAF's roofing products business and expressly assumed $204 million of asbestos liability, with G-I Holdings indemnifying BMCA against any additional asbestos liability. Notwithstanding that BMCA claims to have never manufactured any products containing asbestos, the Company has been named as an additional defendant in more...