The Dughi firm had represented Congoleum for more than ten years in insurance matters and had been actively engaged in the state court coverage action since He developed pericardial mesothelioma as a result of the asbestos in the flooring he installed for 20 to 30 years.
Combustion Engineering, B. The firm had acted as counsel for the debtor pre-petition in negotiating settlement arrangements with asbestos injury claimants represented by attorneys who were co-counsel with the firm in insurance matters for those same claimants.
Correspondingly, the level of court supervision must be of a high order. Approval of the plan would enable Congoleum to preserve its assets and continue in Congoleum case because the trust would assume its asbestos liability.
Marvel Entertainment Group, F. In one case, floor covering contractor Robert Ehret sued Congoleum and several other flooring manufacturers in the late s.
See 1 Collier on Bankruptcy 15th ed. That fee was to Congoleum case paid by a corporation affiliated with the debtor, but was disallowed by the bankruptcy judge because Rice had a conflict of interest. At the same time, Gilbert was assisting the Dughi firm in the coverage litigation in the New Jersey state court.
In FebruaryCongoleum retained Gilbert for the purpose of negotiating the pre-packaged chapter 11 reorganization. It is an issue based on procedural due process concerns that implicate the integrity of the bankruptcy court proceeding as a whole.
The need for counsel with undivided loyalties is more pressing in cases of this nature than in more familiar conventional litigation. Although the settlement agreement required the claimants to release Congoleum, Gilbert admitted in the coverage action in state court that the release was a limited one and applied only if proceeds were recovered from the insurance companies.
GHR also represented Congoleum in negotiating and drafting asbestos settlement agreements that liquidated numerous claims asserted against Congoleum in the tort system. Gilbert has not denied that assertion despite demands that it disclose the details of its fee sharing arrangements with Weitz.
The Nairns manufactured linoleum flooring under the name Nairn Linoleum until it partnered with the supplier of Congoleum. In the present case, the appeal is from an order which will affect the fairness of the entire bankruptcy proceeding, including the determination of issues such as those for which we granted insurer standing to challenge a final order in Combustion Engineering.
Asbestos can be found in their six-foot sheet flooring, asphalt tile and countertops distributed to both retailers and other manufacturers. The retention of special insurance counsel is an important preliminary matter that will profoundly affect the determination of the validity of a proposed plan ab initio.
Kenesis purchased The Clearing House before beginning claims review work for Congoleum. We are persuaded that, in the circumstances here, the insurers and their attorneys have standing to present this appeal. Further, it is extremely important to resolve this preliminary matter now; otherwise, it may never be addressed.
In In re Pittsburgh Corning, B. Pre-packaged plans offer a means of expediting the bankruptcy process by doing most of the work in advance of filing. Init merged with Amtico Floors, a tile manufacturer.
Its efforts, however, might be likened to attempts at using a scalpel to carve a bowl of soup. Those two firms represent hundreds of thousands of asbestos claimants. Keasbey case were also suing Congoleum.
Many other flooring manufacturers were named in lawsuits prior to and most settled quickly. A lawyer cannot allow a related business interest to affect his representation, for example, by referring clients to an enterprise in which the lawyer has an identified financial interest.
The District Court had jurisdiction pursuant to 28 U. Congoleum settled the cases for cash, plus a secured claim against funds that Congoleum hoped to recover from its excess insurers.
The District Court concluded that the bankruptcy judge was correct in her rulings on the alignment of interests and the application of section e. The retention of Gilbert as special insurance counsel will affect the resolution of issues that may directly affect the rights of insurers and fairness to the asbestos claimants.
As this case demonstrates, leaving the procedures for allocation of resources predominantly in the hands of private, conflicting interests has led to problems of fair and equal resolution. See Amchem Products v. Here, the insurers are entitled to standing even under the more restrictive standard applied to bankruptcy proceedings.
We note also, as a practical matter, that in circumstances such as those present here, it is highly unlikely that any of the parties other than the insurers or their attorneys would challenge the application for retention of Gilbert. Congoleum Corporation used asbestos in many of the flooring products they produced between and About Congoleum Made in the U.S.A.
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Internet Purchase Policy Testimonials Warranties FAQs Sitemap. Tools. Videos Find a. Describes the development and terms of the largest leveraged buyout up to the date of the case. The main problem is to value the positions of the various participants: lenders, equity holders, investment bankers, and management.
This is an abridged version of an earlier case by D.W. Mullins, Jr. Congoleum settled the cases for cash, plus a secured claim against funds that Congoleum hoped to recover from its excess insurers. 15 In NovemberGilbert became co-counsel with Weitz in two other asbestos bankruptcy cases.
In one case, floor covering contractor Robert Ehret sued Congoleum and several other flooring manufacturers in the late s. He developed pericardial mesothelioma as a result of the asbestos in the flooring he installed for 20 to 30 years. In fact, the case writer hinted at the possibility of another reorganization at the end of in the note to Exhibit Throughout, assume that time 0 is year • Make sure that you notice the changing debt ratios in This case illustrates a leveraged buyout and highlights some of its value-creating aspects.
You are invited to combine the valuation principles and methods discussed in the course to evaluate a FinanceCorporate Finance, Congoleum Corporation, Hint .Download