CSFB recommends steps to resolve Owens Corning asbestos issues

By Jeff Pines

Washington, June 9 - Credit Suisse First Boston as agent for the pre-petition bank lenders recommended steps the U.S. Bankruptcy Court for the District of Delaware could take to help resolve Owens Corning Corp.'s asbestos issues in a statement filed with the court Tuesday.

The holders of the bank debt believe the asbestos tort claims are over-inflated. The reorganization plan calls for the tort claimants to get $4.8 billion and the bank debt holders to get $1.5 billion for an estimated recovery of 26%. An agreement announced Monday between the company and the committee of unsecured creditors will give them a 38.5% recovery.

CSFB wants a process to value the asbestos claims as opposed to the company's method of estimating them. The company estimates there are $16 billion in asbestos claims. CSFB and the bank debtholders believe the value is "significantly lower."

It recommends the court set a bar date for tort claims to determine just how much in claims there is. The court should then allow "full, open and transparent discovery of all facts" relating to valuing the claims, CSFB said.

After discovery is completed, the court should then set up a briefing schedule to address the issues concerning "the validity and enforceability of certain categories of alleged tort claims," it said.

For example, claimants with lung cancer but who do not have asbestosis would not be compensated.

CSFB's other suggestions involve substantially consolidating all of Owens Corning's subsidiaries. The banks, unlike everyone else, have claims against all of the company's subsidiaries, CSFB said.

Those supporting and opposing consolidation should each file findings of fact and conclusions of law of up to 60 pages. Replies should be kept to 25 pages or fewer.

CSFB has the support of Kensington International, Ltd., Springfield Associates LLC and Angelo Gordon & Co. LLP.

Owens Corning, a Toledo, Ohio-based building materials company, filed for bankruptcy on Oct. 5, 2000. Its Chapter 11 case number is 00-03837.

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