Kensington group says it will ask district court if advisers' fees in Owens Corning case should be disgorged

By Jeff Pines

Washington, July 13 - Kensington International Ltd. and others in a group asked the bankruptcy court in Owens Corning's Chapter 11 case not to consider whether three former advisers to judge Alfred Wolin should be forced to return millions of dollars in fees. The issue is supposed to be taken up at a July 19 hearing.

In a Monday filing with the U.S. Bankruptcy Court for the District of Delaware, Kensington, Springfield Associates LLC and Angelo Gordon said the issue should be taken up in district court. The advisers were appointed by the district court.

The group claims the advisers were partial to certain asbestos personal injury attorneys. Kensington, Springfield and Angelo Gordon believe Owens Corning's reorganization plan unfairly favors the asbestos personal injury claimants at their expenses. They hold about $600 million of the Toledo, Ohio-based building materials company's pre-Chapter 11 bank debt.

In its own filing, Owens Corning said the advisers should not have to disgorge any fees because the advisers did not owe any fiduciary loyalty to Owens Corning or the creditors.

Not so, said the group. The order appointing Judson Hamlin, David Gross and Frances McGovern as advisers said they were functioning similarly to examiners, officers and professional persons under the bankruptcy code. In addition, their fees and expenses had to be submitted to the court for approval and their fees were subject to disgorgement.

The group also withdrew its motion in the Owens Corning bankruptcy to terminate mediator McGovern in a separate filing Monday with the court.

McGovern's role in the case ended June 30. He was a mediator and adviser to judge Alfred Wolin who is no longer overseeing the case.

Owens Corning filed for bankruptcy on Oct. 5, 2000 over asbestos litigation. Its Chapter 11 case number is 00-03837.

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