Owens Corning preferred and equity security holders question court's official committee denial

By Caroline Salls

Pittsburgh, March 9 - Owens Corning's ad hoc committee of preferred and equity security holders filed the issues related to its appeal of the U.S. Bankruptcy Court for the District of Delaware's denial of its motion to appoint an official committee of preferred and equity security holders, according to a Wednesday court filing.

The committee said it wants the district court to determine whether the bankruptcy court ignored or misapplied the legal factors regarding whether preferred security and equity security holders are adequately represented in the case.

The committee is also asking the district court to consider whether Owens Corning's purported insolvency warranted a denial of the motion and whether the bankruptcy court abused its discretion in entering the order.

The bankruptcy court denied the motion on Feb. 17.

As previously reported, the company and its U.S. Trustee objected to the committee's motion, saying equity is already adequately represented in Owens Corning's case and the appointment of an official equity committee would add unnecessary administrative expense and delay.

The trustee also said the company has failed to prove that equity has sufficient value in this case to merit appointment of an official committee.

Furthermore, the trustee said the ad hoc committee has demonstrated that equity security holders can assert a collective voice through an unofficial committee and that it can seek reimbursement of its costs and attorneys' fees if its actions result in a substantial contribution to the case.

According to the company's objection, despite the willingness of some investors to make speculative investments in Owens Corning's stock, there is no reasonable prospect for any recovery by equity.

Owens Corning, a Toledo, Ohio, building materials company, filed for bankruptcy on Oct. 5, 2000. Its Chapter 11 case number is 00-3837.

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