Owens Corning unsecured creditors withdraw 2003 trustee request

By Caroline Salls

Pittsburgh, March 24 - Owens Corning's official committee of unsecured creditors withdrew an Oct. 30, 2003 motion to appoint a Chapter 11 trustee for Owens Corning's case, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

According to the 2003 motion, the committee sought to appoint the trustee "to remedy the debtor's continuing breach of its fiduciary duty of undivided loyalty to act in the best interest of all creditors and to pursue a fair, balanced and confirmable plan of reorganization."

The creditors said they had lost faith in the plan process and the ability of Owens Corning to lead the way out of bankruptcy. They claimed that the officers and directors of the company decided their interests lay in "currying favor" with the asbestos plaintiffs' firms that would control the company's ability to use bankruptcy code section 524g and that would effectively own the company after reorganization, thus determining the future employment of its management.

The creditors said the planning process is "phony and fundamentally flawed" because it contains no mechanism for determining the post-bankruptcy liquidation of Owens Corning's legitimate asbestos exposure; it is premised on participation in the case by thousands of claimants who have never filed a proof of claim; and it has no support from any "significant non-asbestos party."

Owens Corning's willingness to "stand by and essentially hand over its keys to the plaintiffs' firms" without challenging their underlying claims represents a fundamental abdication of the company's fiduciary duty of undivided loyalty to its commercial creditors, the committee said.

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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