Asarco asbestos claimants' committee calls parent's disclosure statement 'unconfirmable'

By Caroline Salls

Pittsburgh, Sept. 15 - Asarco LLC's official committee of asbestos claimants objected to the disclosure statement for the plan of reorganization proposed by the company's parent, Asarco Inc., and Americas Mining Corp., according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of Texas.

According to the objection, the parent's plan "is unconfirmable on its face, based upon a proposed disclosure statement that poses more questions than it answers." The committee said the plan was not proposed in good faith and was only filed to avoid the parent's liability under a fraudulent transfer lawsuit.

The committee said Asarco Inc. and Americas Mining should not be allowed to solicit creditor votes on the plan until they deposit the full plan consideration into a court registry.

"Despite the parent's promise to this bankruptcy court and to the United States District Court for the Southern District of Texas that it would deposit the $2.7 billion into escrow, it has filed a plan of reorganization that allows it to walk away from this court and from Asarco's creditors without ever putting up a dime," the committee said in the objection.

In addition, the committee said the parent's plan comes after an August court finding that Americas Mining had "committed an actual fraudulent transfer by stripping Asarco of is most valuable assets - its 54.2% equity interest in Southern Peru Copper Corporation - with the actual intent to hinder or delay Asarco's creditors."

The committee said the judge found that "relevant information was not given" in the Southern Peru transaction, and that a list of "broken promises" by Americas Mining was evidence of its fraudulent intent.

"Under the circumstances, the court presiding over these reorganization cases owes more than its usual duty to assure that the proffered disclosure statement serves the function that Bankruptcy Code envisions for it, and not as a vehicle to further hinder or delay Asarco's long-suffering creditors," the committee said in the objection.

Asarco, a Tucson, Ariz., mining company, filed for bankruptcy on Aug. 9, 2005. Its Chapter 11 case number is 05-21207.

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