Asarco creditor Harbinger files competing reorganization plan

By Caroline Salls

Pittsburgh, May 27 - Asarco LLC creditor Harbinger Capital Partners Master Fund I Ltd. was given the green light Tuesday to file a competing plan of reorganization in the company's bankruptcy case by the U.S. Bankruptcy Court for the Southern District of Texas.

Under Harbinger's plan of reorganization, which was filed on May 27, Asarco would sell substantially all of its assets to a plan sponsor designated by Harbinger for $500 million. Harbinger said a majority of the sale proceeds will be used to pay plan creditors.

In addition, Harbinger's plan establishes an asbestos trust for the benefit of unsecured asbestos personal injury claims and unknown asbestos claims, but it does not call for a channeling injunction like the one included in the plans filed by Asarco and its parent.

Instead, Harbinger said claims of the asbestos creditors must first be satisfied by recourse against the trust, and unsecured asbestos personal injury claimants will be enjoined from ever filing claims against the plan sponsor.

Holders of unknown asbestos claims would not be able to file claims against the plan sponsor until they have exhausted the remedies provided under the trust.

Plan creditor treatment will include:

• Holders of administrative claims, priority claims, convenience claims and priority tax claims will recover 100% in cash;

• Holders of secured claims will either recover 100% in cash or have their claims reinstated;

• Holders of general unsecured claims will recover 100% through their share of cash, liquidation trust interests and litigation trust interests;

• Holders of late filed claims, subordinated claims and interests in Asarco will receive liquidation trust and litigation trust interests in accordance with trust priorities; and

• Holders of interests in the asbestos subsidiary debtors and other subsidiary debtors will receive no distribution.

A hearing on approval of Harbinger's disclosure statement is scheduled for June 5.

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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