USG, unsecured creditors move to disqualify judge, advisors, claiming inappropriate discussions

By Carlise Newman

Chicago, Nov. 24 - USG Corp. and its committee of unsecured creditors have filed motions to disqualify Judge Alfred Wolin and his advisors from any further participation in the company's bankruptcy case, saying they have participated in "ex parte" or inappropriate discussions with asbestos parties, influencing their decisions.

While the discussions may have begun harmlessly, they now cross boundaries of permissible conduct, the committee said in a filing with the U.S. Bankruptcy Court for the District of Delaware.

The committee said Judge Wolin has spent more than 300 hours in conference in private with his team of advisors, and with individuals whose names were withheld from fee statements. The advisors have spent more than 325 hours consulting with counsel for the asbestos parties, and 240 hours with individuals whose names were withheld from the fee applications.

In addition, Judge Wolin consulted with counsel to the asbestos personal injury creditors' committee for more than 25 hours, according to the committee.

"The mass of ex parte communication has destroyed the court's ability to decide this case strictly on the evidence of record," the committee said.

The "hundreds of hours" of discussion appear to be about fundamental, disputed issues within the case, they added.

In addition, the advisors, David Gross and Judson Hamlin, also represent asbestos personal injury demand holders in a similar bankruptcy, G-I Holdings Inc. The committee said the advisors have been simultaneously advocating positions in that case that are adverse to the interests of USG.

"That taint requires disqualification of Judge Wolin and the advisors," said the committee in the filing.

The advisors also appear to have used their influence as advisors to disclose information to the court that are favorable to G-I Holdings.

Many of the legal disputes in G-I Holdings and USG's cases are similar, including: the establishment of a bar date for future claimants; the way future claims are estimated; to what extent future claims are actual claims under the bankruptcy code; and the qualification of the discharge to future claims.

The committee said that it was also "troubling" that most of the future claimants in the G-I case are also future claimants in USG's case.

Through their communications with the court, the advisors' views have been heard by Judge Wolin, who has made statements suggesting his views have been influenced by matters outside the case, according to the committee.

The committee said that those not involved in this communication have "every reason to doubt" they are being given a fair opportunity to be heard, or that decisions are being based on what is on record.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.