After nearly six years in bankruptcy as a result of asbestos-related litigation, Armstrong World Industries said it expects to emerge from Chapter 11 protection in the fourth quarter of 2006. The statement came following a decision by U.S. District Court Judge Eduardo Robreno confirming Armstrong's fourth amended plan of reorganization, dated Feb. 21, 2006. At press time, the Lancaster, Penn.-based company said that a formal confirmation order should soon be entered by the District Court.
"I am grateful for the support of our employees, customers, suppliers and other business partners during the reorganization process," said Michael D. Lockhart, Armstrong's chairman and CEO. "Consistent with our purpose in seeking relief under Chapter 11, the plan provides the company with a binding resolution of its asbestos liability."
Armstrong said it will establish a trust to satisfy all current and future asbestos personal injury claimants. The trust will be funded with a one-time contribution of cash, notes and common stock of the reorganized company, Armstrong noted. The company expects the trust to be valued at approximately $1.8 billion. Plans call for assets to be used to pay asbestos claims.
Additionally, Armstrong said the reorganized company will have "no role or responsibility in the administration of the trust." The plan also provides for unsecured creditors to receive pro rata distributions of their allowed claims and are expected to receive distributions equal to approximately 59.5 percent of those claims.
Current shareholders of Armstrong's parent company, Armstrong Holdings, Inc. (AHI) will not receive any distributions under the plan. Following Armstrong's emergence, AHI is expected to dissolve, the company noted.
Armstrong to emerge from Chapter 11; U.S. District Court OKs modified plan
September 26, 2006