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In what has been billed as one of the more extraordinary legal meetings in the last two decades, upward of 200 attorneys filed into a jury room in a Newark, N.J., federal courthouse Dec. 20 to witness the dawning of a new day in asbestos-related bankruptcies. The event was merely a case management meeting called by U.S. District Judge Alfred M. Wolin in November to advise attorneys involved in five major Chapter 11 cases filed in the U.S. Bankruptcy Court for the District of Delaware in Wilmington — Armstrong World Industries Inc., Federal-Mogul Global Inc., Owens Corning, USG Corp. and W.R. Grace & Co. — on how they will proceed since they were consolidated under his purview. In November, Edward Becker, chief judge of the 3rd U.S. Circuit Court of Appeals, transferred the cases to Wolin to help alleviate overcrowding in Wilmington and to perhaps create some semblance of consistency in the five cases. At the meeting, Wolin admitted that he can’t effectively manage five large Chapter 11 filings alone, and then outlined the division of labor between the federal district court in New Jersey and the bankruptcy court in Delaware. Furthermore, Wolin told attorneys he intends to employ several court-appointed masters — paid for by the debtors — to help him wade through the various issues raised in the cases, a technique novel to bankruptcy proceedings. After the meeting, the attorneys for each debtor received about an hour of face time with the judge to allow him to acquaint himself with each case and to schedule upcoming proceedings. Attorneys in attendance said it was obvious that they were taking part in a historic moment. “It’s not just the numbers [of attorneys] that are impressive, but also who is here,” said David Bernick, a Kirkland & Ellis attorney who is involved in the W.R. Grace and Federal-Mogul cases. “There is no one who has a significant role in asbestos cases who is not here,” Bernick said. “The judge has a very formidable test before him. What he does has implications for asbestos litigation for years to come.” Added Peter Kraus from Waters & Kraus in Dallas: “This is one of the more significant events in asbestos litigation in the last 20 years. “This illustrates a new level of reaching an across-the-board resolution that we haven’t gotten from Congress, but now may be getting from the courts,” said Kraus, who represents cancer patients in all five cases. Wolin said two visiting judges to the Delaware court, Judith K. Fitzgerald of Pittsburgh and Randall J. Newsome of Oakland, Calif., will preside over the five cases with Wolin. Fitzgerald will sit on Grace and Owens Corning, while Newsome will oversee Federal-Mogul, USG and Armstrong. Fitzgerald and Newsome will preside over strict Chapter 11-related matters, such as the validity of claims, omnibus hearings, bankruptcy discovery issues, fees and any fraudulent conveyances issues. The bankruptcy judges will also play integral roles in the companies’ confirmation hearings, but Wolin said he had not decided if Fitzgerald and Newsome will hear the confirmation jointly with him. Wolin said he’ll handle asbestos-related issues, as well as case management issues such as setting bar dates, scheduling and the discovery of asbestos-related issues. Nonjury issues will be handled in Newark, “the new annex of Delaware,” Wolin joked. He will handle any matters that require a jury in Delaware, he said. While some attorneys, such as Scott L. Baena at Bilzin Sumberg Dunn Baena Price & Axelrod in Miami, deemed the court masters approach innovative, others were a little more skeptical. “We would have to see how that would work,” said Laura Davis Jones, of Pachulski, Stang, Ziehl, Young & Jones in Wilmington. The masters will tackle various issues, and make recommendations to the court. Parties will be able to file objections before Wolin makes a decision. Copyright (c)2001 TDD, LLC. All rights reserved.

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