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In an unprecedented move, asbestos claimants have asked the 3rd U.S. Circuit Court of Appeals to appoint U.S. District Court Judge Alfred Wolin to oversee the confirmation plan proposed for bankrupt Combustion Engineering. The U.S. unit of Switzerland-based ABB Group, which filed for Chapter 11 protection with the U.S. Bankruptcy Court for the District of Delaware in Wilmington in February, has proposed a pre-packaged reorganization plan that includes a 524g trust, which will be used to pay all future asbestos claims and will shield the company from lawsuits rising from those claims. Unsatisfied with the speed at which Visiting Judge Judith Fitzgerald has moved to appoint a U.S. District Court judge for the task, however, the asbestos claimants have gone directly to appeals court. “Whenever you have 524g trust involved in an asbestos bankruptcy, a U.S. District Court judge has sat in on confirmation. This isn’t an unusual request that we’re making, but what’s unusual is that we went to the 3rd Circuit and said we need a district judge on this,” said Elizabeth Wall Magner, a New Orleans lawyer who represents cancer claimants. On Tuesday Fitzgerald agreed to a request from lawyers representing cancer sufferers to slow down the fast-track pre-pack. She delayed the company’s confirmation hearing, which had been set for Monday, to at least April 24. Wolin is based in Newark, N.J., and is in charge of the asbestos issues involved in five bankruptcies filed in Delaware. Combustion Engineering isn’t one of them, however. The dissenters believe having Wolin appointed would help the proceedings. “We want district judges on every case because there are important issues that can’t legally be left to a bankruptcy judge,” said a plaintiff attorney and one of the four dissenters on the committee, Stephen Kazan of Kazan, McClain, Edises, Abrams, Fernandez, Lyons & Farrise. “Wolin understands the big picture here.” Cancer patients, creditors and Combustion Engineering’s insurers vehemently oppose the pre-packaged bankruptcy plan and have been trying to slow the process. They allege that ABB paid $400 million in cash to a group of asbestos plaintiffs to win the 75 percent vote it needs to get its pre-pack approved, even though they may have no legitimate asbestos claims against ABB. (The 524g trust in the proposed plan protects ABB from asbestos lawsuits going forward.) ABB’s attorney, David Bernick of Kirkland & Ellis, said a settlement is needed to get asbestos creditors to sign onto the plan. Magner, as well as four lawyers who are on Combustion Engineering’s seven-member unsecured creditors committee, oppose the plan. They argue that, while the plan rewards lawyers who represent mostly healthy plaintiffs, it leaves little money for future claimants, especially those who have yet to develop fatal diseases due to asbestos exposure. “The future cancer claimants will get pennies on the dollar of their claims because money is going to buy off present claimants,” said Magner, who also represents so-called select asbestos committees, which represents sick claimants, in 16 other bankruptcies. “Even experts say we can expect 20 more years of asbestos claims.” Besides the $400 million in cash, which has already been distributed through a settlement trust created before the company filed for bankruptcy, Combustion Engineering is offering to put in the 524g trust a $250 million long-term non-interest bearing note, $100 million worth of insurance and $90 million worth of ABB stock. Magner and other dissidents don’t like that the 524g trust will be financed by securities and insurance policies with questionable value. “The best-case scenario is $550 million will be left for future claimants, compared to $400 million for present claimants,” Magner said. “That [$550 million] has to pay every claimant for 20 years. That’s why we’re opposing the plan.” Copyright �2003 TDD, LLC. All rights reserved.

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