Three years into what was meant to be a quick trip to bankruptcy court, a federal judge in Trenton, N.J., shot down Congoleum Corp.’s “prepackaged” Chapter 11 reorganization plan as a “dead end” that scarcely satisfies the intent of the law.
The plan drafted by the Mercerville, N.J.-based manufacturer and the principals of two national asbestos plaintiffs powerhouses — Joseph F. Rice of Motley Rice in Mount Pleasant, S.C., and Perry Weitz of Weitz & Luxemburg in New York — proposed a trust funded by the company’s insurers to which the two plaintiffs firms’ clients would receive first preference. In addition, the company, freed from its asbestos liability, was to contribute no equity.
