The Phoenix Rises: Congoleum 13.0?

Perhaps the thirteenth time is a charm.  The New Jersey Law Journal reports that a district judge in the Garden State has reinstated Congelum’s Chapter 11 bankruptcy case.  Congoleum has made 12 prior attempts at getting a plan confirmed over the course of six years.

U.S. District Judge Joel Pisano has taken an unusual step by not only reviving the case, but also by removing it to the district court.  The brick wall in the plan is the creation of a trust for tens of thousands of asbestos claims against the company. 

In the 1970s and 1980s, Congoleum manufactured floor tiles and vinyl products that contained asbestos.  Between 1981 and 2002, it settled 33,000 personal injury claims over asbestos exposure at a total cost of $13.5 million, exhausting its primary insurance policies.

When Congoleum failed to to get its excess insurers to cover the amount beyond the primary policy limits, it filed a pre-packaged bankruptcy plan.  Over the course of its long progression through bankrputcy, Congoleum proposed numerous plans, only to have them rejected by Judge Kathryn Ferguson for the unbalanced treatment of various asbestos claims.  This latest ruling is a last ditch effort to resurrect Congoleum and get the plan (and trust) operational.  Anything less and Congoleum’s case could be converted to a Chapter 7, and it would face liquidation.