Citing long delays in the asbestos-related Chapter 11 proceedings involving chemical giant W. R. Grace, a federal trustee overseeing the matter asked the U.S. Bankruptcy Court to end the company’s control over the case, the Associated Press reported.
Trustee Kelly Beaudin Stapleton told the federal court in Wilmington, Del., that a reorganization plan was unlikely to be filed anytime soon if Grace is allowed to retain exclusive control over the case into 2008. With the stall in negotiations that has resulted from that control, she said, creditors have suffered.
Said Stapleton in court papers filed Friday, according to AP: “The status quo in this case is simple: litigation. Denying exclusivity may very well foster the negotiations that have essentially eluded the parties.” She said the costs of the case are growing as legal and financial-adviser fees reach “significantly high levels.” Meanwhile, Grace’s creditors have not been paid.
She added, “Unfortunately, the wrong people are being paid in this case. Creditors continue to wait for money while professionals get paid on a consistently high basis.”
Columbia, Md.-based Grace filed for Chapter 11 protection in 2001 under an avalanche of lawsuits filed by people claiming harm from asbestos in the company’s products. The company wants to keep exclusive control over the case until 90 days after a final court order establishing its asbestos liabilities. Those proceedings are to begin in January. Grace blamed the delay on lawyers for asbestos claimants, and said they had “held the estimation process hostage for nearly two years.” A hearing on Grace’s request is scheduled for July 23. If the court grants the request, creditors would be barred from filing their own reorganization plans on the company’s behalf.
Stapleton joined the company’s asbestos-affected creditors in opposing the extension, and said that refusing to extend Grace’s exclusive control is not drastic, and could help further a resolution. “It needs to be stressed that this case is no closer to confirmation now than 10 months ago when the last exclusivity extension was granted,” she said. “The ability for other parties to submit plans may act to foster the consensus that has been so difficult to obtain in this case.”