Thompson-Hayward Compilation of Briefs

8/4/2019 Thompson-Hayward Compilation of Briefs

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SONNENSCHEIN NATH & ROSENTHAL LLP

Jo Christine Reed (JCR 3783)1221 Avenue of the AmericasNew York, New York 10020-1089(212) 398-5236

Counsel to Attorneys for The Travelers Indemnity Company,

The Travelers Indemnity Company of Connecticut (f/k/a

The Travelers Indemnity Company of Rhode Island), Travelers

Property Casualty Company of America (f/k/a The Travelers

Indemnity Company of Illinois) and Travelers Casualty and

Surety Company (f/k/a The Aetna Casualty and Surety Company)

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------x

In re: ::

TH AGRICULTURE & NUTRITION, L.L.C. , :

:

Debtors. :

:

---------------------------------------------------------------x

Chapter 11

Case No. 08-14692 (REG)

EX PARTE APPLICATION OF CERTAIN INSURERS FOR ENTRY

OF AN ORDER SCHEDULING AN EXPEDITED HEARING TO CONSIDER

MOTION TO MODIFY THE COURT’S FIRST DAY SCHEDULING ORDER

The undersigned insurers (collectively the “Insurers”),1

by and through counsel, submit

this Application for an expedited hearing to consider the Motion To Modify The Court’s First

Day Scheduling Order (the “Motion to Modify,” attached hereto as Exhibit A) and, in support,

respectfully represent as follows:

1 The “Insurers” are comprised of The Travelers Indemnity Company, The Travelers IndemnityCompany of Connecticut (f/k/a The Travelers Indemnity Company of Rhode Island), TravelersProperty Casualty Company of America (f/k/a The Travelers Indemnity Company of Illinois)and Travelers Casualty and Surety Company (f/k/a The Aetna Casualty and Surety Company)(collectively, “Travelers”), Fireman’s Fund Insurance Company (“FFIC”), Continental InsuranceCompany and Pacific Insurance Company (collectively “CNA”).



JURISDICTION

1. This Court has jurisdiction to consider this Application pursuant to 28 U.S.C. §

1334. Consideration of this Application is a core proceeding pursuant to 28 U.S.C. § 157(b).

Venue of this proceeding is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

The legal predicate for this Application is Federal Rules of Bankruptcy Procedure Rule

9006(c)(1) (the “Bankruptcy Rules”).

RELIEF REQUESTED

2. By this Application, the Insurers request entry of an order, pursuant to Bankruptcy

Rule 9006(c)(1), shortening the notice period required to be provided with respect to the hearing

to consider the Motion to Modify. Specifically, the Insurers request that the Court schedule a

hearing to consider the Motion to Modify on December 16, 2008, at 10:00 a.m. (Eastern

Standard Time) and the deadline for service and filing of objections, if any, on December 15,

2008, at 12:00 noon (Eastern Standard Time). Contemporaneously herewith, the Insurers have

filed the Declaration of Donna J. Vobornik, Esq. in support of this Application.

3. Bankruptcy Rule 9006(c)(1) authorizes the Court, for cause shown, to reduce

notice periods prior to the hearing to consider a motion. Here, there is ample cause to reduce the

notice period.

4. Simultaneously with the filing of its voluntary Chapter 11 petition on November

24, 2008, T.H Agriculture & Nutrition, L.L.C. (“THAN” or “Debtor”) filed the Prepackaged

Plan of Reorganization of T H Agriculture & Nutrition, L.L.C. under Chapter 11 of the

Bankruptcy Code [Docket No. 20] (the “Plan”), the related disclosure statement [Docket No. 21]

(the “Disclosure Statement”) and a motion to schedule, among other things, a combined hearing



to consider approval of the Disclosure Statement, THAN’s prepetition solicitation procedures

and confirmation of the Prepackaged Plan (the “Scheduling Motion”).2

5. On November 25, 2008, the Court entered the First Day Scheduling Order

approving the Scheduling Motion.3 The Insurers did not receive notice of the Scheduling Motion

and, therefore, were not provided an opportunity to be heard prior to its approval.

6. The schedule established by the First Day Scheduling Order does not provide

adequate time for the Insurers to obtain the discovery that they need and interpose timely

objections to the Plan, if ultimately deemed necessary. It mandates that parties file objections to

the Plan and accompanying Disclosure Statement a mere 42 days after the case was filed, with

the confirmation hearing just 10 days thereafter, on January 15, 2009. The Insurers did not

participate in the Plan negotiations, and they had not seen drafts of the Plan Documents or any of

the numerous motions that THAN filed on the first day of the case. Given the complexity of the

voluminous Plan Documents, the First Day Scheduling Order is manifestly unfair and prejudicial

to the Insurers.

7. The Insurers seek the opportunity to initiate focused discovery on three

fundamental aspects of the Plan: (a) The intended operation of the “Insurance Neutrality”

2 THAN’s Scheduling Motion is entitled “Debtor’s Motion for (I) An Order (A) Scheduling ACombined Hearing To Consider Approval of Disclosure Statement and Solicitation Procedures,and Confirmation of Prepackaged Plan of Reorganization, (B) Establishing Deadlines and

Procedures for Filing Objections, and (C) Approving Form and Manner of Notice of CombinedHearing; and (II) An Order Approving Disclosure Statement and Solicitation Procedures”(hereinafter, the “Scheduling Motion”) [Docket No. 3].

3 The First Day Scheduling Order means the Court’s “Order (A) Scheduling a CombinedHearing to Consider Approval of Disclosure Statement and Solicitation Procedures, andConfirmation of Prepackaged Plan of Reorganization, (B) Establishing Deadlines and Proceduresfor Filing Objections, and (C) Approving Form and Manner of Notice of Combined Hearing.”[Docket No. 56].



language set forth in Section 10.4 of the Plan;4 (b) The impact of the $900 million in Asbestos PI

Trust Contributions by THAN and its parent, PENAC, on the Insurers’ coverage rights and

obligations (See Plan at §§ 1.20, 1.93, 1.128, 9.4(f)); and (c) The extent to which the Plan may

affect the Insurers’ pecuniary interests and/or their rights to receive performance under the terms

of their respective policies and/or settlement agreements with THAN and/or PENAC.

8. On December 10, 2008, counsel for Travelers requested THAN to consent to a

sixty-day extension of time for the Insurers to file objections to the Plan to allow the Insurers to

engage in limited discovery on an expedited basis to prepare their confirmation case. THAN did

not consent to an extension of time, necessitating that the Insurers’ seek relief from the Court on

an expedited basis. The Debtors were orally advised that if the Insurers did not obtain THAN’s

consent, they would seek expedited relief from the Court.

9. Given the accelerated schedule set by the First Day Scheduling Order, time is of

the essence. Accordingly, the Insurers request that the Court grant expedited consideration of the

Motion to Modify.

4Section 10.4 of the Plan states:

Insurance Neutrality. Notwithstanding anything to the contrary in the ConfirmationOrder, the Plan or any of the Plan documents, nothing in the Plan, the Plan Documents, theConfirmation Order, any finding of fact and/or conclusion of law with respect to theconfirmation of the Plan, or any Final Order or opinion entered on appeal from the ConfirmationOrder (including any other provision that purports to be preemptory or supervening) shall in anyway operate to, or have the effect of, impairing: (a) any Asbestos Insurance Entity’s legal,

equitable or contractual rights, if any, in any respect under the Shared Asbestos InsurancePolicies or any Insurance Settlement Agreement; or (b) any policyholder’s legal, equitable orcontractual rights, if any, in any respect under the Shared Asbestos Insurance Policies or anyInsurance Settlement Agreement. The rights and obligations of any Asbestos Insurance Entityshall be determined under the insurance policies, including, but not limited to the SharedAsbestos Insurance Policies, or any Insurance Settlement Agreement. Notwithstanding anythingin this Article 10.4 to the contrary, nothing in this Article 10.4 shall affect or limit, or beconstrued as affecting or limiting: (a) the binding effect of the Plan and the Confirmation Orderon THAN, Reorganized THAN, the Asbestos PI Trust and the beneficiaries of such trust; or (b)the protection afforded to any Asbestos Insurance Entity.



10. The Insurers submit that service of the Motion to Modify by no later than

December 11, 2008 by First Class Mail or, where appropriate, electronic mail and facsimile to (i)

counsel for the Debtors, (ii) the Office of the United States Trustee for the Southern District of

New York, (iii) proposed counsel for the Official Creditors’ Committee, (iv) proposed counsel to

the proposed Future Claims Representative, and (v) all parties that have filed a notice of

appearance in the Debtors’ Chapter 11 cases pursuant to Bankruptcy Rule 2002, will be good and

sufficient notice of the Motion to Modify.

NOTICE

11.

Pursuant to Bankruptcy Rule 9006(c)(1), the Court may shorten time without

notice. However, as mentioned above, the Debtors’ were orally advised that failing an

agreement to extend the time for the Insurers to file objections to the Plan and conduct limited

discovery, the Insurers would seek expedited relief from the Court with respect to the existing

schedule.

12. No prior request for the relief sought in this Application has been made to this or

any other court.

WHEREFORE, the Insurers respectfully request that the Court hear the Motion on an

expedited basis.

Dated: New York, New York December 11, 2008

Respectfully submitted,


/s/ Jo Christine Reed

Jo Christine Reed (JCR 3783)1221 Avenue of the AmericasNew York, New York 10020-1089(212) 398-5236

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Donna J. Vobornik, Esq.Robert B. Millner, Esq.Daniel E. Feinberg, Esq.7800 Sears Tower233 South Wacker Drive

Chicago, Illinois 60606-6404

Counsel to Attorneys for The Travelers Indemnity

Company, The Travelers Indemnity Company of

Connecticut (f/k/a The Travelers Indemnity

Company of Rhode Island), Travelers Property

Casualty Company of America (f/k/a The Travelers

Indemnity Company of Illinois) and Travelers

Casualty and Surety Company (f/k/a The Aetna

Casualty and Surety Company)

STEVENS & LEE, P.C.

/s/ Constantine D. Pourakis

Constantine D. Pourakis485 Madison Avenue, 20th FloorNew York, New York 10022(212) 319-8500

-and-

Leonard P. Goldberger

Marnie E. Simon1818 Market Street, 29th FloorPhiladelphia, PA 19103(215) 751-2864, -2885

-and-

John D. Demmy1105 North Market Street, 7th FloorWilmington, DE 19801(302) 425-3308



Counsel for Fireman’s Fund Insurance Company

SEYFARTH SHAW LLP

/s/ Robert W. Dremluk

Robert W. Dremluk 620 Eighth Avenue, 32nd FloorNew York, New York 10018Telephone: (212) 218-5269Facsimile: (212) 218-5526

-and-

David C. Christian II (pending pro hac vice)121 South Dearborn StreetSuite 2100

Chicago, Illinois 60603-5577Telephone: (312) 460-5000Facsimile: (312) 460-7000

Counsel For Pacific Insurance Company

and Continental Casualty Company



Exhibit A




Jo Christine Reed (JCR 3783)1221 Avenue of the AmericasNew York, New York 10020-1089Telephone: (212) 768-6700

Facsimile: (212) 768-6800

Attorneys for The Travelers Indemnity Company,

The Travelers Indemnity Company of Connecticut

(f/k/a The Travelers Indemnity Company of Rhode

Island), Travelers Property Casualty Company of

America (f/k/a The Travelers Indemnity Company

of Illinois) and Travelers Casualty and Surety Company

(f/k/a The Aetna Casualty and Surety Company)



In re: :

:

TH AGRICULTURE & NUTRITION, L.L.C. , :

:

Debtors. :

:

---------------------------------------------------------------x

Chapter 11

Case No. 08-14692 (REG)


The undersigned insurers (collectively the “Insurers”),1 by and through counsel,

respectfully move pursuant to Rules 9014 and 7026 of the Federal Rules of Bankruptcy

Procedure and Paragraph 23 of the Court’s Case Management Order #1, for entry of an Order

modifying the Court’s November 25, 2008 Order (A) Scheduling a Combined Hearing to

Consider Approval of Disclosure Statement and Solicitation Procedures, and Confirmation of

Prepackaged Plan of Reorganization, (B) Establishing Deadlines and Procedures for Filing

Objections, and (C) Approving Form and Manner of Notice of Combined Hearing (the “First

1 The “Insurers” are comprised of The Travelers Indemnity Company, The Travelers IndemnityCompany of Connecticut (f/k/a The Travelers Indemnity Company of Rhode Island), TravelersProperty Casualty Company of America (f/k/a The Travelers Indemnity Company of Illinois)and Travelers Casualty and Surety Company (f/k/a The Aetna Casualty and Surety Company)(collectively, “Travelers”), Fireman’s Fund Insurance Company (“FFIC”), and ContinentalInsurance Company and Pacific Insurance Company (collectively “CNA”).



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Day Scheduling Order,” at Docket No. 56), in order to permit a brief period of focused discovery

by the Insurers and adequate time to develop their objections and prepare for a contested hearing

on TH Agriculture & Nutrition, L.L.C.’s Prepackaged Plan of Reorganization (the “Plan”). A

brief adjournment of sixty (60) days of the presently scheduled January 15, 2009, confirmation

hearing date is sought. In support of this Motion, the Insurers state as follows:

BACKGROUND

1. TH Agriculture & Nutrition, L.L.C. (“THAN” or “Debtor”) filed its voluntary

petition for relief under Chapter 11 of the Bankruptcy Code on November 24, 2008. (See

THAN’s Voluntary Petition (Chapter 11) at Docket No. 1).

2. The First Day Scheduling Order was entered the next day (on November 25,

2008) without notice to the Insurers and without providing them with an opportunity to be heard.

By filing it as a first day motion in conjunction with its bankruptcy petition on November 24,

2008, THAN apparently created the perception that its Scheduling Motion2 was routine and thus,

would not be expected to engender opposition.

3. While the Plan may be “prepackaged” in the sense that holders of Asbestos PI

Claims or their lawyers have accepted it, it is not prepackaged as to the Insurers. In particular,

THAN is engaged in active litigation with several of the Insurers in the Circuit Court of Cook

County, Illinois, in a declaratory judgment action captioned TH Agriculture & Nutrition, L.L.C.

v. ACE Property and Cas. Co., et al., Case No. 02 CH 19037 (the “Insurance Coverage Action”),

in which THAN seeks insurance coverage for asbestos bodily injury claims and lawsuits asserted

against it. The insurers named as defendants in the Insurance Coverage Action include FFIC,

2 THAN’s Scheduling Motion is entitled “Debtor’s Motion for (I) An Order (A) Scheduling ACombined Hearing To Consider Approval of Disclosure Statement and Solicitation Procedures,and Confirmation of Prepackaged Plan of Reorganization, (B) Establishing Deadlines andProcedures for Filing Objections, and (C) Approving Form and Manner of Notice of CombinedHearing; and (II) An Order Approving Disclosure Statement and Solicitation Procedures”(hereinafter, the “Scheduling Motion”). (See THAN’s Scheduling Motion at Docket No. 3).



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CNA, certain AIG Companies, Centennial Insurance Company, Royal Indemnity Company,

Everest Reinsurance Company, Northstar Reinsurance Company, TIG Insurance Company,

United States Fire Insurance Company, Federal Insurance Company, Employers Mutual Casualty

Company, Munich Reinsurance Company and ACE Property and Casualty Company.

4. Additionally, THAN has disagreements with other insurance carriers, including

Travelers with which it has an ongoing dispute as to whether THAN’s conduct in connection

with the Plan violates the terms of a Confidential Agreement of Settlement and Release entered

into on or about September 20, 2005.

JURISDICTION

5. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. §§ 157

and 1334. This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). Venue is proper

in this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

RELIEF REQUESTED



language set forth in Section 10.4 of the Plan;3

(b) The impact of the $900 million in Asbestos PI

3 Section 10.4 of the Plan states:

Insurance Neutrality. Notwithstanding anything to the contrary in the ConfirmationOrder, the Plan or any of the Plan documents, nothing in the Plan, the Plan Documents, theConfirmation Order, any finding of fact and/or conclusion of law with respect to the

confirmation of the Plan, or any Final Order or opinion entered on appeal from the ConfirmationOrder (including any other provision that purports to be preemptory or supervening) shall in anyway operate to, or have the effect of, impairing: (a) any Asbestos Insurance Entity’s legal,equitable or contractual rights, if any, in any respect under the Shared Asbestos InsurancePolicies or any Insurance Settlement Agreement; or (b) any policyholder’s legal, equitable orcontractual rights, if any, in any respect under the Shared Asbestos Insurance Policies or anyInsurance Settlement Agreement. The rights and obligations of any Asbestos Insurance Entityshall be determined under the insurance policies, including, but not limited to the SharedAsbestos Insurance Policies, or any Insurance Settlement Agreement. Notwithstanding anythingin this Article 10.4 to the contrary, nothing in this Article 10.4 shall affect or limit, or be



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of their respective policies and/or settlement agreements with THAN and/or PENAC. Thus, the

Insurers are simultaneously serving interrogatories and documents requests on THAN, the Future

Claimants’ Representative and the Official Committee of Unsecured Creditors of T H

Agriculture & Nutrition, L.L.C. addressing these very issues.

7. The “Insurance Neutrality” language in the Plan is decidedly less robust than that

included in other recent confirmed plans in asbestos-related bankruptcy cases.

4

For example, the

construed as affecting or limiting: (a) the binding effect of the Plan and the Confirmation Orderon THAN, Reorganized THAN, the Asbestos PI Trust and the beneficiaries of such trust; or (b)the protection afforded to any Asbestos Insurance Entity.

4 For example, and not by way of limitation, the insurance neutrality provision in the FourthAmended Joint Plan of Reorganization (As Modified) confirmed by the bankruptcy court onNovember 8, 2007 in In re Federal Mogul Global, Inc., et al, No. 01-10578 (Bankr. D. Del.)provides:

10.4 Insurance Neutrality

10.4.1. The provisions of this Section 10.4.1 shall apply to all Entities(including, without limitation, all Asbestos Insurance Companies); provided, however, that withrespect to Certain Underwriters at Lloyd's, London and Certain London Market Companies(collectively, “ London Market Insurers”) and any Asbestos Insurance Policies subscribed byLondon Market Insurers (or any Asbestos Insurance Settlement Agreements applicable to suchAsbestos Insurance Policies), the provisions of this Section 10.4.1 shall not be applicable, andthe provisions of Section 10.4.2 shall be applicable.

10.4.1.1. Nothing in the Plan, the Plan Documents, the Confirmation Order,or any finding of fact and/or conclusion of law with respect to the Confirmation of the Plan shalllimit the right of any Asbestos Insurance Company to assert any Asbestos Insurer CoverageDefense.

10.4.1.2. The Plan, the Plan Documents, the Confirmation Order, and theBankruptcy Insurance Stipulation shall be binding on the Debtors, the Reorganized Debtors, theTrust and the beneficiaries of the Trust. The obligations, if any, of the Trust to pay holders of Asbestos Personal Injury Claims and Demands shall be determined pursuant to the Plan and thePlan Documents. None of (I) the Bankruptcy Court's or District Court's approval of the Plan or



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the Plan Documents, (II) the Confirmation Order or any findings and conclusions entered withrespect to Confirmation, nor (III) any estimation or valuation of Asbestos Personal InjuryClaims, either individually or in the aggregate (including, without limitation, any agreement as tothe valuation of Asbestos Personal Injury Claims) in the Reorganization Cases shall, with respect

to any Asbestos Insurance Company, constitute a trial or hearing on the merits or an adjudicationor judgment; or accelerate the obligations, if any, of any Asbestos Insurance Company under itsAsbestos Insurance Policies; or be used as evidence in any forum to prove:

(i) that any of the Debtors, the Trust, or any Asbestos Insurance Company isliable for, or otherwise obligated to pay with respect to, any individual AsbestosPersonal Injury Claim or Demand;.

(ii) that the procedures established by the Plan, including the Asbestos PersonalInjury Trust Distribution Procedures, for evaluating and paying Asbestos PersonalInjury Claims and Demands are reasonable;

(iii) that the procedures established by the Plan, including the AsbestosPersonal Injury Trust Distribution Procedures, for evaluating and paying AsbestosPersonal Injury Claims and Demands are consistent with any procedures that were usedto evaluate or settle Asbestos Personal Injury Claims against the Debtors before thePetition Date;

(iv) that the settlement of, or the value assigned to, any individualAsbestos Personal Injury Claim pursuant to the Asbestos Personal Injury TrustDistribution Procedures was reasonable and/or otherwise appropriate;

(v) that any of the Asbestos Insurance Companies participated in and/or

consented to the negotiation of the Plan or any of the Plan Documents;

(vi) that any of the Debtors or the Trust has suffered an insured loss with respectto any Asbestos Personal Injury Claim or Demand; or

(vii) as to (A) the liability of the Debtors or the Trust for Asbestos Personal InjuryClaims or Demands, whether such Claims or Demands are considered individuallyor on an aggregate basis; or (B) the value of such Asbestos Personal Injury Claimsor Demands, individually or in the aggregate.

10.4.1.3. Nothing in the Plan or the Plan Documents shall affect or limit, or beconstrued as affecting or limiting, the protection afforded to any Settling Asbestos InsuranceCompany by the Supplemental Injunction, the Third Party Injunction, and/or the AsbestosInsurance Entity Injunction.

10.4.1.4. Nothing in this Section 10.4 is intended or shall be construed to precludeotherwise applicable principles of res judicata or collateral estoppel from being applied againstany Asbestos Insurance Company with respect to any issue that is actually litigated by suchAsbestos Insurance Company as part of its objections, if any, to Confirmation of the Plan or aspart of any contested matter or adversary proceeding filed by such Asbestos Insurance Companyin conjunction with or related to Confirmation of the Plan. Plan objections that are withdrawn



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language quoted below from the Federal Mogul plan makes clear that the confirmation of the

plan and other orders and findings in that case would not “accelerate the obligations, if any, of

any Asbestos Insurance Company” and cannot not “be used as evidence in any forum to prove”

inter alia the reasonableness of the Trust Distribution Procedures or that any of the Debtors had

“suffered an insured loss with respect to any Asbestos Personal Injury Claims or Demands.”

(See Footnote 4 supra).

8. In contrast, the “Insurance Neutrality” language set forth in Section 10.4 of the

Plan contains no such express prohibitions. In fact, Section 10.4 contains language affirmatively

stating that nothing in the Plan Documents or Confirmation Order will impair the policyholder’s

rights, thereby effectively extinguishing any defense (by the Insurers) that THAN and/or PENAC

have breached their respective policies or settlement agreements by propounding the Plan and

including certain provisions therein. (See Plan at § 10.4; see also Plan at § 8.4).

9. Additionally, discovery regarding the claim estimates used in negotiating the

agreed $900 million Asbestos PI Trust Contribution undoubtedly will show that the payment is

going largely towards future claims. Thus, discovery might well show that the intended effect of

the Plan is to (impermissibly) accelerate the Insurers’ obligations such that they would be, in

prior to the conclusion of the Confirmation Hearing shall be deemed not to have been actuallylitigated.

10.4.1.5. Nothing in the Plan, the Plan Documents, the Confirmation Order, or anyfinding of fact and/or conclusion of law with respect to the Confirmation or consummation of the

Plan shall limit the right, if any, of (i) any Asbestos Insurance Company, in any AsbestosInsurance Action, to assert any Asbestos Insurer Coverage Defense, including by presentingevidence and/or argument with respect to any of the matters specified in clauses (i) through (vii)of Section 10.4.1.2 of the Plan or (ii) any other party in any such Asbestos Insurance Action toassert any appropriate position. Except as provided in Section 10.4.1.4 above, none of thematters specified in clauses (i) through (vii) of Section 10.4.1.2 of the Plan shall have any res judicata or collateral estoppel effect against any Asbestos Insurance Company.

(See Federal Mogul Fourth Amended Joint Plan of Reorganization (As Modified) at pp. 150-51,attached hereto as Exhibit A).



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effect, indemnifying THAN today for claims that PENAC and THAN have chosen to pay before

they even are asserted (if ever). Discovery into the sources of the $900 million contribution may

also shed light on the intended operation of the Plan.

10. To the extent (as is apparent from the Plan Documents) the Plan (a) is not

insurance neutral; (b) impairs the Insurers’ contractual and state law rights; and (c) provides

protection for THAN and its parent, PENAC, against the consequences of their own violations of

insurance policies and settlement agreements, the Plan violates 11 U.S.C. § 1129(a)(1)-(3) and

thus, is not confirmable. Further, there is an overriding issue of good faith (and violation of 11

U.S.C. § 1129(c)(3)) in the Plan, which requests not only a discharge, but also a supplemental

discharge injunction under 11 U.S.C. § 524(g). In fact, there is no bonafide “reorganization” in

this case. As reflected in the “Historical Income Statements” (included in Exhibit C to THAN’s

Disclosure Statement), THAN had no revenue whatsoever in 2004, 2005, 2006 or 2007. THAN

had no business. Its “reorganization” is based on its obtaining two revenue-generating properties

and leasing those properties under a long-term triple-net lease for a total revenue of $666,000 per

year for five years after Plan confirmation -- with THAN sustaining a net loss in each such year.

(See Ex. C to THAN’s Disclosure Statement at Docket No. 21).

11. Given the pending Insurance Coverage Action, as well as its present dispute with

Travelers, THAN clearly should have anticipated that the Insurers would require adequate time

and discovery to permit them to develop plan objections and prepare for a contested confirmation

hearing. The experience of debtors in other asbestos-related Chapter 11 cases -- including the

Mid-Valley and Congoleum prepaks, as well as the pre-negotiated plan in Quigley in this

District5 -- should have counseled as much.

5 See In re Congoleum Corp., No. 03-51524 (Bankr. D.N.J.) (alleged “prepak” filed withoutconsent of insurers, plan not confirmed after numerous unsuccessful attempts by the debtor toimpair insurer rights); In re Quigley Co, Inc., No. 04-15739 (Bankr. S.D.N.Y.) (alleged “pre-



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12. Under Paragraph 23 of the Court’s Case Management Order #1 (“CMO #1”),

when a motion “may reasonably be expected to engender opposition, the movant should confer

with any expected adversaries to agree on a briefing schedule.” (See CMO #1, Docket No. 56, at

¶ 23). That did not happen in connection with the First Day Scheduling Order. “[I]f

circumstances make that impractical, the movant may unilaterally set the schedule, but if it is

unreasonable, the opposing party may apply to the Court for modifications in the schedule, and

where it appears that the schedule unilaterally set was not a reasonable one, requests for

modification will presumptively be granted.” (See Id.).

13. The schedule delineated in the First Day Scheduling Order simply is not

reasonable. It mandates that parties file objections to the Plan and accompanying Disclosure

Statement a mere 42 days after the case was filed, with the confirmation hearing just 10 days

thereafter, on January 15, 2009. The Insurers did not participate in the Plan negotiations, and

they had not seen drafts of the Plan Documents or any of the numerous motions that THAN filed

on the first day of the case. Given the complexity of the voluminous Plan Documents, the First

Day Scheduling Order is manifestly unfair and prejudicial to the Insurers. It is difficult not to

conclude that the exclusion of the Insurers was a purposeful litigation strategy designed to limit

the effectiveness of their ability to respond in such an artificially truncated time frame. Indeed, it

undermines the good faith of the entire prepak process and is the antithesis of due process.

14. The bankruptcy courts in other asbestos-related cases have accommodated

insurers’ legitimate needs for similar such discovery, and have allowed more time for meaningful

discovery and pretrial preparation than is requested here. (See, e.g., Order Establishing Case

Management Procedures in connection with Objections to the Confirmation of the Debtors’

Proposed Plan entered on February 18, 2004 in In re Mid-Valley, Inc., No. 03-35592-JKF

negotiated” case still pending without a confirmed plan); In re Mid-Valley, Inc., No. 03-35592(Bankr. W.D. Pa.) (debtor agreed to insurance neutrality language demanded by insurers).



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(Bankr. W.D. Pa.), attached as Exhibit B; Scheduling Order Regarding Hearing on Confirmation

of the Third Amended Joint Plan of Reorganization entered on July 25, 2003 in In re Babcock &

Wilcox Co., No. 00-10992 (Bankr. E.D. La.), attached as Exhibit C).

15. Considering that THAN effectively has been a dormant entity for years, there is

no compelling reason why this bankruptcy case must be completed in such extraordinary haste,

especially at the expense of fundamental fairness and the Insurers’ due process.

16. Such procedural unfairness, including lack of adequate time for an objector to

develop and prepare its confirmation case, can inject reversible error into a Chapter 11 case.

See, e.g., In re Armstrong World Industries, Inc., 2005 U.S. Dist. LEXIS at *18, n.17 (D. Del.

2005) (listing “troubling” procedural issues in the bankruptcy court that were not decided on

appeal because confirmation was reversed on other grounds); aff’d, 432 F.3d 507 (3rd Cir. 2005).

Therefore, the Insurers respectfully request: (a) That the date for objections to the Disclosure

Statement, the Debtor’s solicitation procedures, and confirmation of the Plan (January 5, 2009),

the date for Debtor to respond to any such objections (January 12, 2009), and the date for the

Combined Hearing (January 15, 2009), as set forth in the First Day Scheduling Order, be

vacated; (b) That the Combined Hearing be reset for March 16, 2009, with objections due on

March 6, 2009 and Debtor’s response due on March 13, 2009; and (c) That the parties be

directed to agree to expedited discovery and reasonable pretrial procedures, including disclosure

of witnesses and exhibit stipulations, to effectuate this schedule.

NO PRIOR APPLICATION

17. No previous application for the relief requested herein has been made to this or

any other court.



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MEET AND CONFER

18. On December 10, 2008, counsel for Travelers requested THAN to consent to a

sixty (60) day extension of time for the Insurers to file objections to the Plan to allow the

Insurers to engage in limited discovery on an expedited basis to prepare their confirmation case.

THAN did not consent to an extension of time. (See Declaration of Donna J. Vobornik, filed in

conjunction with the Insurers’ Ex Parte Application for Entry of an Order Scheduling a Hearing

to Consider Motion to Modify the Court’s First Day Scheduling Order).

NOTICE

19. Notice of this Motion will be served in accordance with this Court’s Order on

Insurers’ Ex Parte Application For Entry of An Order Scheduling An Expedited Hearing to

Consider Motion to Modify the Court’s First Day Scheduling Order.

WHEREFORE, the Insurers respectfully request entry of an order substantially in the

form attached hereto, authorizing the relief requested herein, and granting such other and further

relief as is just.

Dated: New York, New York December 11, 2008

Respectfully submitted,


/s/ Jo Christine Reed

Jo Christine Reed (JCR 3783)1221 Avenue of the AmericasNew York, New York 10020-1089

and

SONNENSCHEIN NATH & ROSENTHAL LLPDonna J. Vobornik, Esq.Robert B. Millner, Esq.Daniel E. Feinberg, Esq.7800 Sears Tower



- 11 -

233 South Wacker DriveChicago, Illinois 60606-6404

Counsel to Attorneys for The Travelers Indemnity

Company, The Travelers Indemnity Company of

Connecticut (f/k/a The Travelers IndemnityCompany of Rhode Island), Travelers Property

Casualty Company of America (f/k/a The Travelers

Indemnity Company of Illinois) and Travelers

Casualty and Surety Company (f/k/a The Aetna

Casualty and Surety Company)

STEVENS & LEE, P.C.

/s/Constantine D. Pourakis

Constantine D. Pourakis485 Madison Avenue, 20th FloorNew York, New York 10022(212) 319-8500

-and-

Leonard P. GoldbergerMarnie E. Simon1818 Market Street, 29th FloorPhiladelphia, PA 19103(215) 751-2864, -2885

-and-

John D. Demmy1105 North Market Street, 7th FloorWilmington, DE 19801(302) 425-3308

Counsel for Fireman’s Fund Insurance Company

SEYFARTH SHAW LLP

By: /s/ Robert W. Dremluk Robert W. Dremluk

620 Eighth Avenue, 32nd FloorNew York, New York 10018Telephone: (212) 218-5269Facsimile: (212) 218-5526

David C. Christian II (pending pro hac vice)



- 12 -

121 South Dearborn StreetSuite 2100Chicago, Illinois 60603-5577Telephone: (312) 460-5000Facsimile: (312) 460-7000

Counsel For Pacific Insurance Company

and Continental Casualty Company



IN THE UNITED STATES BANKRUPTCY COURTFOR THE DISTRICT OF DELAWARE

In re: ) Chapter 11

)

FEDERAL-MOGUL GLOBAL INC., ) Case No. 01-10578 (JKF)T&N LIMITED, et al.,1

) (Jointly Administered))

Debtors. )

FOURTH AMENDED JOINT PLAN OF REORGANIZATION (AS MODIFIED)

ARTICLE IX OF THIS PLAN AND THE ADDENDUM TO THE PLAN

PROVIDE FOR THE ISSUANCE OF A CHANNELING INJUNCTION UNDER

SECTION 524(g) OF THE BANKRUPTCY CODE THAT PERMANENTLY ENJOINS

ALL PERSONS HOLDING ASBESTOS PERSONAL INJURY CLAIMS FROM

PURSUING A REMEDY AGAINST THE PROTECTED PARTIES (AND, IN THE CASE

OF THE ADDENDUM, THE PNEUMO PROTECTED PARTIES) AND CHANNELS

THEM TO THE TRUST FOR RESOLUTION AND PAYMENT

1 The U.S. Debtors (collectively, the “U.S. Debtors”) are Carter Automotive Company, Inc., Federal-Mogul Corporation,

Federal-Mogul Dutch Holdings Inc., Federal-Mogul FX, Inc., Federal-Mogul Global Inc., Federal-Mogul Global Properties, Inc., Federal-MogulIgnition Company, Federal-Mogul Machine Tool, Inc., Federal-Mogul Mystic, Inc., Federal-Mogul Piston Rings, Inc., Federal-Mogul

Powertrain, Inc., Federal-Mogul Products, Inc., Federal-Mogul Puerto Rico, Inc., Federal-Mogul U.K. Holdings, Inc., Federal-Mogul Venture

Corporation, Federal-Mogul World Wide, Inc., Felt Products Manufacturing Co., FM International LLC, Ferodo America, Inc., Gasket Holdings

Inc., J.W.J. Holdings, Inc., McCord Sealing, Inc., and T&N Industries Inc.

The United Kingdom Entities to which this Plan applies (collectively, the “U.K. Debtors”) are AE Piston Products Limited, Aeroplane

& Motor Aluminium Castings Limited, Ashburton Road Services Limited, Brake Linings Limited, Duron Limited, Edmunds, Walker & Co.Limited, Federal-Mogul Aftermarket UK Limited, Federal-Mogul Bradford Limited, Federal-Mogul Bridgwater Limited, Federal-Mogul

Camshaft Castings Limited, Federal-Mogul Camshafts Limited, Federal-Mogul Engineering Limited, Federal-Mogul Eurofriction Limited,

Federal-Mogul Friction Products Limited, Federal-Mogul Global Growth Limited, Federal-Mogul Ignition (U.K.) Limited, Federal-Mogul

Powertrain Systems International Limited, Federal-Mogul Sealing Systems (Cardiff) Limited, Federal-Mogul Sealing Systems (Rochdale)Limited, Federal-Mogul Sealing Systems (Slough) Limited, Federal-Mogul Sealing Systems Limited, Federal-Mogul Shoreham Limited, Federal

Mogul Sintered Products Limited, Federal-Mogul Systems Protection Group Limited, Federal-Mogul Technology Limited, Ferodo Caernarfon

Limited, Ferodo Limited, Fleetside Investments Limited, F-M UK Holding Limited, Friction Materials Limited, Greet Limited, Halls Gaskets

Limited, Hepworth & Grandage Limited, J.W. Roberts Limited, Lanoth Limited, Newalls Insulation Company Limited, TAF International

Limited, T&N Holdings Limited, T&N International Limited, T&N Investments Limited, T&N Limited, T&N Materials Research Limited, T&NPiston Products Group Limited, T&N Properties Limited, T&N Shelf Eighteen Limited, T&N Shelf Nineteen Limited, T&N Shelf One Limited,

T&N Shelf Seven Limited, T&N Shelf Three Limited, T&N Shelf Twenty Limited, T&N Shelf Twenty-One Limited, T&N Shelf Twenty-Six

Limited, TBA Belting Limited, TBA Industrial Products Limited, Telford Technology Supplies Limited, The Washington Chemical Company

Limited, Turner & Newall Limited, Turner Brothers Asbestos Company Limited, and Wellworthy Limited. Unlike all the other U.K. Debtors,T&N Investments Limited is a Scottish rather than English company and commenced administration in Scotland in April 2002. Certain

additional U.K. Affiliates of the U.S. Debtors and U.K. Debtors have commenced chapter 11 cases but are not subjects of this Plan.



150

10.4. Insurance Neutrality.

10.4.1. The provisions of this Section 10.4.1 shall apply to all Entities(including, without limitation, all Asbestos Insurance Companies); provided, however, that with

respect to Certain Underwriters at Lloyd’s, London and Certain London Market Companies

(collectively,“London Market Insurers”

) and any Asbestos Insurance Policies subscribed byLondon Market Insurers (or any Asbestos Insurance Settlement Agreements applicable to suchAsbestos Insurance Policies), the provisions of this Section 10.4.1 shall not be applicable, and

the provisions of Section 10.4.2 shall be applicable.

10.4.1.1. Nothing in the Plan, the Plan Documents, the Confirmation

Order, or any finding of fact and/or conclusion of law with respect to the Confirmation of thePlan shall limit the right of any Asbestos Insurance Company to assert any Asbestos Insurer

Coverage Defense.

10.4.1.2. The Plan, the Plan Documents, the Confirmation Order,

and the Bankruptcy Insurance Stipulation shall be binding on the Debtors, the Reorganized

Debtors, the Trust and the beneficiaries of the Trust. The obligations, if any, of the Trust to payholders of Asbestos Personal Injury Claims and Demands shall be determined pursuant to the

Plan and the Plan Documents. None of (I) the Bankruptcy Court’s or District Court’s approval

of the Plan or the Plan Documents, (II) the Confirmation Order or any findings and conclusionsentered with respect to Confirmation, nor (III) any estimation or valuation of Asbestos Personal

Injury Claims, either individually or in the aggregate (including, without limitation, any

agreement as to the valuation of Asbestos Personal Injury Claims) in the Reorganization Cases

shall, with respect to any Asbestos Insurance Company, constitute a trial or hearing on the meritsor an adjudication or judgment; or accelerate the obligations, if any, of any Asbestos Insurance

Company under its Asbestos Insurance Policies; or be used as evidence in any forum to prove:

(i) that any of the Debtors, the Trust, or any Asbestos InsuranceCompany is liable for, or otherwise obligated to pay with respect to, any individualAsbestos Personal Injury Claim or Demand;

(ii) that the procedures established by the Plan, including the Asbestos

Personal Injury Trust Distribution Procedures, for evaluating and paying Asbestos

Personal Injury Claims and Demands are reasonable;

(iii) that the procedures established by the Plan, including the AsbestosPersonal Injury Trust Distribution Procedures, for evaluating and paying Asbestos

Personal Injury Claims and Demands are consistent with any procedures that were used

to evaluate or settle Asbestos Personal Injury Claims against the Debtors before thePetition Date;

(iv) that the settlement of, or the value assigned to, any individualAsbestos Personal Injury Claim pursuant to the Asbestos Personal Injury Trust

Distribution Procedures was reasonable and/or otherwise appropriate;

(v) that any of the Asbestos Insurance Companies participated in

and/or consented to the negotiation of the Plan or any of the Plan Documents;



151

(vi) that any of the Debtors or the Trust has suffered an insured losswith respect to any Asbestos Personal Injury Claim or Demand; or

(vii) as to (A) the liability of the Debtors or the Trust for Asbestos

Personal Injury Claims or Demands, whether such Claims or Demands are considered

individually or on an aggregate basis; or (B) the value of such Asbestos Personal InjuryClaims or Demands, individually or in the aggregate.

10.4.1.3. Nothing in the Plan or the Plan Documents shall affect orlimit, or be construed as affecting or limiting, the protection afforded to any Settling Asbestos

Insurance Company by the Supplemental Injunction, the Third Party Injunction, and/or the

Asbestos Insurance Entity Injunction.

10.4.1.4. Nothing in this Section 10.4 is intended or shall be

construed to preclude otherwise applicable principles of res judicata or collateral estoppel frombeing applied against any Asbestos Insurance Company with respect to any issue that is actually

litigated by such Asbestos Insurance Company as part of its objections, if any, to Confirmation

of the Plan or as part of any contested matter or adversary proceeding filed by such AsbestosInsurance Company in conjunction with or related to Confirmation of the Plan. Plan objections

that are withdrawn prior to the conclusion of the Confirmation Hearing shall be deemed not to

have been actually litigated.

10.4.1.5. Nothing in the Plan, the Plan Documents, the Confirmation

Order, or any finding of fact and/or conclusion of law with respect to the Confirmation orconsummation of the Plan shall limit the right, if any, of (i) any Asbestos Insurance Company, in

any Asbestos Insurance Action, to assert any Asbestos Insurer Coverage Defense, including by

presenting evidence and/or argument with respect to any of the matters specified in clauses (i)through (vii) of Section 10.4.1.2 of the Plan or (ii) any other party in any such Asbestos

Insurance Action to assert any appropriate position. Except as provided in Section 10.4.1.4above, none of the matters specified in clauses (i) through (vii) of Section 10.4.1.2 of the Planshall have any res judicata or collateral estoppel effect against any Asbestos Insurance Company.

10.4.2. Insurance Neutrality Provisions Applicable Solely to London

Market Insurers. This Section 10.4.2 shall apply solely with respect to London Market Insurers

and any Asbestos Insurance Policies subscribed by London Market Insurers (or AsbestosInsurance Settlement Agreements relating to such Asbestos Insurance Policies).

10.4.2.1. Notwithstanding anything to the contrary in the

Confirmation Order, the Plan or any of the Plan Documents, nothing in the Confirmation Order,

the Plan or any of the Plan Documents (including any other provision that purports to bepreemptory or supervening), shall in any way operate to, or have the effect of, impairing London

Market Insurers’ legal, equitable or contractual rights, if any, in any respect. The rights of

London Market Insurers shall be determined under the Asbestos Insurance Policies or Asbestos

Insurance Settlement Agreements.

10.4.2.2. Except as provided in Section 10.4.2.3 below, nothing inthe Plan or the Plan Documents shall affect or limit, or be construed as affecting or limiting, the



- 2 -

Exhibit B



Case 03-35592-JKF Doc 613 Filed 02/18/04 Entered 02/19/04 09:32:30 Desc MainDocument Page 1 of 4



- 3 -

Exhibit C




EASTERN DISTRICT OF LOUISIANA

In re: NUMBER

00-10992THE BABCOCK & WILCOX COMPANY, SECTION “B”

DEBTOR(S) CHAPTER 11REORGANIZATION

Jointly Administered with

DIAMOND POWER INTERNATIONAL, INC. 00-10993

BABCOCK & WILCOX CONSTRUCTION CO., INC. 00-10994AMERICON, INC. 00-10995

SCHEDULING ORDER REGARDING HEARING ON CONFIRMATION OF THE

THIRD AMENDED JOINT PLAN OF REORGANIZATION

The pre-trial schedule with respect to the Third Amended Joint Plan of Reorganization

(the “Plan”) submitted by the Debtors, together with the Asbestos Claimants’ Committee, the

Future Claimants’ Representative, and McDermott Incorporated (collectively with the Debtors,

the “Plan Proponents”), pursuant to this Court’s Pretrial Notice (Rev’d. Dec. 2000), shall be as

follows:

1. This Scheduling Order shall govern the procedures relating to all issues relating to

Plan confirmation and shall bind all parties who intend to participate in the hearing on

confirmation.

2. The hearing on confirmation in this matter will be treated as a contested matter

and is set for the period commencing September 22, 2003, before the Honorable Jerry A.

Case 00-10992 Doc 4431 Filed 07/25/03 Entered 07/25/03 11:18:34 Main DocumentPage 1 of 5



Brown, United States Bankruptcy Judge, at the United States Bankruptcy Court, 501 Magazine

Street, New Orleans, LA 70130, Courtroom 705, New Orleans, Louisiana.

3. Counsel shall meet to confer on the preparation of a Joint Pretrial Order, exchange

copies of all exhibits, and attempt to reach agreement as to the authenticity of exhibits. Counsel

shall compile a joint bench book in accordance with the Pretrial Notice. The original and one

copy of a Joint Pretrial Order will be filed on or before seven (7) days before trial and shall

conform to this Court’s Pretrial Notice. Written objections to any exhibits that are not admitted

to be authentic shall be submitted on or before three (3) days before trial. All objections other

than authenticity are reserved until trial.

4. The following timetable shall govern the pretrial procedure in this cause. The

parties will attempt to reach mutual agreement with respect to any modification of the following

timetable, pursuant to the Local Rules including, without limitation, 7026-1(A), and adopted

code of conduct. If the parties are unable to reach such agreement, then the parties shall submit

any proposed modification of the following timetable to the Court for its approval.

5. Except with respect to insurance coverage issues relating to Apollo/Parks

Township Insurance Policies, on or before July 29, 2003, all parties shall furnish opposing

counsel with a written list containing the names and addresses of all persons they intend to call

as witnesses and which briefly describes the subject matter of the testimony for each such

witness. With respect to insurance coverage issues relating to Apollo/Parks Township Insurance

Policies, on or before August 5, 2003, all parties shall furnish opposing counsel with a written

list containing the names and addresses of all persons they intend to call as witnesses and which




briefly describes the subject matter of the testimony for each such witness. These deadlines shall

not apply to rebuttal or impeachment witnesses whose use cannot reasonably be anticipated in

advance or to witnesses called to lay foundation for admissibility of exhibits, or for good cause

shown.

The parties shall supplement their lists within a reasonable amount of time, but in

any event by September 2, 2003 (except where necessary for rebuttal or impeachment witnesses

or to lay foundation for admissibility of exhibits, or for good cause shown). Opposing counsel

shall be afforded the opportunity to take discovery concerning the new information.

On or before September 8, 2003, the parties shall furnish opposing counsel with

a written list containing the names and addresses of all persons they intend to call as rebuttal and

impeachment witnesses and which briefly describes the subject matter of the testimony for each

such witness. Opposing counsel shall be afforded the opportunity to take discovery concerning

these witnesses.

Only those witnesses listed in the Joint Pretrial Order shall be permitted to testify

at the confirmation hearing (except for those witnesses called to lay foundation for admissibility

of exhibits, or for good cause shown).

6. Subject to Rule 9006, responses to all written discovery requests shall be served

within 20 days after service of such discovery requests, except for responses to written

discovery served prior to entry of this Scheduling Order. The parties shall work together to

expeditiously complete the production of documents and things.





Township Insurance Policies, on or before July 31, 2003, the parties shall furnish opposing

counsel with a list of experts, pursuant to Rule 7026(a)(2)(A). On or before August 15, 2003,

the parties shall furnish opposing counsel with Disclosure of Expert Testimony pursuant to Rule

7026(a)(2)(B). With respect to insurance coverage issues relating to Apollo/Parks Township

Insurance Policies, on or before August 15, 2003, the parties shall furnish opposing counsel with

a list of experts, pursuant to Rule 7026(a)(2)(A), and, on or before August 22, 2003, the parties

shall furnish opposing counsel with Disclosure of Expert Testimony pursuant to Rule

7026(a)(2)(B). Within thirty days following this disclosure (but prior to the close of discovery),

the Parties shall make their experts available for deposition. The experts’ depositions may be

conducted without further order from the Court.


Township Insurance Policies, on or before August 29, 2003, the parties shall furnish opposing

counsel with a Disclosure of Rebuttal Expert Testimony pursuant to Rule 7026(a)(2). With

respect to insurance coverage issues relating to Apollo/Parks Township Insurance Policies, on or

before September 5, 2003, the parties shall furnish opposing counsel with a Disclosure of

Rebuttal Expert Testimony pursuant to Rule 7026(a)(2). Within twenty days following this

disclosure (but prior to the close of discovery), the parties shall make their experts available for

deposition. The experts’ depositions may be conducted without further order from the Court.

9. All discovery shall be completed by September 12, 2003, except for depositions

of rebuttal expert witnesses, which shall be completed by September 18, 2003.




10. Trial briefs shall be filed by September 19, 2003. Trial briefs shall not exceed

25 pages. Trial briefs may be amended or supplemented to address new issues raised in filings

made on or after September 19, 2003, provided they are filed within 10 days after the filings

raising those new issues. Any amending or supplemental briefs shall be limited to 15 pages.

11. The hearing on confirmation shall commence on September 22, 2003.

12. The Debtors shall serve this Scheduling Order on all parties who have requested

that they be served with all papers filed in these cases pursuant to Bankruptcy Rule 2002.

ORDERED this 25th

day of July, 2003 in New Orleans, Louisiana.

Jerry A. Brown

United States Bankruptcy Judge






In re: :

:

TH AGRICULTURE & NUTRITION, L.L.C. , ::

Debtors. :

:

---------------------------------------------------------------x

Chapter 11

Case No. 08-14692 (REG)

DECLARATION OF DONNA J. VOBORNIK IN SUPPORT OF

EX PARTE APPLICATION OF CERTAIN INSURERS FOR ENTRY

OF AN ORDER SCHEDULING AN EXPEDITED HEARING TO CONSIDER


DONNA J. VOBORNIK, under penalty of perjury, hereby declares:

1. I am an attorney with the law firm of Sonnenschein Nath & Rosenthal LLP, 7800

Sears Tower, Chicago, Illinois, 60606, counsel for The Travelers Indemnity Company, The

Travelers Indemnity Company of Connecticut (f/k/a The Travelers Indemnity Company of

Rhode Island), Travelers Property Casualty Company of America (f/k/a The Travelers Indemnity

Company of Illinois) and Travelers Casualty and Surety Company (f/k/a The Aetna Casualty and

Surety Company) (collectively “Travelers”) in the above-captioned case.

2. I submit this Declaration pursuant to 28 U.S.C. § 1746 and Local Bankruptcy

Rule 9077-1 in support of the Ex Parte Application of Certain Insurers For Entry Of An Order

Scheduling An Expedited Hearing To Consider Motion To Modify The Court’s First Day

Scheduling Order (the “Application”). This Declaration is based upon my personal knowledge.

3. Through the Application, the Insurers are requesting an Order shortening the

period for notice and a hearing - and believe there is cause for such a reduction - so that the relief

requested in the Motion To Modify The Court’s First Day Scheduling Order (the “Motion to



- 2 -

Modify”) may be considered and, if deemed appropriate by the Court, granted in advance of the

deadlines set by the First Day Scheduling Order.1

4. Given the accelerated schedule set by the First Day Scheduling Order, time is of

the essence.

5. Simultaneously with the filing of its voluntary Chapter 11 petition on November

24, 2008, T.H Agriculture & Nutrition, L.L.C. (“THAN” or “Debtor”) filed the Prepackaged

Plan of Reorganization of T H Agriculture & Nutrition, L.L.C. under Chapter 11 of the

Bankruptcy Code [Docket No. 20] (the “Prepackaged Plan”), the related disclosure statement

[Docket No. 21] (the “Disclosure Statement”) and a motion to schedule, among other things, a

combined hearing to consider approval of the Disclosure Statement, THAN’s prepetition

solicitation procedures and confirmation of the Prepackaged Plan (the “Scheduling Motion”).2

6. On November 25, 2008, the Court entered the First Day Scheduling Order

approving the Scheduling Motion. The Insurers did not receive notice of the Scheduling Motion

and, therefore, were not provided an opportunity to be heard prior to its approval.

7. The schedule established by the First Day Scheduling Order does not provide

adequate time for the Insurers to obtain the discovery that they need and to interpose timely

objections to the Plan, if ultimately deemed necessary. It mandates that parties file objections to

the Plan and accompanying Disclosure Statement a mere 42 days after the case was filed, with

1 The First Day Scheduling Order means the Court’s “Order (A) Scheduling a CombinedHearing to Consider Approval of Disclosure Statement and Solicitation Procedures, and

Confirmation of Prepackaged Plan of Reorganization, (B) Establishing Deadlines and Proceduresfor Filing Objections, and (C) Approving Form and Manner of Notice of Combined Hearing.”[Docket No. 56].2 THAN’s Scheduling Motion is entitled “Debtor’s Motion for (I) An Order (A) Scheduling ACombined Hearing To Consider Approval of Disclosure Statement and Solicitation Procedures,and Confirmation of Prepackaged Plan of Reorganization, (B) Establishing Deadlines andProcedures for Filing Objections, and (C) Approving Form and Manner of Notice of CombinedHearing; and (II) An Order Approving Disclosure Statement and Solicitation Procedures”(hereinafter, the “Scheduling Motion”) [Docket No. 3].



- 3 -

the confirmation hearing just 10 days thereafter, on January 15, 2009. The Insurers did not

participate in the Plan negotiations, and they had not seen drafts of the Plan Documents or any of

the numerous motions that THAN filed on the first day of the case. Given the complexity of the

voluminous Plan Documents, the First Day Scheduling Order is manifestly unfair and prejudicial

to the Insurers.



language set forth in Section 10.4 of the Plan; (b) The impact of the $900 million in Asbestos PI




of their respective policies and/or settlement agreements with THAN and/or PENAC.

9. On December 10, 2008, I telephoned THAN’s counsel, Kenneth Frenchman, Esq.

of Dickstein Shapiro, to request a sixty-day extension of certain of the dates delineated in the

First Day Scheduling Order.

10. I advised Mr. Frenchman that Travelers and certain other insurers needed to

conduct discovery concerning various aspects of the proposed Plan, which will enable the

insurers to consider and develop any objections to that Plan.

11. In response to the requested adjournment, Mr. Frenchman advised me that he

needed to check with THAN’s bankruptcy counsel and THAN itself as to whether consent to an

extension could be given, but that he did not anticipate THAN consenting to such an

arrangement.

12. I advised Mr. Frenchman that if his client would not consent to such an

adjournment, Travelers and the other insurers would be filing a Motion to Modify the First Day



- 4 -

Scheduling Order, and that expedited consideration of such Motion would be sought. I further

advised Mr. Frenchman that Travelers and the other insurers would be requesting a schedule

whereby objections, if any, to the Motion to Modify would be due on December 15, 2008 at

12:00 p.m. (Eastern Standard Time) a hearing thereon to be conducted on December 16, 2008.

Mr. Frenchman disagreed with such an expedited hearing schedule.

13. Mr. Frenchman subsequently advised me that THAN will not consent to a sixty-

day extension.

14. No prior request for the relief sought in the Application has been made to this or

any other Court.

I declare under penalty of perjury hat the foregoing is true and correct.

Dated: Chicago, IllinoisDecember 11, 2008

/s/ Donna J. Vobornik

Donna J. Vobornik



PHLDMS1 4942379v.1

WHITE AND WILLIAMS LLP

Karel S. KarpeOne Penn Plaza/250 W. 34th St.

Suite 4110 New York, NY 10119

andChristian J. Singewald (DE 3542)

Marc S. Casarino (DE 3613)824 N. Market Street, Suite 902

Wilmington, DE 19801 Attorneys for Volkswagon Group of America, Inc.


SOUTHERN DISTRICT OF NEW YORK

---------------------------------------------------------------x

:

In re: : Chapter 11

:

TH AGRICULTURE & NUTRITION, L.L.C., : Case No. 08-14692 (REG):

Debtors. :

:

---------------------------------------------------------------x

AMENDED STATEMENT OF VOLKSWAGEN GROUP OF AMERICA, INC. IN

SUPPORT OF MOTION TO MODIFY SCHEDULING ORDER ENTERED

NOVEMBER 25, 2008

Volkswagen Group of America, Inc. (“VWGoA”), a party in interest in this case,

submits this Amended Statement in support of the Motion of Certain Insurers to modify the

Scheduling Order entered November 25, 2008. In support of this Statement and the grant of the

requested relief, VWGoA respectfully states

JURISDICTION, VENUE AND PROCEDURES

1. This case was commenced by the filing of a voluntary petition under Chapter 11

of the Bankruptcy Code on November 23, 2008.



PHLDMS1 4942379v.1

2. Jurisdiction over this proceeding exists under 28 U.S.C. § 1334(b).

3. Venue of this proceeding is set in this Court pursuant to 28 U.S.C. §1409(a).

4. This is a case proceeding pursuant to 28 U.S.C. § 157(b)(2)(A).

5. The legal predicate for the relief herein requested is Federal Rule of Bankruptcy

Procedure 9006(b)(1) authorizing the Court to enlarge the period for the performance of an act.

VWGoA STANDING

6. VWGoA is a co-defendant with the Debtor in certain lawsuits pending in Federal

and State courts involving asbestos personal injury tort claims and/or wrongful death actions

within the scope of 28 U.S.C. §157(b)(5). VWGoA knows that such cases exist, but at present

does not have a complete list of all such cases.

THE REQUESTED RELIEF

7. VWGoA states that the provisions of the “Prepackaged” Plan and Trust

Distribution Procedures to be adopted if the Plan is confirmed could materially and adversely

affect substantive and procedural rights accorded VWGoA under applicable State law.

Additional time is required to permit VWGoA and similarly situated co-defendants to review the

relevant documents to ascertain their effect on such co-defendants’ rights.

8. The need for additional time to interpret the Plan involves such issues as the role

of the Future Claims Representative. Is he only the representative of individual victims of

asbestos-related diseases, or does he have a larger constituency? The precise role of the

appointed Future Claims Representative needs to be identified and disclosed with certainty. See

generally Plevin, Epley & Elgarten, Conflicts of Interests, Strange Alliances, and Unfamiliar

Duties for Burdened Bankruptcy Courts, 62 NYU Annual Survey of American Law 271 (2006).

9. In general, the Plan injunction and its TDPs deprive current corporate cross-claim

claimants of their existing state law rights by explicitly eliminating state law trial rights against



PHLDMS1 4942379v.1

THAN (and other non-bankrupt entities), and relegating some or all current contribution claim

holders to pursuing administrative claims under rules not yet promulgated.

10. The Plan appears to impair the right of co-defendants in asbestos litigation to have

fault and damages apportioned among them. In Illinois, for example, a November 25, 2008

Illinois Supreme Court opinion holds that at least for some tort claims, comparative fault cannot

be apportioned against an entity that is not a defendant at trial. Since the Plan injunction and

TDPs block THAN or the Trust from being a defendant in a tort trial in Illinois, the remaining

co-defendants are prejudiced by losing their state law right to allocate fault to THAN. See Ready

v. United/Goedecke Services, Inc., 2008 WL 5046833 (Ill. 2008). The proposed Plan may also

impair a co-defendant’s right under other applicable state laws, e.g., Ohio, barring joint and

several liability in certain situations.

11. The Plan, the Trust and the TDP procedures may prejudice co-defendants by

denying them access to information regarding the allowance of claims. See, e.g., Shelley et al.,

The Need For Transparency Between the Tort System and Section 524(g) Asbestos Trusts, 17

Norton J. Bankr. Law & Practice 257-95.

12. The preceding examples are not exhaustive, and instead are intended only to give

the Court some insights into why there must be time for cross-claim creditors to understand the

TDP and Plan terms, to take discovery if needed, and to then present confirmation hearing

evidence to show the Court the variety of state law rights that would or may be taken away due

to the impact of the proposed Plan injunction, the TDPs, and the terms of the Trust.

CONCLUSION

For the foregoing reasons, the Court is urged to manage current and future proceedings

with the knowledge that the Plan proponents chose not to provide due process notice to current

holders of cross-claims in underlying cases. In other asbestos Chapter 11 cases, courts have



PHLDMS1 4942379v.1

refused to issue injunctions and other expedited relief when, as here, the parties seeking them

have themselves created their own problems through their own actions. See In re Federal-Mogul

Global, Inc., No. 01-10578, slip op. at 129-136 (D.N.J. 1/20/06) (Hon. Raymond T. Lyons)

(copy attached as Exhibit 1). Accordingly, this Court can and should extend existing deadlines

to allow all creditors a reasonable opportunity to analyze the complex Plan and its numerous

ramifications. The time for conducting discovery should be extended for at least 60 days.

Dated: New York, New York

December 24, 2008 Respectfully submitted,

WHITE AND WILLIAMS LLP

__/s/Karel S. Karpe ____________________

Karel S. KarpeOne Penn Plaza/250 W. 34th St.

Suite 4110 New York, NY 10119

Telephone: 212-244-9500Email: [email protected]

and

Christian J. Singewald (DE 3542)

Marc S. Casarino (DE 3613)White and Williams LLP

824 N. Market Street, Suite 902Wilmington, DE 19801

Telephone: 302-467-4510Email: [email protected]

Attorneys for Volkswagon Group of

America, Inc.



1 UNITED STATES BANKRUPTCY COURT

DISTRICT OF NEW JERSEY

2

- - - - - - - - - - - - - - x

3 IN THE MATTER OF: :

: CASE NO: 01-10578(RTL)

4 FEDERAL MOGUL GLOBAL, INC., :

T&N LIMITED, ET AL : January 20, 2006

5 Debtor :

:

6 - - - - - - - - - - - - - - x

7 TRANSCRIPT OF MOTIONS

BEFORE THE HONORABLE RAYMOND T. LYONS

8 UNITED STATES BANKRUPTCY JUDGE

9 A P P E A R A N C E S:

10

For the Debtor: PACHULSKI STANG ZIEHL YOUNG

11 JONES & WEINTRAUB

BY: JAMES E. O'NEILL, ESQ.

12 919 N. Market Street

Wilmington, DE 19801

13

For the Debtor: SIDLEY AUSTIN BROWN & WOOD

14 BY: KEVIN LANTRY, ESQ.,

JEFFREY BJORK,ESQ.

15 Bank One Plaza

10 South Dearborn Street

16 Chicago, ILL 60603

17 Counsel for Official SONNENSCHEIN NATH & ROSENTHAL

Committee for Unsecured BY: TOM LABUDA, ESQ.

18 Creditors: 8000 Sears Tower

Chicago, Ill 60606

19

United States Trustee: RICHARD SCHEPACARTER, ESQ.

20 844 King Street


21

22

23 Operator: Betty Akin------------------------------------------------------

24 TERRY GRIBBEN'S TRANSCRIPTION SERVICE

27 BEACH ROAD, UNIT 4

25 MONMOUTH BEACH, NEW JERSEY 07750

(732) 263-0044 FAX (263) 263-0075



1 ADDITIONAL APPEARANCES:

2

Claimant ROBERT CLEMENTS (Telephonically)

3

For Asbestos Creditors: CAPLIN & DRYSDALE

4 BY: PETER LOCKWOOD, ESQ.

399 Park Avenue

5 New York, NY 10022

6 Counsel for Futures YOUNG CONAWAY STARGATE & TAYLOR

Representatives: BY: JAMES PATTON, JR., ESQ.

7 1000 West Street 17th Floor

Brandywine Building

8 Wilmington, DE 19801

9 Counsel for asbestos SEITZ VAN OGTROP & GREEN

plaintiffs law firms: BY: ROBERT KARL HILL, ESQ.10 222 Deleware Avenue


11

For cancer claimants: SIMMONS COOPER, LLC

12 BY: ROBERT W. PHILLIPS, ESQ.

707 Berkshire Boulevard

13 East Alton, IL 62024

14 For cancer claimants: GEBHARDT & SMITH, LLP

BY: LOUIS EBERT, ESQ.

15 9 World Trade Center

New York, NY

16

For claimants: DAVID M. LIPMAN, P.A.

17 BY: JONATHAN RUCKDESCHOL, ESQ.

5901 S.W. 74th Street

18 Miami, FL 33131

19 For claimants: STANLEY LEVEY, ESQ.

20 For CNA Insurance: McDERMOTT WILL & EMERY

BY: DAVID CHRISTIAN, ESQ.

21 227 West Monroe

Chicago, IL 60606

22

23

24

25



1 ADDITIONAL APPEARANCES:

2

For Pepsi Americas: MORGAN LEWIS & BOCKIUS

3 BY: HARVEY BARTLE, ESQ.

1111 Pennsylvania Avenue

4 Washington, DC 20004

5 For Grover Alexander: TIMOTHY HOGAN, ESQ.

6 For Cooper Industries: SWIDLER BERLIN

BY: ROGER FRANKEL, ESQ.

7 3000 K Street NW

Washington, DC 20007

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25



Lantry/Motion 56

1 from the commencement of the case. What a debtor in

2 possession, or what a debtor contemplating Chapter 11 filing

3 of asbestos liability considers, among other things, is two

4 potential assets. One of them are the contributions that a

5 parent or former parent that won't be going into Chapter 11

6 might be willing to contribute that would be fair and

7 equitable and get 524(g) protection.

8 So you look at the prospective parent or former

9 parent companies, talk to them to see if they have a

10 willingness to make such a contribution. If they do, it's

11 typical in probably more than 50 percent of the Chapter 11

12 asbestos cases that are pending to seek an injunction on the

13 very first day because that parent or former parent that's

14 not filing is willing to deal. And you get the injunction

15 so that they can be motivated to work with asbestos and

16 futures rep to determine the amount of the fair and

17 equitable contribution.

18 Secondly, you look at the potential shared

19 insurance that might exist with that former or existing

20 parent company that's not going in, to see if the debtor's

21 rights to that shared insurance is going to be impacted by

22 the injunction or lack of injunction, vis-a-vis the parent

23 company. And obviously, if the parent or former parent

24 that's not going in is solvent, and there's a huge plethora

25 of insurance that's available, you may end up saying let's



Lantry/Motion 57

1 just let it be, because it will take care of the asbestos

2 liability on its own in the tort system. But if the parent

3 isn't that solvent, the ex-parent perhaps isn't that

4 solvent, or if there are problems in the insurance, you may

5 want to stay it so that the limited asset of the insurance,

6 the shared insurance isn't dissipated.

7 With those things in mind, Your Honor, we turn to

8 thinking about Pneumo and Cooper before the filing. And we

9 recognize that both of them were former parents that might

10 be interested in making a contribution. And we also

11 recognize that there was some shared insurance. What we

12 knew from our experience in the tort system defending

13 Pneumo's asbestos liability which Federal Mogul had

14 undertaken in 1998, was that there were gaps in the

15 insurance. And that in fact over those three years we spent

16 about 55 million out of insurance in defending the Federal

17 Mogul Products lines of asbestos liability, the two lines

18 that we described in our pleadings; the Pneumo line and the

19 Wagner line.

20 So we knew that it would cost Cooper, who had to

21 step into our shoes, some money in the tort system to have

22 to defend Pneumo Abex. We also knew that there was this

23 shared insurance that we might want to tap into. When we

24 acquired, when Federal Mogul acquired Wagner in '98 there

25 was about 1.2 billion in insurance available. We also knew



Lantry/Motion 58

1 something else, Your Honor. Cooper had been a rival in the

2 friction business with Federal Mogul before we acquired

3 Wagner. And we knew that that rivalry was significant. We

4 also knew that --

5 THE COURT: Can I just interrupt you?

6 MR. LANTRY: Certainly.

7 THE COURT: Can you point me to the pleading that

8 sets forth these facts you're talking about with regard to

9 insurance and the experience of Federal Mogul.

10 MR. LANTRY: Your Honor, the pleading that

11 describes it is probably best the memorandum of points and

12 authorities in support of the preliminary injunction. And

13 it describes the various history of the purchase agreement.

14 The actual recitation of the 55 million that we expended

15 comes from the SEC filings, and we did not put that fact in

16 those papers.

17 THE COURT: And the insurance coverage? The 1.2

18 billion and so forth, where is that?

19 MR. LANTRY: That's in our disclosure statement,

20 Your Honor. Let me just back up for a minute and describe a

21 little bit more of the facts. What occurred in terms of the

22 primary history of Federal Mogul Products, is it came from

23 the origins of Wagner brake business which was created in

24 the 1920s and put asbestos in brake linings. Wagner was

25 ultimately acquired by Federal Mogul Products in a stock



Lantry/Motion 59

1 acquisition in '98 from Cooper. And so, Federal Mogul

2 Products changed the name from Wagner to Federal Mogul

3 Products and stepped directly into that liability.

4 Before the acquisition by Federal Mogul Products

5 in 1994 Wagner, which was at the time owned by Cooper,

6 acquired a separate line of friction business which was

7 Pneumo Abex, which had also been putting, for many years,

8 asbestos in the brake linings. And so there are two streams

9 of asbestos liability, two streams of business operations

10 that come into Federal Mogul Products that for many years

11 put asbestos in the brake linings. So you have the friction

12 division of Pneumo Abex. At one point Pneumo Abex thus was

13 a predecessor in interest to what is now Federal Mogul

14 Products. You also have Wagner, which at one point was a

15 predecessor of the actual debtor, who was also doing that.

16 What occurred in '94 was that Wagner entered into

17 a deal with Pneumo Abex that says we will indemnify you for

18 your asbestos liability in exchange for you giving us rights

19 to your insurance to pay for that. In addition, Wagner said

20 I will assume, in the contract, we will assume your

21 liability. This was an asset purchase agreement which had

22 all the trappings, it was lock, stock and barrel, all the

23 trappings of successor liability.

24 What then happened in '98 when Federal Mogul

25 purchased Wagner, is that again there was, this was a stock



Lantry/Motion 60

1 purchase agreement. Federal Mogul Corporation guaranteed

2 Cooper's, rather indemnified Cooper for its asbestos

3 liability from the brake business while it owned Wagner, and

4 then stepped directly into the shoes of Cooper's

5 indemnification of Pneumo Abex for that liability, but also

6 stepped into the benefit of the shared insurance. So when

7 Federal Mogul stepped in in '98 to defend Pneumo Abex and to

8 defend Cooper for these two separate lines of asbestos

9 liability, it had rights to about 1.2 million, as we set

10 forth in our disclosure statement, to the shared insurance.

11 To date, at the present time rolling forward,

12 there's about 800 million left of that shared insurance. At

13 any rate, going back in time now to the petition date, as we

14 were looking at these facts we knew that we had been in

15 quite a few disputes with Cooper over the --

16 THE COURT: Let me interrupt you.

17 MR. LANTRY: Certainly.

18 THE COURT: Why don't you tell me something more

19 about this shared insurance. How did that work? You said

20 that when Wagner acquired the friction products division of

21 Pneumo Abex it also acquired rights and its insurance. How

22 did that work?

23 MR. LANTRY: There's a separate insurance

24 contract, and we can give it to you, it's part of the proof

25 of claim that Cooper filed. And we have here, if you'd like



Lantry/Motion 61

1 a copy. But there's a separate insurance agreement in the

2 '94 asset purchase agreement that basically assigns the

3 rights to, whenever there is this indemnification by Wagner

4 of Pneumo Abex, it can draw on and be reimbursed from the

5 insurers for that claim. And obviously Pneumo's --

6 THE COURT: Are the insurance companies part of

7 that?

8 MR. LANTRY: I don't know that they were, but I

9 believe that they have not objected to it. All I can say is

10 I know during the period of Federal Mogul indemnifying

11 Pneumo Abex and Cooper we readily drew on and worked with

12 the insurers and didn't find them objecting aside from, you

13 know, the usual objections you run into on insurers paying

14 on any asbestos claim. They were not resisting, this is not

15 a fair arrangement. So when we filed the petition, based on

16 our experience with Cooper in terms of any number of fights

17 over the 1998 stock purchase agreement, we knew a couple of

18 things.

19 We knew that a deal with Cooper wasn't going to be

20 easy to get. We also knew that Cooper was a very solvent

21 company. And we also knew that they were sitting out there

22 in the tort system with their contractual indemnity that

23 they now had to perform, because we were stopping to perform

24 on behalf of Pneumo Abex. So we knew that they were going

25 to be motivated to come back and talk to us, if they didn't



Lantry/Motion 62

1 talk to us at the beginning, about a fair and equitable

2 contribution so that they could step into the protections of

3 524(g) as a former parent with liability for what is the

4 Federal Mogul Products asbestos liability. At the very

5 commencement of the case --

6 THE COURT: Has anybody sued Cooper?

7 MR. LANTRY: Your Honor, we have two witnesses

8 here today; Diane Schumacher, general counsel, who can

9 undoubtedly testify. But in our discussions, they have said

10 that they have been sued in the tort system directly on

11 behalf of Pneumo Abex. But we can, we'll proffer the

12 witnesses later on if you'd like, or any confirmation at

13 this point.

14 THE COURT: Ms. Schumacher.

15 MS. SCHUMACHER: Yes.

16 THE COURT: You are the general counsel for --

17 MS. SCHUMACHER: General counsel of Cooper

18 Industries.

19 THE COURT: -- for Cooper. Has your employer been

20 sued by any injured parties claiming that Cooper had some

21 derivative liability for the asbestos products of Pneumo

22 Abex?

23 MS. SCHUMACHER: We have been sued under an

24 allegation of a successor to Pneumo Abex. Yes.

25 THE COURT: And do you know how many times or how



Lantry/Motion 63

1 many of these existing claims fall into that category?

2 MS. SCHUMACHER: I don't know how many times. I

3 will tell you there have been many cases where they have

4 named Cooper separately from Pneumo Abex under a theory that

5 we are liable, and also under the theory that we are a

6 guarantor, Cooper's liability as guarantor.

7 THE COURT: As guarantor --

8 MS. SCHUMACHER: To Pneumo Abex.

9 THE COURT: -- to Pneumo Abex.

10 MS. SCHUMACHER: Yes.

11 MR. PHILLIPS: Your Honor, we would ask, if she's

12 going to testify as a witness could we have her sworn?

13 THE COURT: Can I have your appearances?

14 MR. PHILLIPS: Robert Phillips for Simmons Cooper,

15 Your Honor. The cancer claimants. We don't object to

16 counsel's offer of proof and discussion. But if we're going

17 to get into actual testimony of what's been happening and

18 what the facts are we would ask -- She has been proffered as

19 a witness. We ask she actually be sworn.

20 THE COURT: Okay. Well, I'm just taking a

21 representation at this point. I don't know if we're going

22 to get into testimony today. Thank you very much.

23 MR. LANTRY: At any rate, Your Honor, the point of

24 the matter in terms of background information is that we

25 immediately, upon filing the case, knowing that Cooper and



Lantry/Motion 64

1 Pneumo Abex were potential sources of assets to contribute

2 to the trust, and knowing that they could be dissipating our

3 shared insurance, and that their claim would be exceeding

4 given the gaps of the insurance, their claim would be

5 growing every single day in the tort system because they

6 were defending Pneumo Abex and Federal Mogul had directly

7 indemnified them, we contacted them. And we contacted them

8 regularly, methodically, probably on a monthly basis, Cooper

9 and their counsel. Do you want to make a deal, can we talk,

10 what can we do on this? And that happened for pretty much

11 the first two years of the case. Little talks, but not too

12 much development.

13 When we struck our main deal, as you're aware in,

14 you know, 2000, late 2000, early 2004 and started filing a

15 plan, things became very active. The asbestos committee and

16 futures rep began to negotiate directly with Cooper.

17 Debtors were also involved. But what was going on is what

18 we suspected from the very beginning, knowing our

19 relationship with Cooper. We needed a deal with Cooper, but

20 we also were very likely to be litigating with Cooper. It

21 was going to be one or the other. And they progressed on

22 two tracks.

23 As we got close to the disclosure statement,

24 Cooper filed a very vigorous objection to the disclosure

25 statement, raising a number of confirmation objections. Of



Lantry/Motion 65

1 the 25 or so objections you may recall, Your Honor, we gave

2 Cooper the best objection award. It also filed objections

3 to the voting procedures.

4 On the courthouse steps a deal was struck, as you

5 may recall, where the skeleton, the template of the deal

6 we're here telling you about today was agreed to. And so

7 we, after the Court approved the disclosure statement on the

8 hearing on May 13th, it took us about three weeks to

9 incorporate that. We basically took the skeleton of this

10 deal, put it into our plan and disclosure statement. And

11 the missing piece was the amount of the fair and equitable

12 contribution.

13 In exchange for that, Cooper basically withdrew

14 its objection to the disclosure statement, said it would not

15 object to confirmation of that plan, and we negotiated. The

16 bad news is that the negotiations with the futures rep and

17 the asbestos committee and Cooper fell apart, and the amount

18 of that fair and equitable consideration for 524(g)

19 protection did not get achieved. And we went back into

20 litigation mode and Cooper proceeded to file objections, or

21 sorry, file additional proofs of claim.

22 It originally filed a 17 million proof of claim

23 for its indemnification obligation. That went up to 102 and

24 then 132 by the time we got to the voting deadline. You

25 will recall, Your Honor, they objected to the voting and



Lantry/Motion 66

1 asked for special permission to vote 47,000 asbestos claims

2 that they had settled in the tort system so that they could

3 block, essentially, confirmation of the Federal Mogul

4 Products plan. And Your Honor ruled that they could only

5 have one vote rather than 47,000.

6 They proceeded in the litigation mode, appealing

7 that to Judge Rodriguez and then to the Third Circuit during

8 most of 2005. And we continued to negotiate off and on

9 through the Asbestos Committee, futures rep and some on our

10 own with Cooper. What finally happened once again, as we

11 neared the sign of a plan and they continued to take some

12 pain in the tort system, and in the fall of 2005 the FAIR

13 Act was fading once again, negotiations really heated up.

14 And ultimately we achieved the deal that we have today in

15 light of the fact that there was a deal when the

16 administrators and Cooper realized that we were getting once

17 again close to the finish line.

18 As we were struggling with should we reach this

19 deal, we were all considering, the plan proponents, what it

20 would take to get to confirmation in light of Cooper's

21 positions. As you may recall, they had two legal entities

22 where they got the rejecting votes of a class, and so we

23 would have to cram down two debtors. We also heard the

24 Cooper objections to the plan which basically said that

25 although the Cooper claims, which as of today are about 150



Lantry/Motion 67

1 million during those four years, but as you expect the

2 indemnification to continue in the tort system for the next

3 40 years will be multiples of that, their claim, big claim

4 is channeled to the trust like all of their indirect

5 asbestos claims and all of these 524(g) cases.

6 But they observed that the plan doesn't make a

7 provision for that payment. So, they knew and we knew that

8 there was going to need to be some changes in the plan in

9 order to handle their claim, or there was going to be

10 ferocious litigation over the nature of their claim. And we

11 have been, as we've talked about either the deal or the

12 litigation with Cooper, contemplating what it would take to

13 overcome their objections and what nuclear warheads we could

14 shoot their way. And I'm not going to reveal our hands at

15 this point, but we know, the plan proponents know that it

16 would take a lot of work, we could be successful but it

17 would take a lot of work and a lot of expense and a lot of

18 delay given their position with claims against many many

19 debtors for the large amount. In addition --

20 THE COURT: Let me just understand one thing in

21 the history here. At the time of the hearing on the

22 disclosure statement, and the third amended joint plan, the

23 disclosure statement described in the third amended joint

24 claim, if I understood you correctly, you resolved, the

25 debtor resolved the objections by Cooper and revised the



Lantry/Motion 68

1 plan to have a provision where Cooper would be one of the

2 parties protected by the 524(g) injunction.

3 MR. LANTRY: That's correct, Your Honor.

4 THE COURT: But there's no funding for that. But

5 you also said that Cooper's claims would be treated under

6 the plan as well. Does that --

7 MR. LANTRY: Let me divide the two. Cooper,

8 making the fair and equitable contribution addition to the

9 plan that was part of that skeleton at the disclosure

10 statement time, was on the premise that they would make a

11 fair and equitable contribution and essentially reach the

12 settlement that they have today, walking away from their

13 claim, making a fair and equitable contribution and having

14 our shared lines of asbestos liability channeled to the

15 trust. And in light of their fair and equitable

16 contribution they would get the protection. That didn't

17 work.

18 THE COURT: So now they're back to having an

19 indirect claim.

20 MR. LANTRY: Right. And we know that --

21 THE COURT: And how is that indirect treated?

22 MR. LANTRY: -- if that add-on of the Cooper deal

23 that was in the disclosure statement wasn't there and we had

24 to treat their claim, we're going to have to redo the plan

25 to treat that claim, or else we're going to have to disallow



Lantry/Motion 69

1 that claim.

2 THE COURT: Okay. I thought there was --

3 MR. LANTRY: And we're going to have to recut the

4 whole pie amongst the various constituencies. And I can't

5 tell you now which creditors would be hurt, but let's

6 suppose the Cooper claim was multiples of 150 million and it

7 had to be treated, somebody is going to have to lose because

8 there's a finite corpus. The bottom line is the existing

9 creditors of Federal Mogul would be hurt, both by having to

10 treat that claim and by the delay it would take to recut

11 this plan.

12 I think at this point, Your Honor, that's

13 sufficient background in terms of why we're here and why

14 this is a very good thing. And we need to talk about the

15 merits of the motion. I know Your Honor has a habit of

16 reading the pleadings, so I don't want to spend too much

17 time on what undoubtedly you've already read.

18 THE COURT: Well, don't assume. Because I got the

19 binders about 24 hours ago, and I think there are about two

20 and a half binders that deal with this motion. So, I may

21 have missed something in there.

22 MR. LANTRY: Your Honor, I think the beginning

23 premise is a factual one. And that's the claims that are

24 being enjoined are the claims of the debtor. As we talked

25 about the streams of liability, Federal Mogul Products



Lantry/Motion 70

1 either by theories of successor liability or its factual

2 contractual assumption of the liability that is through

3 Wagner's assumption of the Pneumo Abex line, or Wagner being

4 directly as the same legal entity that is now Federal Mogul

5 Products, put asbestos into the stream of commerce. Both of

6 the two streams that we are trying to enjoin are Federal

7 Mogul Products liabilities.

8 We have been sued in the tort system, prepetition,

9 unsuccessor liabilities for the Pneumo stream as well as the

10 Wagner stream. It would be imprudent for Federal Mogul

11 Products to emerge as a reorganized company without having

12 the Pneumo Abex claims channeled to the Trust. I make this

13 point because this is not at all like COMBUSTION ENGINEERING

14 in which Basic and Lummus were basically trying to get their

15 own independent stream of asbestos liability, which was not

16 a liability of the debtor, channeled to the Trust. That's

17 not what we're doing here.

18 I think the second critical point, and this goes

19 to subject matter jurisdiction for Your Honor to enter the

20 injunction, is the fact that the liability of Cooper and

21 Pneumo Abex for the asbestos liability is inextricably tied

22 up with these Chapter 11 proceedings on account of the

23 contractual indemnity that we stepped into, that Federal

24 Mogul Products stepped into when it acquired Wagner, which

25 had in turn indemnified Pneumo Abex. And so each time there



Lantry/Motion 71

1 is a liability that Cooper incurs in indemnifying and

2 protecting Pneumo, they in turn have a claim back against

3 Federal Mogul Products. We've seen this by their proofs of

4 claim filed and by their testimony now that they've incurred

5 150 million during the post petition period.

6 As a result, there is an immediate outcome that is

7 directly impacting on the size of the debtor's liabilities

8 every time a Pneumo Abex claim goes forward. There is also

9 an immediate impact on the shared insurance because Cooper

10 is going to immediately draw on that shared insurance. So

11 it is inextricably tied to these Chapter 11 proceedings for

12 those claims to be going forward. As I say, we would have

13 sought to stay this long ago, Your Honor, save for the

14 tactical card of the fact that we suspected, based on all

15 that I described to you, that Cooper and Pneumo Abex would

16 soon come to the deal that they struck, because they were

17 going to take it in the tort system. And we were ultimately

18 right in terms of the deal that they have offered to put the

19 700 million into a trust to pay Pneumo Abex claims.

20 What we submit, Your Honor, is that that is going

21 to be something that could be beneficial as we have, you

22 know, heard from the Asbestos Committee and futures rep,

23 that could be net net beneficial for the greatest number of

24 the Pneumo asbestos claimants who are being enjoined. We'd

25 like to put it to the vote and let them see. In addition,



Lantry/Motion 72

1 we will get the benefit of the waiver of the Cooper claim.

2 That's a large claim. We would have to recut the plan, as I

3 described, to deal with that.

4 In addition, there is some additional shared

5 insurance that I haven't talked about, that comes from the

6 history of Wagner. Wagner was ultimately owned, before

7 Cooper acquired Wagner it was owned by Studebaker and

8 Worthington, and then McGraw Edison which was acquired by

9 Cooper. And they have their own streams of insurance which

10 we've described again in our disclosure statement, and which

11 is the funding vehicle under our plan in the trust

12 distribution procedures for the Wagner stream of asbestos

13 liability. Under Cooper's rights to that insurance and the

14 deal with Dresser (phonetic) that Your Honor approved back

15 in December of 2004, Cooper and Federal Mogul Products share

16 a split in the balance of that insurance that didn't go to

17 Dresser.

18 But in order to access that and make any

19 commutation deals with insurers we have to have their

20 agreement. Under this deal we've worked that out. And so

21 this is beneficial for the existing Wagner stream of

22 asbestos liability as well in terms of how our plan will

23 work. Again, I'm going to the related to jurisdiction why

24 all of this is tied up and really impacts on the debtor.

25 Your Honor, in almost all of the other Chapter 11



Lantry/Motion 73

1 cases that are currently pending, and it's worth citing them

2 so that you have a sense of the number, this type of relief

3 has been sought and granted. It's in WR GRACE, it's in

4 BABCOCK, it's in GI HOLDINGS, PITTSBURGH CORNING, HARBORSON

5 (phonetic) WALKER, REFRACTORY AMERICAN, sorry, NORTH

6 AMERICAN REFRACTORY COMPANY. It has been a regular process

7 for the Courts to grant an injunction staying claims against

8 a third party when there is contractual shared insurance and

9 when it is the debtor's liability that is also being

10 derivatively sought against these other third parties. This

11 is not unusual relief that we're asking for.

12 What is critical to note however, is that this is

13 unlike some of those scenarios that the Third Circuit in

14 COMBUSTION ENGINEERING or in PACOR says is not appropriate

15 because it is not so inextricably interrelated, such as --

16 And which occurred at the very commencement of these cases

17 when all the OE manufacturers tried to enjoin actions

18 against them on contribution claims that were not

19 contractual. And what the Third Circuit has told us in

20 PACOR and in COMBUSTION ENGINEERING is that it needs to be

21 an express contractual indemnity for which the debtor would

22 be liable. When it's like that there is this jurisdiction

23 that has been rightfully granted by these other courts.

24 So with you having jurisdiction, Your Honor, to

25 issue this injunction, we turn to the usual requirements of



Lantry/Motion 74

1 the injunction. And the first is, are we likely to succeed

2 on the merits? And the Courts looking at this, in terms of

3 the bankruptcy courts issuing preliminary injunctions, will

4 look to are we likely to confirm a plan? So the real

5 question is, does 524(g) permit this type of relief that is

6 the channeling injunction to these former parent companies;

7 Cooper and Pneumo Abex and some of their related parties, in

8 consideration for a fair and equitable contribution.

9 And I think the critical thing is the exact

10 language of 524(g)(4)(A)2 where it says that these

11 obligations need to be alleged to be directly or, the third

12 parties who are being protected, the claims against them

13 need to be alleged to be directly or indirectly liable for

14 the conduct, claims against or demands on the debtor. And

15 once again, Cooper and Pneumo Abex have been alleged to be

16 liable, as we've described, in the tort system for these

17 Pneumo Abex claims that are the claims of the debtor to the

18 extent that that liability arises by reason of those third

19 party's ownership or financial interest in the debtor or

20 predecessor in interest of the debtor.

21 And once again, Pneumo Abex owned the friction

22 products division, Cooper owned Wagner. They have this

23 liability by virtue of their prior ownership of predecessors

24 in interest to the debtor. We think --

25 THE COURT: But that's nowhere in the pleadings



Lantry/Motion 75

1 that you filed, that I read.

2 MR. LANTRY: They're in our reply briefs, Your

3 Honor.

4 THE COURT: No, it's not. You talk about the

5 indemnity obligations of Cooper.

6 MR. LANTRY: The indemnity obligations of Cooper?

7 THE COURT: Indemnity obligation of Cooper, and

8 then the subsequent indemnity obligation of the debtor to

9 Cooper.

10 MR. LANTRY: Your Honor, I can point you to where

11 in the pleadings we put that. Or if it would be easier, we

12 can offer into evidence right now copies of the actual

13 contracts or the excerpts from the contracts that show you

14 that indemnity, that contractual indemnity.

15 THE COURT: But I'm saying, now you're arguing

16 indemnity and that's not what you just said when you're

17 referring to 524(g)(4).

18 MR. LANTRY: Right. What I'm describing in terms

19 of 524(g)(4) --

20 THE COURT: This has to be by the reason of the

21 third party's ownership of the present or past affiliate of

22 the debtor.

23 MR. LANTRY: And your question is where do we have

24 into evidence that these, that Pneumo Abex and Cooper owned

25 these prior divisions?



Lantry/Motion 76

1 THE COURT: No. No, that people are suing them by

2 reason of their ownership of a financial interest in the

3 debtor or a past or present affiliate of the debtor.

4 MR. LANTRY: Your Honor, I can submit to you a

5 number of complaints that were filed both prepetition and

6 post petition.

7 THE COURT: Well, today is the day.

8 MR. LANTRY: We have them here. We have our

9 general counsel who is willing to put them into evidence.

10 They're here right now and we would like to proffer them.

11 Complaints by which Federal Mogul Products has been sued for

12 the obligations of Pneumo Abex for the asbestos history of

13 Pneumo Abex under explicit successor liability theories.

14 THE COURT: That's Federal Mogul Products.

15 MR. LANTRY: That's right, Your Honor.

16 THE COURT: Right. But what about Cooper?

17 MR. LANTRY: Your Honor, I will, you know, leave

18 it to Cooper's counsel to put Diane Schumacher on the stand

19 who will also proffer that evidence. It's in her

20 declaration and I think she's quite willing to testify.

21 That is the --

22 THE COURT: Where is it in her declaration?

23 MR. LANTRY: Your Honor, if it isn't, we have her

24 here and I'd like to defer to her counsel to put her on the

25 stand --



Lantry/Motion 77

1 THE COURT: That's not fair --

2 MR. LANTRY: -- in terms of that liability.

3 THE COURT: Well, that's not fair to the

4 defendants to come up with this evidence now --

5 MR. LANTRY: Again, Your Honor, let me give a

6 context --

7 THE COURT: All right. I'm going to take a break

8 now.

9 MR. LANTRY: The legal --

10 THE COURT: Hold on a second. I want to

11 interrupt now because I've been discourteous to Ms. Akin.

12 Let's take a break and let her have a little time. We'll

13 come back at 12 o'clock. All right?

14 (Court stands in recess)

15 (Court resumes in session)

16 MR. LANTRY: Thank you, Your Honor. I want to go

17 back to where we were when we stopped, and just make sure I

18 clarify what Your Honor was showing a furrowed brow over.

19 Where we were, I think, was the issue of in order to issue

20 an injunction the Court needs to find that we're likely to

21 succeed on the merits of a plan that could channel the

22 liability, the Pneumo asbestos liabilities to the Trust and

23 protect Pneumo Abex and Cooper, these third parties who at

24 one time were owners of the business that ultimately came to

25 be Federal Mogul Products. And the question I'm wanting --



Lantry/Motion 78

1 This is a confirmation issue that, you know, I'm sure we

2 will address again. Right now it's are we likely to

3 succeed. That's the issue. But I wanted to understand, was

4 Your Honor focusing on the legal issue, and would it be

5 useful to walk carefully through the 524(g)(4) language?

6 THE COURT: Yes, I think so. Because I'd like to

7 know how you --

8 MR. LANTRY: Absolutely.

9 THE COURT: -- how you propose to confirm a plan

10 that has an injunction that protects Cooper under 524(g).

11 MR. LANTRY: Your Honor, do you have the code

12 there? I made copies of 524(g) -- Perfect.

13 THE COURT: Disregard the red underline.

14 MR. LANTRY: You're focusing on Cooper, so let's

15 speak of Cooper?

16 THE COURT: Yes.

17 MR. LANTRY: The language, again it's (4)(A)2, is

18 this third party Cooper is alleged to be directly or

19 indirectly liable for the conduct or claims against the

20 debtor by virtue of its, now I'm going to one, third party's

21 ownership of a financial interest in the debtor. Cooper

22 owned Wagner, and during the period in which it owned

23 Wagner, Wagner incurred asbestos liability, did things that

24 gave rise to asbestos liabilities. And it is alleged, and

25 all we have to find for 524(g) to apply is has Cooper been



Lantry/Motion 79

1 alleged to be directly liable or indirectly liable for what

2 Wagner did during that period of ownership. That's the

3 issue.

4 THE COURT: By reason of its ownership.

5 MR. LANTRY: By reason of its ownership. And what

6 typically happens in the tort system is if a parent company

7 is managing and controlling that subsidiary that ultimately

8 became the debtor, it is regularly and often alleged to be

9 liable for it. And that's what they need to get the

10 protection from, so that they're not continued to be sued in

11 the tort system, and why they're willing to make the fair

12 and equitable contribution.

13 THE COURT: See, that fact I couldn't find in the

14 record that was submitted in support of this motion.

15 MR. LANTRY: That is the fact that Cooper has --

16 THE COURT: That Cooper has been sued by reason of

17 its ownership of Wagner or the Pneumo friction products

18 division.

19 MR. LANTRY: Okay. So let me put aside then,

20 perhaps --

21 THE COURT: What I've been told in the record is

22 that Cooper has been sued because it indemnified Pneumo.

23 And Pneumo has been sued, so they've had to pay on these

24 indemnity claims. And I don't see, I guess, --

25 MR. LANTRY: Let me be practical --



Lantry/Motion 80

1 THE COURT: -- one could argue that that's

2 indirect liability.

3 MR. LANTRY: Let me be practical in the tort

4 system. The overwhelming majority of all of these claims

5 have been sue Pneumo Abex. The reason is because it's

6 easiest to prove that it was Pneumo Abex and because Cooper

7 is going to contractually step up and pay for that. But

8 let's suppose Pneumo Abex is no longer around and they need

9 to sue somebody else. Cooper is quite sure that they will

10 sue it. And again, it's this alleged liability that

11 motivates anybody in the chain of ownership of a division or

12 a corporation that put asbestos in the stream of commerce

13 that's subject to attack in the tort system, and who are

14 motived to want to come and pay fair and equitable

15 consideration to get the protection. So that's where it's

16 coming from, and I certainly hold that you need to have a

17 little bit of evidence in that. So let's put that aside for

18 a moment. Do you have any concerns about Pneumo fitting

19 into 524(g)? Should we walk that through?

20 THE COURT: Let's see. Well, Pneumo is, the

21 assets of Pneumo were acquired by Federal Mogul. Federal

22 Mogul Products.

23 MR. LANTRY: It seems to us that that is the

24 predecessor in interest of the debtor.

25 THE COURT: Yes, right. I don't think I have a



Lantry/Motion 82

1 Abex once owned that friction products division.

2 THE COURT: Yes, okay.

3 MR. LANTRY: There are other ways, Your Honor, we

4 look to section 4, the third party's involvement in a

5 transaction changing the corporate structure. Once again,

6 Pneumo Abex sold that division, changed its corporate

7 structure. Once again, Cooper could easily come into there

8 in terms of it was also in a transaction that was changing

9 the corporate structure. There are a variety of other ways.

10 What I would point to Your Honor is there are two

11 cases out there where injunctions have been issued in very

12 very factual similar situations, and that's HARBORSON WALKER

13 and NARCO (phonetic), where we had prior third party, prior

14 owners that are third parties who once owned a division that

15 had been then spun off, that ultimately became the debtor.

16 And the injunction protects that parent that one time owned

17 some of that division.

18 So courts have looked at a very parallel structure

19 and found, at least for purposes of the injunction, one of

20 them has had a confirmation hearing and one the confirmation

21 hearing is yet to happen, but the point is other courts have

22 looked at similar factual situations. So I think there is a

23 basis, both in the reading of the code and the precedent for

24 you to at least find that there is a likely chance that we

25 could get to confirmation on this structure.



Lantry/Motion 83

1 Again, the other, the likelihood of the merits.

2 The other thing we point to, Your Honor, is a lot of this is

3 again the will of the people. And if the Pneumo asbestos

4 claimants, when the vote is put to them, when they look at

5 this 700 million and the certainty of getting it, and what

6 the trust distribution procedures will pay for them, they'll

7 vote it up or down. They'll say we like it, we think this

8 is good for us, or they won't. And that is the success on

9 the merits. We won't get to confirmation unless we get that

10 vote. You won't even have to agonize about the 524(g)

11 language until we get that vote.

12 And so there is a way where the real parties who

13 are being enjoined can rather quickly say, we think this is

14 good for us, or we don't. We've heard from, you know, two

15 percent or less of them that don't like it, which to me

16 suggests that 98 percent of them do like it. And the

17 Asbestos Committee represented by Caplin and Drysdale who's

18 been very good at predicting how the votes come in in these

19 other Chapter 11 cases where they almost always represent

20 the committee, thinks that we'll get the vote. So we think

21 that there is a likelihood that we'll get the vote that we

22 can proceed to successful confirmation. And I think that's

23 what you need to think about in terms of what you need to

24 struggle with for an injunction.

25 Your Honor, there's been the issue of the



Lantry/Motion 84

1 balancing of harms. Certainly we've described the harm that

2 would come from Cooper walking away from this deal because

3 they don't get the injunction. This deal, without this deal

4 confirmation will be slowed down. It will be harmful for

5 the larger constituency of creditors in Federal Mogul,

6 recutting the deal, all the time it takes to figure out how

7 to get a plan to go forward over their objection. But there

8 are similarly situated asbestos claimants. 500,000 of them

9 is the current estimate in existence today in the whole

10 Federal Mogul family who are waiting to get paid, and have

11 been waiting for four years.

12 And when you balance the harms, I think it

13 suggests strongly that this is a quickly way to payment for

14 a hugely larger number of people who have so far voted in

15 favor or this, and who we think this additional subset, when

16 they appreciate the 700 million that's certain to go to

17 them, will also vote the Pneumo asbestos claimants who would

18 be enjoined.

19 Your Honor, there's the public interest. And once

20 again, I think this is the ratable, fair efficient

21 bankruptcy code being the only model that has yet been

22 created in this Country to solve asbestos liability as

23 opposed to the tort system. And undoubtedly, there are some

24 people who will roll the dice and do better in the tort

25 system. But when you think of the greater good of the



Lantry/Motion 85

1 whole, that is all of the asbestos claimants, the best way

2 to test that is put it to the vote. And that's why we think

3 the public interest would suggest giving the injunction so

4 that we can put the disclosure together and the modified

5 plan and get this out to a vote and see if the Pneumo

6 asbestos claimants like this as a better treatment than what

7 they've got.

8 Your Honor, there is an issue that has been

9 raised, and I'll quickly go over it, and that's a procedural

10 issue in terms of serving the 38,000 Pneumo asbestos

11 claimants with the summons.

12 THE COURT: You don't have to address that.

13 MR. LANTRY: Okay, Your Honor. Thank you.

14 THE COURT: I think Judge Stern addressed it in

15 the MORALO (phonetic) case.

16 MR. LANTRY: Thank you, Your Honor. Beyond that,

17 Your Honor, I would simply note something of significant

18 import. We have completely exempted, through what we

19 predicted was a deal in our reply papers, the Mallia

20 claimant. The Mallia claimant is unique, they have won a

21 judgment, they have had a supersedeas bond posted by Pneumo

22 Abex. And we think that under those unique facts that it is

23 appropriate for them not to be subject to the injunction.

24 And we have shared with them a modification of the

25 preliminary injunction order that would exempt them so that



Lantry/Motion 86

1 they can go forward to a nonappealable judgment, and if need

2 be enforce on the supersedeas bond while reserving our right

3 to come back to you if we want to and join the action on the

4 bond. But we have agreed that that's the best way to deal

5 with their unique circumstances and some of the facts that

6 they've presented, and we've agreed on the form of that

7 order.

8 Your Honor, other than that I would say again, we

9 have John Gasparovic, our general counsel, and Diane

10 Schumacher, Cooper's general counsel. And I think you

11 probably will want to briefly inquire of Diane on this legal

12 issue in terms of some evidence you'd like to have in. But

13 we also are joined by the Asbestos Committee and futures rep

14 who represent this very constituency and who are at the

15 heart of the negotiations. And I think they should be

16 heard.

17 THE COURT: Thank you.

18 MR. LOCKWOOD: Good morning, Your Honor. Peter

19 Lockwood for the Asbestos Claimant's Committee.

20 THE COURT: Good afternoon.

21 MR. LOCKWOOD: I guess you're right. It's

22 afternoon. Thank you. I have one slightly different take

23 on one issue that I'd like to present to the Court, which

24 has to do with the related to jurisdiction question. I

25 believe actually that this is not related to jurisdiction,



Lockwood/Argument 87

1 it's core. And the reason that I would argue that it's core

2 is that 524(g) is a statute. It's part of the Bankruptcy

3 Code. And the definition of core is arising under or

4 arising in. So a 524(g) injunction is clearly a core

5 injunction. You can't get it outside of bankruptcy.

6 THE COURT: You can't get it outside of a plan.

7 MR. LOCKWOOD: You can't get it outside of a plan.

8 However, 105 is, as we learned from the case law, an

9 ancillary mechanism to protect the Court's jurisdiction to

10 do things that it has core jurisdiction to do. It is not in

11 and of itself a jurisdictional creating device, and it

12 doesn't create substantive rights. But it does give the

13 bankruptcy court the power to protect things.

14 The evidence here today is that this injunction is

15 needed in order to protect the plan proponents' stated

16 intention and agreement to propose a 524(g) plan that will

17 in fact issue the very same permanent 524(g) injunction

18 that's sought to be entered as a preliminary injunction now.

19 And therefore, it seems to me that the issue of whether or

20 not the Court can issue a preliminary injunction to protect

21 the 524(g) opportunity to issue a permanent injunction --

22 Remember, the permanent injunction, we've been told by

23 COMBUSTION ENGINEERING that you can only issue a 524(g)

24 injunction at the plan stage for asbestos. You can't issue

25 a 105 injunction. But the courts have uniformly taken the




1 position that you can issue a 105 injunction in order to

2 protect the court's power to issue the 524(g) injunction.

3 So I would argue that it's core. If you compare

4 it with the cases relied on by the objectors, PACOR and the

5 earlier FEDERAL MOGUL decision, neither one of those cases

6 involve protecting the plan proponents' stated intention to

7 propose a 524(g) injunction. PACOR was before 524(g),

8 didn't involve it at all, and FEDERAL MOGUL you had

9 interlopers, three automakers who came in here and said

10 remove all our claims to the Federal Mogul bankruptcy

11 because we'd like to talk to people about maybe having

12 either -- What they really wanted to do was commandeer Your

13 Honor to make DALBERT rulings that they didn't have any

14 claims against them. It has nothing to do with 524(g). So

15 those cases are totally dissimilar in terms of the related

16 to function here.

17 With respect to the merits, I would like to -- It

18 seems to me the issue boils down to do we have a reasonable

19 prospect of ultimately getting a 524(g) injunction. And

20 Your Honor has exhibited some concern about whether there's

21 a technical qualification here. And at the risk of perhaps

22 repeating something that you went through with Mr. Lantry, I

23 would like to just emphasize a couple of points here. The

24 issue here is whether the third party is directly or

25 indirectly liable for claims against the debtor. It doesn't




1 say claims, it says indirectly.

2 Now, let's look at Cooper and let's look at

3 Federal Mogul Products. We're talking about Pneumo Abex

4 claims. Pneumo Abex was an unincorporated division, excuse

5 me, the friction division was an unincorporated division and

6 you had an asset sale, in effect, to Wagner. Wagner,

7 through Moog Automotive which was a rename of Wagner through

8 which, and Moog Automotive is the name changed to Federal

9 Mogul Products. So the Wagner business with the Pneumo Abex

10 assets is now in Federal Mogul. Federal Mogul Product is

11 alleged, for example by Cooper, to be indirectly liable for

12 claims against Pneumo Abex's friction division because it's

13 indemnified.

14 THE COURT: We don't care about what Cooper

15 alleges, because Cooper is the one that's seeking to be

16 protected by the 524(g).

17 MR. LOCKWOOD: I understand. But the

18 qualification here talks about how the liability arises.

19 And what Cooper is saying in effect, is these --

20 THE COURT: And it's not the direct or indirect

21 liability of Federal Mogul Products, it's the direct or

22 indirect liability of Cooper.

23 MR. LOCKWOOD: Well, Cooper is indirectly liable

24 for the Pneumo Abex claims because it indemnified Pneumo

25 Abex when it acquired the, when Wagner acquired these




1 liabilities and then Cooper acquired Wagner. And so its

2 indirectly liable for the Pneumo Abex liabilities as well.

3 And those liabilities are created by plaintiffs.

4 THE COURT: And is that by reason of its

5 ownership?

6 MR. LOCKWOOD: Its ownership. It gave the

7 indemnity because it became an owner. That was -- I mean,

8 ask yourself why are the plaintiffs here objecting to this

9 injunction protecting Cooper. If Cooper isn't liable for

10 the Pneumo Abex claims why do they care? They're here

11 because their position is Cooper is in fact liable for the

12 Pneumo Abex claims because when it became an owner it

13 indemnified Pneumo Abex for those claims. And that's a form

14 of indirect liability, if you will, of Cooper for those

15 claims. And those claims are claims against the business

16 which is now owned by Federal Mogul Products and which

17 Federal Mogul Products has also indemnified both Pneumo Abex

18 and Cooper, and therefore is liable for those claims.

19 All these entities, Pneumo, Cooper and Federal

20 Mogul Products are either directly or indirectly or possibly

21 even both directly and indirectly liable for the claims

22 against the Pneumo Abex unincorporated division. And

23 predecessor in interest, which is where you start here, is

24 not a corporate definition. You can have an unincorporated

25 business that's a predecessor in interest. If somebody goes




1 out and buys an unincorporated business and puts it in a

2 corporation, the unincorporated business is the predecessor

3 in interest of the incorporated business.

4 And otherwise, and successor liability, whether

5 through an asset sale or a merger, is a common forum whereby

6 the successor becomes liable for the claims against the

7 predecessor in interest. So it's my submission, Your Honor,

8 that both Cooper and Pneumo Abex will do and will be shown

9 to be, at confirmation, to be eligible either under

10 Subsection 1, or as Mr. Lantry pointed out, under Subsection

11 4 where you talk about changing the corporate structure.

12 Because there you had assets being sold and subsidiaries

13 being purchased and sold, and that changes the corporate

14 structure of the entities that own them.

15 The final point I'd like to make has to do with

16 why my committee is a co-plaintiff. This committee, like

17 the committees that we represent in many other cases, is not

18 in the business of going out and looking to find ways to do

19 favors to nondebtors. We're not interested in that, and we

20 haven't been paid anything to do that. The problem we've

21 got here is that the Cooper Pneumo Abex claims against

22 Federal Mogul Products are potentially extraordinarily

23 difficult to resolve in this bankruptcy case, absent this

24 deal, as Mr. Lantry explained.

25 And we believe that most of the Pneumo Abex




1 claimants are not only -- Well, we believe that all of the

2 Pneumo Abex claimants could, if they wanted to, assert a

3 Federal Mogul claim against Federal Mogul Products. Apart

4 from that however, they are also, large numbers of them have

5 claims against multiple defendants of who Pneumo Abex is

6 only one. And included within the numerous defendants that

7 they frequently have claims against are Turner and Newall,

8 Flexitalic (phonetic), Ferodo, Wagner, and the Valuemoid

9 (phonetic) claims against Federal Mogul itself. And

10 Fel-Pro. There are six different sets of entities in this

11 Federal Mogul family that have liabilities to claimants.

12 And they're not going to -- And you know, I agree

13 these situations of dying claimants, it's a big problem.

14 And it's terrible that people have to not get their

15 compensation when they should. But you know, bankruptcy

16 happens. It's kind of like the adage that stuff happens.

17 It's bad stuff. And we've got six companies, or six sets of

18 liability streams here that are similarly situated. People,

19 sick and dying claimants, and they're not getting any money

20 until this plan is confirmed.

21 And while there may be a few Pneumo Abex claimants

22 that don't have claims against anybody else, I don't know

23 how one would go about really determining how many of them,

24 it is the belief, and I couldn't prove it because I can't, I

25 don't know who are all the Pneumo Abex claimants and we




1 couldn't possibly bring in 38,000 of them and then cross

2 examine them. But it is the common experience of

3 plaintiff's lawyers, and therefore of bankruptcy lawyers

4 that represent their clients and these committees, that

5 they, generally speaking, have claims against multiple

6 defendants.

7 And it is the belief that those people and their

8 lawyers, when they see the plan that we're going to propose

9 here, and they think to themselves would I rather have seven

10 potential sets of claims paying or am I really only going to

11 focus on one, namely Pneumo Abex and let the others go hang,

12 that the requisite majority of the Pneumo Abex claimants who

13 will be canvassed separately will decide to vote in favor of

14 that plan.

15 THE COURT: All right, thank you.

16 MR. LOCKWOOD: Thank you, Your Honor.

17 MR. PATTON: Good afternoon, Your Honor. Jim

18 Patton on behalf of Professor Eric Green and the future

19 claimants representative. We too are supportive of the

20 application before Your Honor today, the complaint. And we

21 were integrally involved in the negotiations that led to the

22 ultimate resolution with Cooper. It was a very tough

23 negotiation. In fact the negotiations first began years ago

24 in a conversation down in Florida between representatives of

25 Cooper and Eric Green and myself. And it's been a long road



Patton/Argument 94

1 to get us to the point where we have resolved the overall

2 dispute with Cooper and the problems that Cooper represents

3 in this bankruptcy case.

4 The only thing I want to add to everything you've

5 heard so far, is that a fundamental premise to our

6 negotiation with Cooper with respect to resolving its

7 disputes with Federal Mogul and creating a process for which

8 it could get 524(g) injunction, is that at the end of this

9 negotiation we wanted to be assured that we would put

10 together a claims matrix using the funds that would be

11 provided by Cooper, that would enable claimants that are

12 processed into that matrix to receive 100 cents on the

13 dollar as the value of their claim is established by that

14 matrix.

15 We felt the only way that this could be considered

16 fair in our minds, would be if that was a reasonable

17 prospect at the outcome of this negotiation. We can't

18 guarantee any percentage under these procedures over the

19 long haul, but our goal was to assure ourselves and to be

20 able to assure the other constituents that when we were done

21 we had created a claims matrix and received sufficient funds

22 that we would be able to stand before Your Honor at

23 confirmation and say that we have the ability to pay allowed

24 claims, 100 cents on the dollar.

25 THE COURT: What would the --



Patton/Argument 95

1 MR. PATTON: And from our point of view --

2 THE COURT: -- Gallias (phonetic) get under that

3 --

4 MR. PATTON: I'm sorry, I couldn't --

5 THE COURT: Would would the Gallias get under that

6 claims matrix? Do you know?

7 MR. PATTON: I don't know. I don't know enough

8 about any particular claim to be able to analyze that. But

9 it could be relatively easily answered in the near future.

10 The process with respect to the claims matrix though

11 involves the presentation of a claim and, you know,

12 evaluation of the claim under the rules of the matrix and a

13 decision by the claims handling facility whether the claim

14 satisfies the rules of the matrix. And then the claim is

15 paid if it does. So you have to do an individual claim by

16 claim analysis and look at the facts.

17 THE COURT: He's a mesothelioma victim I think.

18 MR. PATTON: You mean in terms of what the value

19 is for a mesothelioma claim?

20 THE COURT: Yes, what's the value of a

21 mesothelioma claim? You haven't come up with a matrix yet.

22 MR. PATTON: We have not yet disclosed what the

23 actual values are with respect to the matrix because it's

24 going to become part of the disclosure statement. And Your

25 Honor, we probably should not, until that is something



Hill/Argument 96

1 that's able to be shared broadly to the public as a whole.

2 THE COURT: Okay, thank you. All right, in

3 opposition?

4 MR. HILL: Good afternoon, Your Honor. I'm Karl

5 Hill, I'm a local counsel from Wilmington, Deleware, Seitz

6 Van Ogtrop and Green. My firm actually represents three

7 sets of asbestos plaintiff's law firms around the Country.

8 And in a moment I'm going to yield the podium to Mr. Robert

9 Phillips of the Simmons Cooper firm who will take the lead

10 today on behalf of the objectors. I'll just put that in

11 quotations. But as to the other two firms, Your Honor, that

12 my firm is local counsel for, they are actually preparing

13 for trial next week because one of the 737 asbestos

14 plaintiffs represented by the Goldenburg Miller firm in

15 Edwardsville Illinois and the Richardson Patrick firm which

16 is a spin off from the Ness Motley firm in Charleston South

17 Carolina, is the estate of Mr. Carey who died of meso back

18 in, I think April or actually March 9 of 2005. That trial

19 is scheduled in Illinois State Court for Monday of next

20 week.

21 And before I yield the podium, again Mr. Phillips

22 will be taking the lead for the objectors, my background

23 candidly Your Honor, is in State court litigation and I

24 appear before the Deleware Court of Chancery very often.

25 And I know, Your Honor, that Section 105 gives you the



Hill/Argument 97

1 traditional injunctive powers that a court of equity will

2 have. And I've listened to the plaintiff's presentation

3 today very carefully, and I can tell you without fail that

4 what I've seen today is nothing that I've ever seen before

5 in a preliminary injunction hearing.

6 In Deleware, and again I'm just going by my

7 experience, Your Honor, that is a complaint is filed, it's

8 served, it's answered, usually expedited. You have

9 discovery to test facts. And I underscore facts because I

10 don't see a presentation here that gives you enough factual

11 record to enter a preliminary injunction. And if you

12 listened carefully, which I know you did, the plaintiffs in

13 this case always say the word injunction. They don't focus

14 on the fact that what they're really seeking by this

15 adversary and the motion for this preliminary injunction is

16 a preliminary injunction. A preliminary injunction is

17 designed to maintain the status quo. The status quo really,

18 Your Honor, I submit, is to allow the State court cases,

19 including Mr. Casey's estate's case on Monday, to proceed

20 forward.

21 On behalf of all of the defendants, it's hard to

22 call them defendants, but the defendants that I represent

23 through these three firms, we strongly object to the entry

24 of a preliminary injunction and instead would implore Your

25 Honor to force this side of the room, the plaintiffs, the



Phillips/Argument 98

1 debtors and plan proponents, to get on with it and to seek

2 the channeling injunction through Section 524 in conjunction

3 with an amended plan, so that as the plan proponents

4 described in their reply on page 17, the "democratic

5 process" may proceed. What they've done here is

6 inconsistent with due process by any stretch of proper

7 procedure under preliminary injunction hearing.

8 THE COURT: Thank you, Mr. Hill. Mr. Phillips?

9 MR. PHILLIPS: First I'll warn you, Your Honor,

10 that I may indeed try to parse 524(g) again, and I apologize

11 for the sixth time today. But I think our brief was fairly

12 thorough in terms of the overall objections we had, is so we

13 could glean the request, relief being requested by the

14 plaintiffs. But what I've heard today is really, there's

15 two levels at work here. One is whether a preliminary

16 injunction is proper right now. The other level, and this

17 is mostly what's been discussed, is whether down the road,

18 we're not sure when, we're not sure what it will say, we're

19 not sure of all the details of who's going to vote on what,

20 we're going to have a plan that's going to issue an

21 injunction under 524(g).

22 And so we spent a lot of time here today,

23 relatively speaking, trying to parse the language of 524(g)

24 because there seems to be some concern by the Court, and

25 certainly we have a lot of concern that Pneumo Abex and




1 Cooper for instance don't fit within the confines of 524(g)

2 as it's written. At least not to the full extent of their

3 liabilities. So, we have a problem with the plaintiff's

4 presentation of whether they can actually confirm a plan.

5 But if we come back to why we're actually here

6 today, to address whether a preliminary injunction should

7 issue, I don't really understand what we're going forward

8 on. The debtors in their reply, because of the objections

9 of our parties as well as the primary insurers, aren't going

10 forward on the automatic stay applying. I know that the

11 chief counsel for the debtors made some comments in opening

12 his presentation about the automatic stay, but they've

13 expressly withdrawn that argument.

14 So what we're left with is Count 3 of the

15 complaint, which says 524(g), 105, you know, we've got this

16 great, you know, wonderful settlement that's not been

17 approved by anybody yet, and that will get us an injunction

18 down the line. Therefore this Court should put on its

19 equity hat and issue a preliminary injunction and stay all

20 proceedings, even though they've tried to put us under the

21 carpet, it's four years later.

22 The last time I checked, 524(g) wasn't a cause of

23 action. I mean, 524(g), and to the extent they want to use

24 105(a) to implement 524(g), is a plan issue. I mean, as Mr.

25 Patton alluded here today, we don't even have a set of trust




1 distribution procedures, we don't have an amended plan, we

2 don't even have a definitive agreement with Cooper. Because

3 if you read the term sheet, the only operative provisions

4 binding on the parties right now are the litigation state

5 provision. They seek it, not that they get it, but that

6 they seek it. The withdrawal provisions, provisions about

7 cooperating with insurance, and a couple of other ancillary

8 things you would expect in a preliminary term sheet.

9 So to my knowledge we don't even have a definitive

10 agreement that's actually going to result in this wonderful

11 amended plan that we're all going to vote yes on. And if we

12 were to move ahead, and I'm just going to jump real quick

13 because I want to get this in, earlier there was an attempt

14 to put the counsel for Cooper on here and talk about whether

15 Cooper and Pneumo Abex have been sued in such a way as to

16 invoke the protections of 524(g)(4)(A).

17 And I think while everyone who's gotten up here

18 has looked at different language in the subsection, to me

19 some of the key language is in the last line of IIi; demands

20 on the debtor to the extent such alleged liability of such

21 third party arises by reason of. No one really wanted to

22 focus on to the extent of language. And this kind of goes

23 to the whole problem we have conceptually with what's being

24 requested here today, which is the primary liability and

25 through all of the presentations of factual background,




1 what's being lost is Pneumo Abex is the tort-feasor.

2 Prior, long prior to Wagner's acquisition in an

3 asset sale of the friction products business they were the

4 ones that produced asbestos containing products, put it out

5 on the market, failed to warn, and are now being sued for

6 that reason, and have been sued since, I don't know, late

7 '70s perhaps. And sued all the way through, you know, last

8 week. Then Cooper, through Wagner, bought some of the

9 assets. They agree contractually to defend the claims, part

10 of the consideration. Hey, we'll give you less money if you

11 agree to pay these claims, because everyone knew there were

12 gaps in coverage, I assume, by that point. And so on down

13 the line, we end up with debtor FM Products, which is a

14 successor to the company that acquired the assets.

15 THE COURT: We end up with whom?

16 MR. PHILLIPS: With debtor FM Products, which is

17 the debtor that they claim is primarily liable. That just

18 seems to stand all sense of what 524(g) and what these sorts

19 of guarantor co-obligor rules in bankruptcy are actually

20 designed to implement. The liability is Pneumo Abex.

21 They're the tort-feasor. And the fact that certain parties,

22 one of whom ended up being a debtor in this case, assumed

23 liability long after the fact, long after the tort, can't be

24 used as a justification to go back and wipe the slate clean

25 with the primary tort-feasor just because they wrote a check




1 big enough to have everyone realize that suddenly there's

2 jurisdiction, that the equities support doing this and so

3 forth.

4 THE COURT: What about if people who were injured

5 by Pneumo Abex Products sue Cooper because Cooper was the

6 parent of Wagner that acquired the business line, and you

7 have the successor interest --

8 MR. PHILLIPS: Well, and that's my whole reason

9 for focusing on the to the extent language. People sue

10 under varying theories. Pneumo Abex is the primary

11 tort-feasor. Normally what would happen is, Pneumo Abex

12 apparently would tender the case to originally FM Products,

13 later to Cooper, they would pay the claim, gain rights to

14 get some of the monies paid back by insurance. If one, two,

15 5,000 plaintiffs chose to add account, or add Cooper as

16 defendant and also alleged liabilities for successor

17 liability, for alter ego, for meddling in the corporate

18 affairs of the subsidiary, whatever, that's great.

19 And I would agree that 524(g) can be used to

20 enjoin those claims against Cooper and against the debtors

21 that arise from these four Roman numeral enumerated grounds.

22 But that's not the same thing as saying 524(g) allows you to

23 enjoin the actual tort. If people are suing the third party

24 for the third party's own conduct, it's my reading of

25 524(g)(4)(A), Your Honor, that that's not what this statute




1 is talking about. This statute is talking about getting rid

2 of the liability for the lender to the debtor. Getting rid

3 of the liability to an extra parent or grandparent in the

4 chain of the debtor's corporate structure that's been

5 alleged under, some would say, cockamamie theories of

6 liability and what have you.

7 But that's not the same thing as saying oh, we can

8 also use that because they were sued by a couple of people.

9 And I don't know how many, maybe it was 5,000, maybe it was

10 500. But just because certain people sued Cooper Pneumo

11 Abex under these extra theories that are enumerated in

12 (4)(A), doesn't mean that that creates jurisdiction to

13 extinguish all the liability that that third party has. And

14 that's our fundamental problem.

15 And going back to this whole point about whether

16 they're going to succeed on the merits, Your Honor, you know

17 it's an argument we intend to raise. And if not us, I would

18 imagine there are other people in this case who intend to

19 raise.

20 THE COURT: You mean object to confirmation on

21 524(g) --

22 MR. PHILLIPS: Object to confirmation to the

23 extent that, you know, this is trying to be done.

24 THE COURT: Okay.

25 MR. PHILLIPS: And I think that, you know, if




1 we're going to take everyone's representations on faith at

2 the podium of what's going to happen, I think Your Honor has

3 to take into account what could happen. And one of the

4 things that could happen is us, others, other people not

5 here and so forth, may raise objections that could delay or

6 completely derail the process.

7 THE COURT: All right. Mr. Phillips, who do you

8 represent? Remind me please.

9 MR. PHILLIPS: We represent the -- We have about

10 100 and some-odd clients listed on addendum 1 to the

11 complaint. We have approximately 150 mesothelioma cases

12 pending in State Court, either in Illinois or in Deleware.

13 We're co-counsel with other firms on additional cases. But

14 those firms are listed as primary counsel on the list. As,

15 you know, counsel for the ACC would say, I mean it's a

16 floating target. We've said we have 26 cases set for trial

17 in the next 60 days. 16 of those cases are of living mesos.

18 People who, as I say in our brief, have little chance of

19 making it through confirmation of this plan.

20 And we believe the balance of hardships, to go

21 back to the other prong I was talking about, whether

22 preliminary injunction should issue today, given that we

23 don't have a plan, that we don't know what the votes are

24 going to be despite the arguments that maybe some

25 preliminary nose counting has been done. And I'll say on




1 that point, my nose counting suggests that they're being

2 unduly optimistic about whether the people are going to

3 vote. That the balance of hardships weighs against here, in

4 year four, coming in here with a complaint, two counts of

5 which they've taken back since the day of the filing only

6 two or three weeks ago --

7 THE COURT: Well, they haven't withdrawn them,

8 they just said for today's purposes they're not seeking a

9 preliminary injunction based on 362.

10 MR. PHILLIPS: Right. Before I sit down, Your

11 Honor, there's one other thing and this kind of goes to an

12 emerging problem we have with this whole deal. I focus on

13 Section 3AI of the term sheet itself. That provision

14 provides that Cooper, on the effective date, can use $35

15 million of the $100 million cash contribution it makes as

16 part of the 700 million to pay certain of the pending Pneumo

17 asbestos claims, PAC, that were pending as of September

18 15th. Section 6C of the term sheet goes on to say, anyone

19 who is going to be paid by Cooper pursuant to that provision

20 can't vote.

21 And one question we have in addition to the issue

22 I've already raised of where's the plan, where's the matrix,

23 where's the medical evidence et cetera, is who are those

24 people? I mean, because there's two reasons. One --

25 THE COURT: Why aren't they being given sub plans?




1 MR. PHILLIPS: Your Honor, I mean, there are

2 certain issues that have been addressed, in COMBUSTION

3 ENGINEERING and elsewhere, there's also just the plain

4 voting issue. If that 35 million is divvied up $1,000 each

5 to 35,000 claimants, because a lot of the 38,000 are

6 nonmalignant claims which are worth significantly less in

7 the system on average then the malignancies, we really have

8 a viable voting issue. Because we represent substantially

9 more than 1,000 people, from my understanding. There's

10 another counsel who will come up here. We have perhaps not

11 25 percent in the courtroom, but we've got more than the

12 debtor wants to admit we have.

13 And if a huge number of claims are going to be

14 extinguished, and not be able to vote because of this

15 agreement by Cooper to pay them, then for all I know we're

16 the only people standing. You know? And the minimum for

17 terms of an evidentiary perspective, for the Court to enter

18 the injunction, we need to know who those people are. Who's

19 voting, who's not? And as Your Honor first seized upon,

20 that does raise an issue of who's getting the money. You

21 know, certain of us were taken surprise by the course of

22 these negotiations, and perhaps some other people weren't

23 taken by surprise. And you know, if we're going to count

24 noses, counting the clients and the members of the Committee

25 might not be the best place to start for that reason.



Ebert/Argument 107

1 THE COURT: Thank you very much. Anybody else in

2 opposition who wants to say something different? Good

3 afternoon.

4 MR. EBERT: Good afternoon, Your Honor. Louis

5 Ebert of the law firm of Gebhardt and Smith. We entered our

6 appearance in connection with the opposition of the Mallias

7 to the motion. And that, as you heard, has been resolved.

8 I also filed last night an amended motion for the pro hac

9 vice admission of Jonathan Ruckdeschol, and attached to that

10 was a list of approximately 700 to 750 persons who are on

11 Exhibit I, who Mr. Ruckdeschol and his firm represent. And

12 Your Honor, I would like to turn the podium over to him. He

13 has all the information about this. I would ask that my

14 motion be approved. The fee has been paid.

15 THE COURT: All right. Well, the motion will be

16 handled in due course through the clerk's office. But

17 you're welcome to speak to today, Mr. Ruckdeschol.

18 MR. RUCKDESCHOL: Yes. Thank you, Your Honor.

19 Good afternoon. My name is Jonathan Ruckdeschol. I'm a

20 trial lawyer, I'm practicing in Miami, Florida with the law

21 offices of David Lipman. We were counsel for Joseph Mallia

22 in the Mallia case, and I'm pleased that we've reached a

23 resolution with that, with the movant, with regard to the

24 Mallia case before today's proceedings.

25 Our firm directly or as co-counsel with the law



Ruckdeschol/Argument 108

1 firms of Anania Bandklayer in Miami, McKenna Keoto

2 (phonetic) in Pittsburg, and the Colon law firm in

3 Mississippi represent collectively approximately 1,500

4 claimants with tort claims filed against Pneumo Abex

5 Corporation. And amongst those are many individuals

6 suffering from malignancies. And I'm not sure of the exact

7 number, but it would be at least 60.

8 I think that what I'd like to emphasize to Your

9 Honor first is that these are claims against Pneumo Abex

10 Corporation for the actions of Pneumo Abex Corporation.

11 They're not for the actions of the unincorporated operating

12 division of Pneumo Abex that made friction products. My

13 first year corporations instructor told me that if you have

14 a company you can have a subsidiary or you can have a

15 division. A subsidiary is a separate legal entity and a

16 division is not.

17 Pneumo Abex's business was making asbestos brakes.

18 That's why we sued them. The fact that they sold off the

19 assets for that portion of their business is not a

20 transaction that affects the corporate structure. It does

21 not. The corporation remains a corporation, they just sold

22 off some assets. It's no different than a corporation

23 selling a truck. It doesn't affect the corporate structure.

24 And so to the extent that there's a suggestion

25 that any jurisdiction of this Court arises from a




1 transaction that affects the corporate structure of Pneumo

2 Abex, that is incorrect. Pneumo Abex continued along as a

3 corporation and it's had some name changes since then. But

4 the corporate entity that we sue is the corporate entity

5 that injured our clients. The conduct that we sue on all

6 arises prior to 1988 when Pneumo Abex Corporation stopped

7 manufacturing brakes that contained asbestos.

8 So the claims here do not arise from conducts of

9 the debtor, conduct of the debtor under 524(g). They are

10 not claims against the debtor. We don't sue Federal Mogul,

11 we don't sue Cooper. We've sued Pneumo Abex Corporation.

12 And they are not demands on the debtor. We have made no

13 demand on any of the debtors in this case. In fact, we've

14 made no demand on Cooper. We have sued Pneumo Abex

15 Corporation.

16 Now, Pneumo Abex Corporation is listed however as

17 one of the Pneumo protected parties in this case. Pneumo

18 Abex Corporation is the defendant in our case, it does not

19 fall within 524(g) as we've looked at the categories there.

20 There is a question about, and this was raised earlier on,

21 that the 700 million is somehow a guaranteed contribution.

22 It is my understanding there is a significant dispute with

23 the insurance companies regarding how much insurance is

24 there.

25 But if we take the representations of Cooper with




1 regard to their cash reserve set aside for asbestos

2 liabilities, and we take the representation that there's at

3 least 800 million left in the policy limits of the insurance

4 policies, we have a pool of one billion, 52 million and the

5 $252 million comes from the 2004 10K filed at the end of the

6 year by Cooper regarding their cash reserves. If I've

7 gotten the precise document wrong, it's from one of the SEC

8 filings recently.

9 It is difficult for me to imagine, and since we

10 don't have any information before us as to what the payments

11 are going to be, I can't tell you what our recommendation to

12 our clients would be with regard to voting. But it is

13 difficult for me to imagine a situation where we would

14 recommend to our clients that they should accept a plan that

15 divvies up a contribution of 700 million over time when

16 there is currently a pool of assets of at least one billion,

17 52 million if we take the representations that are made to

18 the Court.

19 Right now Pneumo Abex claims are paid in the tort

20 system. I don't care who pays them. I don't care if, in

21 the shell game of passing this truck along, that everybody

22 down the road from the tort-feasor has said, you know, we'll

23 pay for you if you're held liable, and I will pay for you if

24 you're held liable. That's irrelevant to me. What's

25 relevant to me is that my clients right now are entitled to




1 payment of their liabilities from Pneumo Abex Corporation.

2 And the code, as it's set up, talks about indirect

3 liability for claims on the debtor. And again, these are

4 not claims on the debtor. No matter how many times you pass

5 the truck along, if I drive my truck into Your Honor and I

6 break your leg, I can sell the truck to whoever I want but

7 I'm on the hook. And no matter how many people promise to

8 indemnify me, I'm still on the hook. And the claim, when

9 you sue me, is a claim against me and not against the people

10 that have subsequently assumed the liability.

11 There was some discussion early on about shared

12 insurance. It is my understanding from reading the filings

13 of Cooper in the SEC, which were submitted in respect to

14 some of the papers that were filed with the Court, and it's

15 my understanding from reviewing the papers that have been

16 filed with the Court that there is no dispute, the insurance

17 policies are owned by Pneumo Abex.

18 There have been various transactions along the way

19 where in essence there have been agreements, if you honor

20 your indemnity agreement we'll assign to you the right to

21 receive the proceeds from the insurance policies. And it is

22 my understanding that that is how Federal Mogul came to be

23 allowed to receive the proceeds from the insurance policies

24 when it was honoring its down the road indemnification

25 agreement. When that honoring stopped, Cooper stepped up,




1 started honoring the indemnification and claimed the right

2 to receive the insurance proceeds.

3 All of that being said, there is no shared

4 insurance in this case. Pneumo Abex owns the insurance,

5 period. That they may have assigned the right to other

6 people that they can receive the proceeds if those other

7 people do certain things does not create shared insurance.

8 It's Pneumo Abex's insurance. And what happens with the

9 proceeds after they're paid by the insurance company, which

10 is what these assignments do in my understanding, is

11 irrelevant to the question of whether this is shared

12 insurance. It is not.

13 Many of these points have been covered, and I'm

14 trying to move quickly, Your Honor. The last thing -- Oh,

15 I'm sorry. There's this issue of, there was discussion

16 about there's a former parent of -- And Pneumo Abex was

17 referred to as a parent of the business that now resides

18 with Federal Mogul, or wherever it resides, the assets.

19 It's not. It's not a parent, it is the company. These are

20 just assets, it's just a truck.

21 The last thing I'd like to address, Your Honor, is

22 an issue relating to the effect of any preliminary

23 injunction on cases that are currently set for trial. I was

24 supposed to begin a trial on Tuesday, the 17th of this

25 month, four days ago in Miami against Pneumo Abex and




1 General Electric. When this hearing was set, the parties

2 agreed that we would continue the case until February 20th

3 because we didn't want to pick a jury Tuesday, Wednesday,

4 open on Thursday, come up here and potentially be stayed and

5 have a mistrial.

6 My clients in that case, that's the Modley

7 (phonetic) case that my client is, technically is Glen and

8 Bruno the personal representative of the estate of Mr.

9 Modley, have already had their trial delayed repeatedly.

10 Further delay to them in liquidating their claim and getting

11 on with their life is of great prejudice to them. We have

12 other cases that are set for trial this year; the Wright

13 case, the Hurst case where these cases all have the same

14 concern. And it's my understanding that there's another

15 individual who will come up and talk to you about some of

16 the cases that they have that are set for trial.

17 And I know Simmons Cooper has cases set for trial,

18 and Levy Phillips and Konigsberg who have also filed papers,

19 have cases set for trial. If a stay is entered here the

20 effect on the Modley's case in State Court is uncertain.

21 General Electric is likely to approach the Court, because

22 Florida is a State where liability is apportioned to all

23 people whether parties are not in the courtroom, and say we

24 can't proceed without Pneumo Abex here. Alternatively,

25 General Electric can say let's proceed to trial and we're




1 entered. And the statement in the affidavit from counsel

2 for Cooper is that in her opinion she believes that Cooper

3 will withdraw. And that's not a statement that Cooper will

4 withdraw. And they may well prevail in the Modley trial.

5 There are defenses in the Modley trial to our claim. It may

6 be beneficial to the estate to proceed through trial on

7 this, because it may make a mesothelioma case go away.

8 And Cooper doesn't have to do this. They don't

9 have to have this emergency. This is an emergency of the

10 creation of the drafters of the term sheet. They got

11 together and they said, well you know, it's four and a half

12 years down the road and we've been going along. And Cooper

13 said over and over, we have the money to pay our liabilities

14 on this, and there's all this insurance out there, and we

15 think we're going to pay pretty much the same in or out of

16 the tort system, in the bankruptcy or in the tort system.

17 Those are public statements that have been filed by Cooper

18 or made by Cooper in public proceedings.

19 What the irreparable harm is, what the emergency

20 is that requires during the holiday season, a preliminary

21 injunction pleading to be filed that creates an arbitrary

22 cutoff date, if we don't act by January 29 we're going to

23 take our ball and go home. If this is a good deal, and it's

24 a good deal for Cooper and it's a good deal for the

25 claimants, nobody is going home just because Your Honor



Levey/Argument 116

1 doesn't issue a preliminary injunction. Thank you, Your

2 Honor.

3 THE COURT: Thank you. Anyone else?

4 MR. LEVEY: Your Honor, Stanley Levey, I'll be

5 very short.

6 THE COURT: Mr. Levey, good afternoon.

7 MR. LEVEY: We represent presently eight claimants

8 who have cases set for trial against Pneumo Abex, and only

9 against Pneumo Abex. And all of them are based on Pneumo

10 Abex's manufacture and sale of the product back in the early

11 '80s. The cases are set for trial and the disruption is

12 obvious, and I'm not going to repeat it. The only thing

13 that I do think is worth bringing to the Court's attention

14 is what the impact of even the proceeding we're going

15 through now that's had. We've sued Pneumo Abex numerous

16 times over the years. We've never gone to trial against

17 them because the cases always have been settled as the cases

18 have come up for trial.

19 What has happened in this case now, because of

20 this proceeding, is that Pneumo Abex has suddenly said to

21 plaintiffs we are not prepared to talk about settlement,

22 period. We're gambling that we're going to get our

23 preliminary injunction and therefore we have no further

24 interest in trying to resolve cases with you. And that's a

25 fact of life, and it's a fact that is significant to the



Levey/Argument 117

1 plaintiffs because we only represent living mesothelioma and

2 lung cancer victims.

3 The only other comment I would make, Your Honor,

4 is you asked what the matrix looked like. I don't know what

5 the matrix looks like. The only thing I know is that the

6 defendant's papers said there's 38,000 claims potential in

7 the papers and about $700 million. I count that to be about

8 $15,000 a claimant. I can tell you, based on our

9 experience, that is woefully inadequate, it is woefully

10 below what cases against Pneumo Abex have been settling for

11 in New York.

12 And I think Your Honor should be aware that we're

13 being asked, you're being asked to take claims on faith.

14 None of us know what we're talking about in terms of what

15 the realities of the numbers are. But I do know that those

16 numbers are inadequate on that basis, and that the ability

17 to resolve cases, an ability that has existed for years, has

18 been dried up because of this proceeding.

19 THE COURT: Thank you very much. Anyone else?

20 Yes, sir.

21 MR. CHRISTIAN: Thank you, Your Honor. Good

22 afternoon. David Christian of McDermott Will and Emery,

23 LLP. My clients include Continental Casualty Company,

24 Continental Insurance Company, Columbia Casualty Company and

25 Harbor Insurance Company. We're often referred to as CNA.



Christian/Argument 118

1 We filed a response to the motion for preliminary injunction

2 and I rise here today, Your Honor, to make the point that we

3 disagree with the debtor's characterization and argument

4 here today that there is shared insurance. My client issued

5 certain insurance policies to IC Industries, Inc., and

6 Illinois Central Industries, Inc. We resolved issues with

7 respect to certain of those policies through two settlement

8 agreements, one in 1999, one in 2003 which were subject to

9 confidentiality restrictions.

10 Pursuant to those agreements we have been paying

11 Pneumo Abex for Pneumo Abex claims. There was some

12 suggestion in the record that payments might have gone to

13 others, and that's certainly not the case with respect to

14 CNA. Accordingly, we disagree with the suggestion in the

15 original motion and in the complaint that the automatic stay

16 might apply to those policies or those payments. We

17 understand the debtor intends to resolve, and the plaintiffs

18 I guess, intend to resolve that point by modifying the

19 preliminary injunction order.

20 If this Court decides to enter a preliminary

21 injunction, we would ask to see the preliminary injunction

22 order that they propose, to ensure ourselves that it

23 actually does resolve our objection if this Court decides to

24 enter a preliminary injunction. And we appreciate the

25 debtors and the other plaintiffs meeting us on that issue.



Christian/Argument 119

1 That having been said, we do not oppose the entry

2 of a preliminary injunction under Section 105(a) if that's

3 the Court's desire. I don't, I'm sure that I don't

4 understand everything in the term sheet that's been proposed

5 by Cooper and the other plan proponents in this case. I'm

6 sure that I don't know everything that will make its way

7 into an amended plan implementing the term sheet. It has

8 been represented to CNA that the plan proponents intend to

9 honor the obligations under the settlement agreements with

10 CNA covering Pneumo Abex liabilities. Of course we want to

11 assure ourselves that that's the case.

12 And so we must of course reserve our rights to

13 object and conduct whatever discovery may be necessary to

14 assure ourselves of that. That having been said, we have

15 begun and intend to continue informal discussions and

16 discovery with the plan proponents to, you know, determine

17 the impact of the term sheet and any amended plan on our

18 settlement agreements. Thank you, Your Honor.


20 MR. BARTLE: Good afternoon, Your Honor. Harvey

21 Bartle from Morgan Lewis and Bockins, I represent Pepsi

22 Americas, also formerly known as IC Industries. I've been

23 mentioned, you know, for the last speaker, Your Honor, Pepsi

24 Americas, IC Industries is the owner and named insured under

25 almost all the policies issued between 1971 and 1975 which



Bartle/Argument 120

1 have been discussed here today as shared insurance. Neither

2 Federal Mogul Products nor Cooper is insured under those

3 policies at all. And we disagree with the characterization

4 today about that insurance being shared. We did not receive

5 timely notice of this hearing, Your Honor, nor have we had

6 the opportunity to fully go through the pleadings from the

7 plaintiffs, and we'd like to have a chance to review the

8 transcript here today. And we would just request that the

9 Court make no decision about the preliminary injunction

10 until we have had the opportunity to discuss and review the

11 characterizations about our insurance. Thank you.


13 MR. HOGAN: Very very briefly, Your Honor.

14 THE COURT: Good afternoon.

15 MR. HOGAN: Timothy Hogan in behalf of Grover

16 Alexander and the other plaintiff, defendants here noted as

17 the Nicholl objectors. Since I filed an objection I wanted

18 to make my presence known. I have nothing else to add, Your

19 Honor.

20 THE COURT: Thank you. Okay.

21 MR. FRANKEL: Good afternoon, Your Honor. Roger

22 Frankel on behalf of Cooper Industries. Your Honor, I just

23 want to respond to a couple of the things that have been

24 said this afternoon. First of all, the timing of the

25 preliminary injunction is provided for in the term sheet.



Frankel/Argument 121

1 It's not arbitrary. The economics that were set forth in

2 the term sheet were based on Cooper no longer paying claims

3 in the tort system.

4 The economics are the critical element that was

5 driving this for Cooper, obviously. And if the preliminary

6 injunction is not entered then Cooper has the right to

7 terminate the term sheet. I can represent to this Court,

8 based on discussion with senior management, that that is

9 what Cooper's intent is. Not because they don't want the

10 deal, but because the economics would no longer be the same.

11 Any time a preliminary injunction like this is

12 entered there's going to be trials set the following week,

13 the week after, the week after. So there is no good time

14 for the plaintiffs for something like this to be entered.

15 But it's not arbitrary. It was set because the economics

16 drove it to be set that way.

17 The other thing I want to mention Your Honor, is

18 the $35 million of the PA settled claims, as they're called

19 in the term sheet, that is not just claims that Cooper

20 decides to settle. That is claims that are settled with the

21 consent of the ACC, the FCR and Cooper. There may not be

22 any. But if there are any that are settled in that way, the

23 term sheet suggests that those claims would be unimpaired

24 because presumably they would be paid in full on the

25 effective date. Nothing nefarious in there, that was an



Frankel/Argument 122

1 option that was available to the parties that did the term

2 sheet. It may or may not be utilized, but that's why it was

3 put in there and it's not a Cooper only option. Thank you

4 very much, Your Honor.

5 THE COURT: All right, thank you. I don't want to

6 hear anything further, Mr. O'Neill, other than this, is

7 there anything else that we need to talk about on the

8 agenda?

9 MR. O'NEILL: No, Your Honor.

10 THE COURT: All right. Then let's take a short

11 recess. Rather than recessing for lunch let me just gather

12 my notes together and I'll come back and give you a decision

13 very shortly. Okay? And is there anyone still on the

14 phone?

15 MR. PARSONS: Your Honor, my name is David Parsons

16 of the law firm of Stutzman and Bromberg. We represent

17 Provost Humphrey, Brintkin (phonetic) and Associates and

18 Herb Robin Cloud and Lubell (phonetic), they're personal

19 injury law firms. We've recently just been engaged in this

20 matter. We haven't filed any objections. There's one minor

21 point that I wanted to bring to Your Honor's attention

22 before he considers his decision, if I may do that.

23 THE COURT: I'm sorry, I'm having difficulty

24 hearing you. And I don't think I will take anything

25 further. You're welcome to stay on the phone. I should be



Decision 123

1 back in about 10 minutes or so.

2 MR. PARSONS: Okay. Thank you, Your Honor.

3 (Court stands in recess)

4 (Court resumes in session)

5 THE CLERK: All rise.

6 THE COURT: Thank you. Please be seated. All

7 right. This is an adversary proceeding that was commenced

8 by plaintiffs, the debtor in possession, the Official

9 Committee representing the asbestos personal injury

10 claimants and the futures representative on behalf of

11 parties with future personal injury claims relating to

12 asbestos exposure. The defendants are individuals who have

13 sued a company by the name of Pneumo Abex, I'll refer to as

14 Pneumo, in State Court and Federal Court outside of the

15 Bankruptcy Court.

16 The relief that's sought in the complaint is a

17 declaratory judgment action that, proceeding in the State

18 and Federal forums, would be a violation of the automatic

19 stay of Section 362(a)1 and (a)6 having to do with claims

20 against the debtor, and also a violation of 362(a)3 in

21 attempting to assert control over property of the estate

22 which is alleged to be shared insurance policies. Also the

23 relief sought in the complaint was a temporary injunction to

24 enjoin suits versus parties referred to as the Pneumo

25 protected parties pending confirmation of a plan of



Decision 124

1 reorganization.

2 The background behind this is that prior to 1994

3 the company known as Pneumo Abex had a division called a

4 friction products division, and that division sold products

5 that contained asbestos to persons who were injured,

6 claiming that their injuries were caused by exposure to

7 asbestos from products that were manufactured by the

8 friction products division of Pneumo Abex.

9 In 1994 there was an asset purchase agreement by a

10 company by the name of Warner, or excuse me, Wagner that was

11 a subsidiary of Cooper Industries. Wagner acquired the

12 assets of the friction products division. In that asset

13 purchase agreement Wagner agreed to indemnify Pneumo for

14 asbestos claims arising out of Pneumo's operation of this

15 friction products division. Cooper, the parent company,

16 agreed to guarantee Wagner's indemnity obligation to Pneumo.

17 And it may be, although it's unclear, that Wagner also

18 assumed Pneumo's obligation to parties who may have been

19 injured by exposure to asbestos from these products.

20 In addition, Wagner had its own business that

21 manufactured products containing asbestos. In 1997 Wagner

22 merged into another subsidiary of Cooper by the name of Moog

23 Automotive. And then in 1998 Federal Mogul, one of the

24 debtors in this bankruptcy case, bought the stock of Moog

25 Automotive and then changed its name to Federal Mogul



Decision 125

1 Products. In connection with that stock purchase agreement,

2 Federal Mogul, the parent company, agreed to indemnify the

3 seller, Cooper, for its liabilities to Pneumo regarding the

4 claims against Pneumo, and also agreed to indemnify Cooper

5 for any claims asserted against Wagner for its product line.

6 I believe that's correct.

7 From the time of the acquisition in 1998 through

8 October of 2001 whenever Pneumo was sued by someone claiming

9 to be injured by exposure to asbestos from their products,

10 the defense was undertaken by Federal Mogul and any claims

11 that weren't covered by insurance were paid for by Federal

12 Mogul. In October of 2001 Federal Mogul filed a petition in

13 this Court and got the benefit of the automatic stay. At

14 that time it advised Cooper Industries that it would no

15 longer honor Federal Mogul's indemnity obligation or

16 guarantee, I guess it's an indemnity obligation.

17 And from that point on Cooper stepped into the

18 shoes of the party that took over the defense and paid any

19 claims that were uninsured against Pneumo. To date Cooper

20 says that it is out of pocket for defense costs, and claims

21 payment of $150 million and expects to continue to incur

22 costs and liability in the future.

23 In this bankruptcy case, the debtor filed a third

24 plan of reorganization in the first part of 2004, even

25 though it had been in bankruptcy since October of 2001. The



Decision 126

1 disclosure statement filed in connection with that plan was

2 approved by the Court in June 2004. As part of the

3 disclosure statement process, apparently Cooper objected to

4 the disclosure statement. And then through negotiations

5 before the disclosure statement was approved, the debtor

6 agreed to, or I should say the plan proponents, because it's

7 not just the debtor, agreed to amend the plan to provide

8 that Cooper's exposure to asbestos claimants relating to

9 either the Pneumo line of products or the Wagner line of

10 products would be protected by an injunction to be issued

11 under Section 524(g) of the Bankruptcy Code.

12 If Cooper was not granted the injunction the

13 debtors proposed to treat Cooper's indemnification claim as

14 an indirect asbestos claim and channel that to a trust that

15 would protect the debtor. That deal didn't materialize in

16 time for balloting on this proposed plan, and the time to

17 file objections to confirmation. Because the negotiations

18 remained outstanding Cooper voted to reject the plan and

19 also filed objections to confirmation.

20 As a result of Cooper's negative vote, certain

21 class or classes of claimants in the plan have voted to

22 reject the plan. And if the plan were to be confirmed it

23 would require confirmation over the objection of the

24 rejecting class or classes, the so-called cram down

25 provisions.



Decision 127

1 Now, since the time that the disclosure statement

2 was approved 18 months ago the debtors focused on other

3 major problems in the case. The primary focus was on the

4 fact that some 130 some-odd of these debtors are English

5 companies or UK companies that are also in solvency

6 proceedings in the United Kingdom. The debtors attempted to

7 get the administrators of the UK companies to go along with

8 their plan of reorganization and propose a companion type of

9 plan in the proceedings in the UK. That did not happen.

10 But nevertheless, in this 18 month time period an

11 accommodation was reached with the administrators of the UK

12 plans that would allow the debtors to proceed in this Court

13 with plans of reorganization here.

14 That was undoubtedly a large hurdle that was

15 overcome, if these cases are ever to reorganize. And the

16 parties are to be congratulated and are understandably proud

17 of their work in reaching that resolution. Although, as

18 with any compromise, neither side is particularly happy with

19 the outcome.

20 The plan or the concept that these companies can

21 reorganize is not only supported by the management of the

22 debtors, it's also supported by the Official Committee of

23 Unsecured Creditors, the Committee of Personal Injury

24 Asbestos Claimants, the Futures Representative, the banks

25 that were prepetition lenders to these debtors having



Decision 128

1 substantial monetary claims, the equity holders who are not

2 promised a lot in this proceeding, and the UK administrators

3 as well as the trustees of the pension fund for the UK

4 employees of the affiliate companies.

5 Prior to the recent negotiations there were

6 several parties that still opposed confirmation, Cooper

7 Industries being one, the Committee representing asbestos

8 property damage claimants, and a number of insurance

9 carriers that are alleged to provide insurance coverage to

10 the debtor and whose policies are the primary focus of

11 funding to pay personal injury claimants if the plan were

12 confirmed and the trust established under Section 524(g).

13 Recently the debtor concluded negotiations with

14 Cooper and its affiliates to come up with a deal that's

15 represented in the term sheet. To put it in its most simple

16 terms, which is to really reduce it way beyond simplicity,

17 but for our purposes essentially the plan calls for Cooper

18 to put money into a trust for the benefit of personal injury

19 asbestos claimants, also to have whatever insurance is

20 available to cover their exposure available to the trust,

21 and perhaps put other assets in.

22 In exchange for that, Cooper is to be covered by

23 the injunction issued under Section 524(g) of the Code. And

24 in addition, Cooper is promised to get a litigation

25 injunction effective now until the time of confirmation. If



Decision 129

1 Cooper does not get the litigation injunction that's being

2 sought today, Cooper has the right to back out of the deal

3 and says that it expects to do so.

4 In terms of the plan, it's clear that the plan

5 that was proposed in the disclosure statement that was

6 approved in June of 2004 will have to be modified. Whether

7 the plan will have to, whether a revised disclosure

8 statement will have to be prepared is not known. Whether

9 the disclosure statement will have to go out on notice to

10 creditors is not known. Whether there will have to be

11 another round of balloting is not known. And the time,

12 expected time table to bring that plan to confirmation is

13 not know. And whether the parties who so far haven't

14 indicated their agreement to the plan will continue to

15 object to the modified plan is not known.

16 The plaintiffs in this adversary proceeding filed

17 a motion for preliminary injunction asking initially for all

18 the relief that was sought in the complaint. After

19 opposition was filed the moving party withdrew any request

20 for a preliminary injunction based upon the alleged

21 applicability of the automatic stay to the proceedings by

22 these personal injury claimants in State and Federal Court,

23 because of the potential for negative consequences that were

24 pointed out by some of the objectors, in particular some of

25 the insurance carriers involved in the Pneumo cases.



Decision 130

1 Nevertheless, the counts of the complaint that relate to the

2 automatic stay are preserved by the moving parties for later

3 treatment.

4 In order to succeed in getting a preliminary

5 injunction all parties agree that there's a four part test.

6 The first part is that there must be a reasonable

7 probability of success on the merits. Secondly, there must

8 be irreparable harm to the moving party if an injunction is

9 not issued. Third, any harm that may occur to the enjoined

10 party must not outweigh the harm to the moving party. And

11 four, the injunction should be in the public interest or at

12 least not against the public interest.

13 In this circuit the plaintiff, the law is not

14 clear. But I think the law, as I've gleaned it, is that the

15 plaintiff need not meet all four parts of the test, but only

16 show that certain parts have been satisfied and that the

17 other parts that it can't meet are not sufficient to

18 overcome the fact that it has satisfied one or more of the

19 elements. It's clear that the burden of proof is on the

20 party seeking the injunction to establish that it has met

21 one or more if not the preponderance or all of the elements

22 of the four part test.

23 Let me focus first of all upon irreparable harm.

24 And one of the opponents here has characterized this as a

25 self created irreparable harm. And this really reminds me



Decision 131

1 of the scene from the movie Blazing Saddles where the

2 sheriff played by Clevon Little is being hassled by a crowd

3 and he's being threatened with physical violence. And he

4 pulls out a gun and he holds it to his head. And he says,

5 stand back or I'll shoot the sheriff. The debtor in this

6 case has agreed to a deal in which they've undertaken to get

7 a preliminary injunction and the other party to the deal has

8 said, if I don't get this preliminary injunction I'm going

9 to withdraw from the deal. This to me is a totally self

10 created scenario for irreparable harm.

11 As to the balance of the harm, we have injured

12 parties who are ready to go to trial. It's represented that

13 up until now, up until a week before this, every injured

14 party who successfully prosecuted a claim has been paid in

15 full, and that many of the injured parties were able to

16 reach settlements with Cooper Industries in which the

17 settlement has been paid in full.

18 Many of the injured parties are suffering from

19 fatal diseases caused by exposure to asbestos; mesothelioma,

20 other types of fatal diseases. That some of the claimants

21 have died already and their claims are being pursued by

22 their related parties or the executor of their estate.

23 Others are projected to die very soon. Numerous matters are

24 scheduled for trial in the coming days, weeks and months.

25 The prospect that these injured parties are



Decision 132

1 offered is to wait, have their claims stayed until the

2 debtor can attempt to reorganize, in which case their claims

3 would be channeled to a trust. The trust would have a

4 matrix for paying the claims, and it's projected that the

5 funds in the trust would be sufficient to pay 100 percent of

6 the matrix value of the claims.

7 Now, what the matrix value of the claims is,

8 nobody knows. But it is, where there's a history in the

9 past of injured parties recovering millions of dollars for

10 these claims if the -- It seems unlikely to me that the

11 matrix would be sufficient to offer millions of dollars to

12 these claimants. And it's projected to be 38,000 claimants

13 at this point, to grow some to about 50,000 claimants. Some

14 of them may be very minor claims but others are obviously

15 very serious claims.

16 The harm to the debtor is that if the injunction

17 isn't issued they're going to have a difficult problem in

18 trying to confirm the plan over Cooper's objection. Of

19 course there are still other objections out there, so

20 confirmation is hardly a forgone conclusion. The other harm

21 is that there are projected to be 500,000 other personal

22 injury claimants not related to Pneumo Abex that have been

23 delayed for four years and three months so far by this

24 bankruptcy, and they will be delayed further in getting any

25 payment for their claims.



Decision 133

1 It is a continuing concern that these folks have

2 been delayed in getting payment for their serious injuries

3 while this claim, this case has dragged along here in

4 Bankruptcy Court. Not to say that there haven't been many

5 many complex issues that needed to be resolved before

6 anybody could get paid.

7 As to success on the merits, in the context of a

8 bankruptcy reorganization case where the injunction is

9 sought so that the debtor plan proponent can attempt to

10 reorganize, success on the merits is determined by whether

11 or not it is likely that the debtor can propose, confirm and

12 implement a plan. The circumstance that we have now is that

13 the plan that's on file can't be confirmed as is, no new

14 plan has yet been proposed. The history of this case shows

15 that in four years and three months the debtor has been

16 unable to get confirmation of a plan.

17 There are still significant interests with

18 opposition to a plan, not the least of which is the

19 insurance carriers. There's also the personal damage

20 committee. And it's projected by counsel who have appeared

21 here today, that if the plan proposed is a 524(g) injunction

22 against parties who have claims against Pneumo, that they

23 are likely to oppose confirmation.

24 I would note in passing that in the COMBUSTION

25 ENGINEERING case the parties that carried the ball to the



Decision 134

1 Third Circuit on the appeal were the insurance carriers and

2 certain cancer claimants who were not satisfied with the

3 plan, even though there was a requisite voting in the class

4 put into the 524(g) trust to get approval there.

5 Whether the debtor can propose a plan that would

6 provide the so-called Pneumo protected parties with 524(g)

7 protection, to me is dubious at this point. The statute,

8 let's see, has a lot of conditions or a description as to

9 parties who would be entitled to 524(g) protection, other

10 than the debtor. The statute requires that the party to be

11 covered by the injunction must be alleged to be directly or

12 indirectly liable for conduct, claims against or demands on

13 the debtor to the extent that such liability of the third

14 party arises by reason of the third party's ownership of a

15 financial interest in the debtor, a past or present

16 affiliate of the debtor, or predecessor in interest to the

17 debtor.

18 That's the primary provision of 524(g)(4)(A)2

19 that's relied on by the moving party. The moving party says

20 that these Pneumo protected parties could also be covered

21 under II because they were involved in the management of the

22 debtor or a predecessor of the debtor, because some of them

23 provided insurance to the debtor. And fourth, because these

24 parties were involved in a transaction that changed the

25 corporate structure, including acquiring or selling a



Decision 135

1 financial interest in an entity as part of such transaction.

2 It is not clear to me that one of the Pneumo

3 protected parties; Cooper, would fall into the category of

4 parties protected to the extent that Cooper's liability is

5 only on account of its indemnity or guarantee of indemnity

6 of Pneumo at the time that Wagner acquired the friction

7 products division. At least one of the objectors, if not

8 more, says that they haven't, the people that they represent

9 haven't sued Cooper. They've sued Pneumo. And the fact

10 that Pneumo is indemnified by Cooper and that Pneumo has

11 insurance doesn't impact them, and that 524(g) was not meant

12 to cover parties who have agreed to indemnify defendants in

13 asbestos personal liability cases.

14 The facts presented in this application for a

15 preliminary injunction or motion for a preliminary

16 injunction are woefully inadequate to describe how claims

17 are asserted against Cooper that could result in a 524(g)

18 injunction. Now, the Court is authorized under Rule 52E to

19 hear motions on affidavits without taking testimony. But

20 the affidavits in this case all refer to the indemnity

21 obligation of Cooper and the related indemnity obligation of

22 Federal Mogul to Cooper. It doesn't relate to this third

23 party's direct or indirect liability for claims or demands

24 against the debtor, again, that arise by reason of the

25 ownership of a predecessor in interest of the debtor.



Decision 136

1 And I'm confident that the plain language doctrine

2 that the Supreme Court advocates in statutory construction

3 and the Third Circuit's reading of 524(g) in the COMBUSTION

4 ENGINEERING case would require that it be clear that a party

5 is entitled to an injunction under 524(g) before a plan

6 could be confirmed giving them that injunction. And the

7 Third Circuit has made clear that if 524(g) doesn't provide

8 for an injunction the Bankruptcy Court has no power to issue

9 an injunction outside of 524(g).

10 So I find that the moving parties have failed to

11 prove irreparable harm, have failed to prove that the

12 balance of the harm to them outweighs any harm to the

13 defendants, and have failed to prove a reasonable

14 probability of success on the merits for the purpose of

15 getting a preliminary injunction. Now, this is, whether we

16 characterize this as a preliminary injunction or a temporary

17 restraining order, at this stage in the proceedings without

18 discovery having been taken, it's essentially seeking a

19 temporary restraining order.

20 And temporary restraining orders are generally put

21 in place to preserve the status quo. And the status quo is

22 that Cooper and its insurance carriers have been paying

23 people with asbestos personal injury claims. And without

24 more, I think that status quo should be preserved. So the

25 plaintiff's motion for a preliminary injunction is denied.



137

1 All right? Thank you all. See you again.

2 * * *

3 CERTIFICATION

4 I, SUSAN WALSH, Certified Agency Transcriber, do

5 hereby certify that the foregoing transcript of proceedings

6 on copied disk is prepared in full compliance with the

7 current Transcript Format for Judicial Proceedings and is a

8 true and accurate transcript of the motion as recorded in

9 the matter of FEDERAL MOGUL heard by the US Bankruptcy Court

10 of New Jersey, on January 20, 2006.

11

12 _________________________________ _____________

SUSAN WALSH AOC No.

13

14 TERRY GRIBBEN'S TRANSCRIPTION SERVICE _____________

15

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25



CADWALADER, WICKERSHAM & TAFT LLPOne World Financial Center

New York, New York 10281

Telephone: (212) 504-6000Facsimile: (212) 504-6666

Bruce R. Zirinsky, Esq.John H. Bae, Esq.

Attorneys for the Debtor and Debtor in Possession



---------------------------------------------------------------------------

In re:

T H AGRICULTURE & NUTRITION, L.L.C.,

Debtor.

---------------------------------------------------------------------------

x

:

::

:

:

x

Chapter 11

Case No. 08-14692 (REG)

DEBTOR’S RESPONSE TO AMENDED STATEMENT OF

VOLKSWAGEN GROUP OF AMERICA INC. IN SUPPORTOF MOTION TO MODIFY SCHEDULING ORDER

TO THE HONORABLE ROBERT E. GERBERUNITED STATES BANKRUPTCY JUDGE:

T H Agriculture & Nutrition, L.L.C. (“THAN” or the “Debtor”), as debtor and

debtor in possession, submits this response (the “Response”) to the Amended Statement in

Support of Motion to Modify the Scheduling Order filed by Volkswagen Group of America

(“Volkswagen”) on December 24, 2008 (the “Statement”).1 For the reasons set forth below, the

Debtor respectfully submits that Volkswagen has no cognizable claim in this chapter 11 case,

and the Court should disregard Volkswagen’s Statement and deny the relief requested.

1 Volkswagen filed its original Statement In Support of Motion to Modify Scheduling Order Entered

November 25, 2008 (the “Original Statement”) on December 23, 2008. See Docket No. 171.



-2-

PRELIMINARY STATEMENT

1. On December 24, 2008, Volkswagen filed its Statement, seeking to join in

and support the relief sought by various insurance carriers in their motions to modify the Court’s

Scheduling Order and to adjourn the hearing to consider confirmation of the Debtor’s proposed

plan of reorganization by 60 days. The sole stated basis for the relief sought by Volkswagen is

that the Plan could affect Volkswagen’s substantive and procedural rights as a codefendant with

the Debtor in certain lawsuits. Volkswagen, however, has failed to identify what substantive or

procedural rights it has against the Debtor or its estate.

2.

Volkswagen has simply failed to bear its burden to demonstrate that it

holds any cognizable interest in this chapter 11 case, or present any other basis to have standing

to seek the relief sought in the Statement. Much of the Statement is based on general,

unsubstantiated assertions, relying on vague references to unidentified lawsuits and what “may”

happen in “certain situations” in which Volkswagen might possibly have a cross-claim against

the Debtor. What is clear is that Volkswagen has identified no cross-claim against the Debtor

that it has or ever had and that it has not articulated any justification for the Court to grant its

request to modify the Scheduling Order.

3. Because it has no standing in the chapter 11 case, Volkswagen should not

be allowed to intervene in any motion seeking to modify the Scheduling Order. Even if

Volkswagen could establish standing to participate in this chapter 11 case, which it cannot,

Volkswagen has failed to articulate why it requires more time. As explained below, the issues it

has identified, such as the treatment of cross-claims under the Plan and the role to be played by

the representative of future demand holders, can be addressed by reviewing the proposed plan

and related documents. Volkswagen has failed to articulate why the time period contemplated



-3-

under the Scheduling Order is not sufficient for Volkswagen to complete its review of such

documents. The relief sought by Volkswagen should be denied.

BACKGROUND

4. On November 24, 2008 (the “Commencement Date”), the Debtor

commenced this case under chapter 11 of title 11 of the United States Code (the “Bankruptcy

Code”). The Debtor is authorized to operate its business and manage its properties as a debtor in

possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.

5. Simultaneously with the filing of its chapter 11 petition, the Debtor filed

(i) the Prepackaged Plan of Reorganization of T H Agriculture & Nutrition, L.L.C. Under

Chapter 11 of the Bankruptcy Code, dated October 10, 2008 [Docket No. 20] (the “Plan”);

(ii) the disclosure statement related thereto, dated October 10, 2008 [Docket No. 21] (the

“Disclosure Statement”), which was used in prepetition solicitation of votes on the Plan; and

(iii) the vote certification of the Debtor’s balloting agent, describing the overwhelming

acceptance of the Plan by holders of impaired claims entitled to vote.

6. On November 25, 2008 this Court entered an order (the “Scheduling

Order”) scheduling a hearing on January 15, 2009 for the approval of the Disclosure Statement

and the confirmation of the Plan (collectively, the “Confirmation Hearing”).

7. On December 12 and 16, 2008, certain of the Debtor’s insurers filed

motions seeking to modify the Scheduling Order and requesting that the Confirmation Hearing

be adjourned for 60 days. The Court has not yet ruled on the motions.



-4-

BASIS FOR DENYING RELIEF REQUESTED

I. Volkswagen Lacks Standing

8. As a threshold matter, Volkswagen has no standing to seek modification

of the Scheduling Order. A party invoking federal jurisdiction has the burden of establishing that

it has standing with respect to each issue on which it wishes to be heard. Lujan v. Defenders of

Wildlife, 504 U.S. 555, 561 (1992) (“party invoking federal jurisdiction bears the burden of

establishing the[] elements [of standing]”); In re Refco Inc., 505 F.3d 109, 119 (2d Cir. 2007).

9. In order to establish that it has standing, Volkswagen must show that it has

“a legally protected interest affected by the bankruptcy proceeding.” In re Quigley Co., Inc.,

391 B.R. 695, 701-05 (Bankr. S.D.N.Y. 2008) (quoting In re James Wilson Assocs., 965 F.2d

160, 169 (7th Cir. 1992) (Posner, J.)); In re Martin Paint Stores, 199 B.R. 258, 263 (Bankr.

S.D.N.Y. 1996) (Bernstein, J.), aff’d , 207 B.R. 57, 61 (S.D.N.Y. 1997) (citations omitted).

Although Volkswagen has asserted that it has an interest that would be affected by this chapter

11 case, it has failed to identify what specific interest it actually holds, much less demonstrate

how the Debtor’s Plan could impair such interest. Volkswagen merely posits that it is a

codefendant with the Debtor in some unidentified case or cases, where it may perhaps have a

cross-claim against the Debtor. And, based on this conjecture of a claim, Volkswagen contends

that it should be granted more time to explore the effect of the Debtor’s Plan on such

hypothetical claims.2

10. Volkswagen also alleges, baselessly, that the Debtor has intentionally

acted to deprive “current cross-claim holders” of their due process rights. Yet Volkswagen itself

2 While not relevant to the question of whether Volkswagen has standing in this chapter 11 case, the

Debtor is not aware of ever having distributed asbestos to Volkswagen, and is not aware of any other

connection to Volkswagen.



-5-

is not such a party. Pointedly, Volkswagen does not aver in its Statement that it now holds or

seeks to prosecute a cross-claim against the Debtor. In fact, Volkswagen has never prosecuted a

cross-claim against the Debtor in any past or present asbestos action. Furthermore, no co-

defendant in any asbestos-related case has ever prosecuted a cross-claim against the Debtor. In

other words, there simply are no “current cross-claim holders” whose rights need to be protected,

and in any event, Volkswagen has no standing to assert the rights of others.

11. It bears noting that in the Statement, not only does Volkswagen fail to

assert that it has any actual cross-claims against the Debtor, but it even fails to identify any of the

cases where it holds an enforceable cross-claim, based on the excuse that it “does not have a

complete list of all such cases.” Statement, at ¶ 6. The Debtor submits that Volkswagen’s

inability to identify even a single case is indicative of the degree to which its interest is

attenuated.

12. The best that Volkswagen seems able to do is to express, on the basis of

certain academic articles concerning issues that have arisen in other asbestos chapter 11 cases,

generalized anxiety about the Debtor’s case and the effects of the Plan. Volkswagen has no

cognizable interest in such issues, and thus no standing to be heard. For example, Volkswagen

raises a concern about the “precise role of the Future Claims [sic] Representative.” Statement, at

¶ 8. This purported “concern” relates to the integrity of the reorganization process, rather than

any Volkswagen cross-claim or contribution claim against the Debtor, and as such, Volkswagen

lacks standing to be heard on such matters.

13. Insofar as Volkswagen has failed to show any cognizable interest that

would be affected by this bankruptcy case, it should not be permitted to interfere in the

scheduled progress of this case.



-6-

II. Volkswagen Has No Enforceable Right to Contribution

14. Even if Volkswagen had sought to prosecute a cross-claim against the

Debtor, such claim would not be enforceable. In many jurisdictions, a codefendant does not

have a right to payment pursuant to a contribution claim unless and until judgment has been

entered in the underlying lawsuit and the codefendant has paid more than its pro rata share of the

judgment. See, e.g., Arnold v. Garlock Inc., 288 F. 3d 234, 237 (5th Cir. 2002) (applying Texas

law and stating that the defendant did not hold a cognizable claim against the debtor where it

could not fulfill the requirements for maintaining a contribution claim because there had not been

a judgment or apportionment of fault in the underlying lawsuit); In re N. Am. Refractories Co.,

289 B.R. 356, 358 (Bankr. W. D. Pa. 2002) (applying Mississippi law and stating that

codefendant did not have a cognizable claim against the debtor because it had no right to

payment or equitable remedy where final judgment had not been entered in the underlying

lawsuit); Nat’l Mut. Ins. Co. v. Whitmer, 435 N.E.2d 1121, 1123 (Ohio, 1982) (under Ohio law,

the right to contribution only becomes enforceable once a claimant makes payment extinguishing

the whole of the common obligation).

15. Although some jurisdictions allow a codefendant to assert a contribution

claim prior to judgment, in the interest of judicial efficiency, the right to contribution does not

become enforceable until final judgment has been entered and the obligation is discharged. See

e.g. Gemco-Ware, Inc. v. Rongene Mold & Plastics Corp., 360 S.E. 2d 342, 344 (Va. 1987)

(under Virginia law, a codefendant may assert a claim based on potential future liability for

contribution; however, the right to recover arises only once the codefendant discharges the

common obligation); Mattia v. Sears, Roebuck & Co., 531 A. 2d 789, 791 (Pa. Super. 1987)

(applying Pennsylvania law and stating that while a codefendant can assert a contribution claim



-7-

in the original proceeding, the right to contribution cannot be asserted until a tortfeasor has

“discharged the common liability by paying more than his pro rata share”).

16. Here, Volkswagen does not even suggest that a judgment has been entered

in any case in which it is a codefendant with the Debtor and that it has actually paid more than its

pro rata share for such judgment (and that the Debtor has not). Thus, Volkswagen has no present

right of contribution under state law. Furthermore, any contingent claim for contribution that

Volkswagen might assert in this case would be of no avail, as it would be disallowed under the

Bankruptcy Code. Section 502(e)(1)(B) of the Bankruptcy Code provides in pertinent part:

[T]]he court shall disallow any claim for reimbursement or contribution of an entity that is liable with the debtor on . . . the claim of a creditor, to the

extent that . . . such claim for reimbursement or contribution is contingent

as of the time of allowance or disallowance of such claim for

reimbursement or contribution.

11 U.S.C. § 502(e)(1)(B). See also In re Drexel Burnham Lambert Group, Inc., 146 B.R. 98, 95

(Bankr. S.D.N.Y. 1992) (citing In re Provincetown-Boston Airlines, Inc., 72 B.R. 307, 309

(Bankr. M.D. Fla. 1987) (holding that a claim for reimbursement must be disallowed where the

claimant and debtor are co-liable in the underlying action and there was neither a determination

of the debtor’s proportionate fault in the underlying action nor had the amount owed by the

debtor been fixed, making such claims contingent)).

17. Regardless of whether or not Volkswagen asserts claims against the

Debtor, it cannot do so under state law without first obtaining a judgment. Moreover, even a

contingent claim for contribution would leave Volkswagen with no cognizable interest upon

which to base standing to be heard in this case.

III. Adjournment of the Confirmation Hearing Is Not Necessary

18. Even if Volkswagen were able to establish standing, the Court should

deny the 60-day adjournment sought by the Statement because no additional time is necessary to



-8-

“interpret the Plan” or otherwise ascertain the effect of the Plan on any rights that Volkswagen

purportedly may hold. The terms of the Plan are plain, and the questions Volkswagen raises in

its Statement are only questions of law.

19. For instance, with respect to the precise role of the Future Claimants’

Representative in this case, there is no need for additional time, insofar as the Future Claimants’

Representative’s role is clearly spelled out in the Plan and the Disclosure Statement (as well as

the Debtor’s motion seeking appointment of the Future Claimants’ Representative). See Plan §§

9.4, 10.8; Disclosure Statement § III.A.1.

20.

Similarly, while Volkswagen argues that the “Plan injunction and the

TDPs deprive current corporate cross-claim claimants of their existing state law rights,”3 there

are no “current corporate cross-claimants” to be deprived of state law rights. Moreover, even if

Volkswagen held a cognizable cross-claim against the Debtor (which it does not), it does not

need more time to review the Plan to determine whether or not its rights are being compromised

by the Plan. Indeed, presumably based on its review of the Plan, Volkswagen was able to assert

that contribution claimants are being deprived of rights because the Plan, the Plan injunction and

the TDP “block THAN or the Trust from being a defendant” in a state court action. Although

this assertion is factually wrong (see Plan § 11.5),4 Volkswagen does not need more time to

review the Plan to determine what rights it holds, if any, are being compromised by the Plan.

3 The Debtor presumes that Volkswagen’s references to the “Plan injunction” and the “Trust,” are

references to the Asbestos PI Channeling Injunction and the Asbestos PI Trust, respectively (each asdefined in the Plan). The Debtor also notes that the Plan contemplates only a singular set of trust

distribution procedures, rather than multiple “TDPs.”

4Thus, Ready v. United/Goedecke Services Inc., No. 103474, 2008 WL 5046833, at *2 (Ill. Nov. 25,

2008), the case cited by Volkswagen for the proposition that comparative fault cannot be apportioned

against an entity that is not a defendant at trial, has no relevance here.



-9-

21. Volkswagen has already been provided with a reasonable amount of time

to review the Plan. Bankruptcy Rule 2002(b) requires only twenty-five days’ notice of the

deadline for filing objections to, and any hearing on, confirmation of a plan of reorganization.

Likewise, Bankruptcy Rule 3017(a) requires only twenty-five days’ notice of a hearing to

consider a disclosure statement, and any objections or modifications thereto.

22. Having failed to explain why it requires more time to review the Plan and

related documents, or what interest it holds that are being compromised by the Plan, Volkswagen

has failed to establish cause to seek to modify the Scheduling Order.

WHEREFORE, for all of the reasons set forth above, the Debtor respectfully

requests that the Court deny the relief requested in the Statement, and grant such other and

further relief as is just.


January 2, 2009

By: /s/ John H. BaeBruce R. Zirinsky, Esq.John H. Bae, Esq.

CADWALADER, WICKERSHAM & TAFT LLP

One World Financial CenterNew York, New York 10281

Telephone: (212) 504-6000

Facsimile: (212) 504-6666 [email protected]

Attorneys for the Debtor and Debtor in Possession



1

ME1 7986876v.1

Eduardo J. Glas, Esquire (# EG7027)

McCARTER & ENGLISH, LLP Objection Date: January 5, 2009 245 Park Avenue Hearing Date: January 15, 2009

27th

Floor


(212) 609-6800 - Telephone(212) 609-6921 - Facsimile

Attorneys for Owens-Illinois, Inc.



: Chapter 11

:

In re: : Case Nos. 08-14692 (REG):

T H AGRICULTURE & : RE: D.I. 20 NUTRITION, L.L.C., ::

:

Debtor. ::

OWENS-ILLINOIS, INC.’S OBJECTION TO THE

PREPACKAGED PLAN OF REORGANIZATION

Owens-Illinois, Inc. (“Owens-Illinois”), pursuant to 11 U.S.C. § 1129, hereby files its

Objection (the “Objection”) to the Prepackaged Plan of Reorganization of T H Agriculture &

Nutrition, L.L.C. Under Chapter 11 of the Bankruptcy Code [D.I. #20] (hereinafter the “Plan”).

In support of its Objection, Owens-Illinois respectfully asserts as follows:

FACTUAL BACKGROUND

1. On November 24, 2008, (the “Petition Date”), T H Agriculture & Nutrition,

L.L.C. (the “Debtor”) filed for bankruptcy protection with the United States Bankruptcy Court

for the Southern District of New York. The Debtor filed its petition for relief under Chapter 11

of Title 11 of the United States Code.

2. On the Petition Date, the Debtor filed the Plan.



2

ME1 7986876v.1

A. The Trust’s Powers.

3. The Plan creates an Asbestos Settlement Trust (the “Trust”) pursuant to Section

524(g) of Title 11 of the Bankruptcy Code. The Plan incorporates the Asbestos PI Trust

Agreement (“Trust Agreement”) and the Asbestos PI Trust Distribution Procedures (“TDP”)

(jointly with the Trust Agreement, “Trust Documents”) as Plan Exhibits A and C, respectively.

The Trust will assume liability for all Asbestos Personal Injury Claims, which by definition is

intended to encompass any indemnification and contribution claims in addition to direct claims

against the Debtors (including the claims of Owens-Illinois). See Plan § 9.4; TDP § 5.6. The

Trust will administer the Trust Assets, liquidate Claims and make distributions to holders of

Asbestos Personal Injury Claims in accordance with the Trust Documents. See Plan § 9.4.

B. The Plan Was Negotiated Without The Interests Of Owens-Illinois Or

The Other Co-Defendants Being Fairly Represented.

4. The provisions of the Plan to which Owens-Illinois objects were negotiated by the

Asbestos Claimants Committee for the benefit of asbestos claimants. Owens-Illinois is included

as a member of the class of asbestos claimants, but has no meaningful representation on the

Asbestos Claimants Committee.

C. The Plan Permits Undue Delay In Resolving Claims

5. The Plan encourages late or delayed claims filings. A claim that meets certain

tolling provisions will be treated as timely filed if it is filed with the Trust within three (3) years

after the Initial Claims Filing Date. See TDP § 5.1(a)(2).

6. The claimant can further delay payment from the trust by electing to defer

processing of the claim. Pursuant to TDP Section 6.3, a claimant can withdraw a claim and re-

file another claim, at any time, without affecting the status of the claim for statute of limitations

purposes. A claimant can also elect to defer processing of the claim for three (3) years without



3

ME1 7986876v.1

affecting the claim for statute of limitation purposes. Adding that to the three (3) years it has to

file the claim with the Trust allows claimants up to six (6) years to begin to process their claims.

See TDP §§ 5.1(a)(2), 6.3.

7. The Expedited Review Process provides qualifying claimants with a less

burdensome process for pursuing the claims and quicker payment in cash. See TDP § 5.3(a).

Despite the fact that many claimants can elect to pursue the Expedited Review Process, they

instead elect to defer processing and payment of their claims.

8. These Plan provisions can be and are used with respect to claims that are actively

litigated pursuant to “rocket dockets” in the tort system. Claimants actively seek expedited

resolution of their tort claims against the non-bankrupt defendants, while purposely delaying

resolution of claims for the same indivisible injuries against the bankruptcy trusts -- despite the

fact that compensation is available from the trusts on an expedited basis. The Trust documents

not only set up an easy, no-fault process for payment of claims, but also allow the Trustees to

pay claims that do not meet any minimum exposure requirements. The Trust process can and

will pay money to claimants quickly.

9. The volitional delay provisions in the Plan can and will be used to delay the

payment of compensation by the Trust until after the conclusion of the tort case against the

non-bankrupt defendants. This will preclude set-offs, settlement credits and allocations of

liability under state law in the tort system and will unfairly skew negotiations. The provisions

create a real prospect for double recovery for a single, indivisible injury.

OBJECTIONS

10. Owens-Illinois objects to confirmation of the Plan for several reasons. First, as an

alleged joint tortfeasor that has contribution and indemnity rights against the Debtors, its



4

ME1 7986876v.1

interests were not fairly represented in the Plan negotiations. Owens-Illinois opposes the

volitional delay provisions in the Trust Documents. The manner in which this Court resolves the

Plan will have a profound effect on the future course of asbestos litigation in this country.

Confirmation of the Plan, with the TDP as written, should be denied unless and until these

shortcomings are rectified.

ARGUMENT

A. The Trust Fails to Protect the Interests of Asbestos Co-Defendants.

11. The debtors and the committees appointed in a chapter 11 case have a continuing

fiduciary duty to act in the best interest of all creditors and to ensure that a fair and confirmable

plan of reorganization is proposed. Likewise, bankruptcy courts have a responsibility to

administer bankruptcy cases in a fair and equitable manner, to ensure that the assets of the debtor

will be allocated in a manner consistent with the valid claims and interests of all creditors and

shareholders and to oversee the treatment or abuse of the bankruptcy process by parties.

12. Despite these ongoing obligations, none of the entities that negotiated the TDP or

Trust Agreement adequately represented the interests of the co-defendants, with the result being

that the rights of the co-defendants to fair set-offs and/or credits for Trust payments are impaired.

It is a fundamental principle that the interests of the asbestos plaintiffs are profoundly and

directly adverse to that of the co-defendants. In re Joint Eastern and Southern District Asbestos

Litigation, 982 F.2d 721, 739 (2d Cir. 1992) (“The health claimants and the co-defendant

manufacturers have been adversaries for many years in thousands of lawsuits in courts

throughout the country.”). The Second Circuit recognized that the interests of the asbestos

plaintiffs and co-defendants “are profoundly adverse to each other … [as] the class of health

claimants cannot possibly represent the class of co-defendant manufacturers in determining what



5

ME1 7986876v.1

rights the latter will have against the Trust by way of contribution or setoff, a determination that

directly affects the value of the health claimants’ claims against the manufacturers.” Id. at

739-40.

13. To the extent Plan Proponents argue that indirect claimants voted in favor of the

Plan, that is incorrect. The Debtor unilaterally put indirect claimants in the same class as the

thousands of claims submitted by the asbestos claimants and then negotiated a deal for those

claimants to support the Plan. The acceptance by that class in no way negates the validity of

Owens-Illinois’s objection. Further, as the Second Circuit recognized, the Asbestos Claimants

Committee cannot purport to settle any rights or claims of the co-defendants. See In re Joint

Eastern and Southern District Asbestos Litigation, 982 F.2d 721, 739-740 (2d Cir. 1992); see

also In re ACandS, Inc., 311 B.R. 36, 43 (Bankr. D. Del. 2004) (found that a plan was not

proposed in good faith where “the plan was largely drafted by and for the benefit of the

prepetition committee.”).

B. The TDP Encourages Volitional Delays and Facilitates Duplicative Recoveries for

the Same Injuries.

14. The TDP treats claims as timely filed if the claim is filed within three (3) years

after the Initial Claims Filing Date, after meeting certain tolling provisions. See TDP § 5.1(a)(2).

Most states only provide a two (2) year limitations period. The claimant can also elect to defer

processing of the claim or withdraw a claim and re-file another claim, at any time, without

affecting the status of the claim for statute of limitations purposes. In fact, a claimant can elect

to defer processing of the claim for three (3) years without affecting the claim for statute of

limitation purposes. See TDP § 6.3. Together, these provisions can defer claims processing for

six (6) years or more. See TDP §§ 5.1(a)(2), 6.3.



6

ME1 7986876v.1

15. While the delays are taking place, the plaintiffs are moving forward with litigation

against the co-defendants in the tort system, often receiving expedited resolution of the tort

claims of in extremis plaintiffs based on arguments that compensation and “justice” must be

provided in the plaintiff’s waning lifetime. There is no plausible argument for allowing these

same claimants purposely to delay seeking compensation and “justice” from the Trust. Such

delay merely distorts the process under state law whereby settlement credits, verdict off-sets and

liability allocations are made in the tort system.

16. The plaintiffs have a single, indivisible injury. Joint and several liability in the

tort system cannot operate fairly if Trust compensation is intentionally delayed until after the tort

case for the same injury is resolved. The prospect for double recovery is clear and raises serious

questions of public policy.

17. The no-fault compensation system created by the Trust and the tort system should

not function blind to each other. These two systems are providing compensation for indivisible

injuries allegedly caused by bankrupt and non-bankrupt defendants. To allow plaintiffs to

postpone their bankruptcy trust recovery while seeking expedited recovery in the tort system is

fundamentally unfair. It allows the plaintiffs to deprive the co-defendants of their right to a

credit in the tort system for amounts paid by the Trust and deprives the co-defendants’ right to

discover the basis for the plaintiffs’ claims in order to have the jury allocate a share of

responsibility to the bankrupt party under state law. Accordingly, the Plan and the Trust

documents incorporated therein cannot be approved as drafted.



7

ME1 7986876v.1

C. The Plan Does Not Comply With 11 U.S.C. § 1129.

18. Pursuant to Section 1129(a)(3), the court shall confirm a plan only if the plan has

been proposed in good faith and not by any means forbidden by law. See 11 U.S.C. §1129(a)(3).

The determination of whether a proposed plan complies with Section 1129(a)(3) is a two part test

-- the plan must be proposed in good faith and not by any means forbidden by law. See, e.g.,

Matter of Cajun Elec. Power Co-Op Inc., 150 F.3d 503, 519 (5th Cir. 1998) (performing both a

good faith analysis and a legality analysis pursuant to Section 1129(a)(3)).

19. The "good faith" requirement of Section 1129(a)(3) has been held to alternatively

require either "(1) the plan be consistent with the objectives of the Bankruptcy Code; (2) the plan

be proposed with honesty and good intentions and with a basis for expecting that reorganization

can be achieved; or (3) there was fundamental fairness in dealing with the creditors." Stonington

Partners, Inc. v. Official Committee of Unsecured Creditors (In re Lernout & Hauspie Speech

Products N.V.), 308 B.R. 672, 675 (D. Del. 2004) (internal citations omitted). However, courts

have emphasized that when considering "good faith" of a plan, the most important feature is an

inquiry into the ‘fundamental fairness’ of the plan. See, e.g., In re Coram Healthcare Corp., 271

B.R. 228, 234 (Bankr. D. Del. 2001).

20. As discussed above, the Plan is not fair to asbestos co-defendants, nor does it

comply with 11 U.S.C. § 1129, a pre-requisite for Plan confirmation. For this reason, as well as

the other reasons stated herein, the Plan cannot be confirmed in its current form.

D. Reservation of Rights With Regard to Section 6.5 of the TDP.

21. Owens Illinois does not object to Section 6.5 of the TDP to the extent that the

Debtors acknowledge and confirm that Section 6.5 permits any interested party to obtain a

subpoena from any Court having personal jurisdiction over the Trust and subpoena records from



8

ME1 7986876v.1

the Trust pursuant to that subpoena. To the extent the Debtors or any Plan Proponents assert a

more restrictive interpretation of Section 6.5 of the TDP, Owens Illinois expressly reserves the

right to supplement this Objection to address Section 6.5 of the TDP.

CONCLUSION

WHEREFORE, for the reasons stated above, the Plan, and the Trust documents

incorporated into the Plan, fail to satisfy the legal requirements necessary for Plan confirmation.

For all of these reasons, Owens-Illinois respectfully urges the Court to deny confirmation of the

Plan, and grant such other and further relief as deemed just and proper.

/s/ Eduardo J. Glas

Eduardo J. Glas, Esquire (# EG7027)

McCARTER & ENGLISH, LLP245 Park Avenue

27th Floor


(212) 609-6800 - Telephone(212) 609-6921 - Facsimile

[email protected]

and

Katharine L. Mayer, EsquireDaniel M. Silver, Esquire

McCarter & English, LLP

Renaissance Centre

405 N. King Street, 8th

FloorWilmington, DE 19899

(302) 984-6300 - Telephone

(302) 984-6399 - [email protected]

Attorneys for Owens-Illinois, Inc.

Dated: January 5, 2009



Hearing Date & Time: January 12, 2009 at 4:00 p.m. ESTObjection Deadline: January 9, 2009 at 12:00 p.m. EST

BRUNE & RICHARD LLPSusan BruneTheresa Trzaskoma80 Broad StreetNew York, New York 10004


-and-

STUTZMAN, BROMBERG, ESSERMAN & PLIFKA, A PROFESSIONAL CORPORATIONSander L. Esserman (Admitted Pro Hac Vice )

Andrea L. Niedermeyer (Admitted Pro Hac Vice )2323 Bryan Street, Suite 2200Dallas, Texas 75201Telephone: (214) 969-4900Facsimile: (214) 969-4999

Counsel for Samuel Issacharoff in his Capacity as theProposed Legal Representative for Future Claimants

UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------------X

)In re ) Chapter 11

) Case No. 08-14692 (REG)T H AGRICULTURE & NUTRITION, L.L.C. ))

Debtor. )--------------------------------------------------------------X

RESPONSE OF LEGAL REPRESENTATIVE FOR FUTUREASBESTOS CLAIMANTS TO AMENDED STATEMENT OFVOLKSWAGEN GROUP OF AMERICA, INC. IN SUPPORT

OF MOTION TO MODIFY SCHEDULING ORDERENTERED NOVEMBER 25, 2008



ii

TABLE OF CONTENTS

I. INTRODUCTION .................................................................................................................. 1

II. RESPONSE ........................................................................................................................... 4

A. Volkswagen Lacks Standing to Be Heard in THAN’s ReorganizationCase. ..................................................................................................................... 4

B. Volkswagen Need Only Consult 11 U.S.C. § 524(g) to FullyComprehend the Role of the FCR in the Plan Process. .......................... 10

C. Even if Volkswagen Were a Co-Defendant with THAN in CertainLawsuits Involving Asbestos Personal Injury, Volkswagen Could NotComplain of the Plan. ..................................................................................... 12

III. CONCLUSION.................................................................................................................. 15

TABLE OF AUTHORITIES

Cases

Aetna Cas. & Surety Co. v. Georgia Tubing Co., No. 93 Civ. 3659 (LAP), 1995 WL429018 (S.D.N.Y. Jul 20, 1995), aff’d , 93 F.3d 56 (2d Cir. 1996)........................... 15

Ex parte Levitt , 302 U.S. 633 (1937) ............................................................................6

Gillespie v. City of Indianapolis , 185 F.3d 693 (7th Cir. 1999), cert. denied , 528 U.S.1116 (2000) ................................................................................................................. 5

In re Amatex Corp., 110 B.R. 168 (Bankr. E.D. Pa. 1990)......................................... 15

In re APCO Liquidating Trust , 370 B.R. 625 (Bankr. D. Del. 2007) ......................... 14

In re B. Cohen & Sons Caterers, Inc., 124 B.R. 642 (E.D. Pa. 1991)........................... 9

In re Drexel Burnham Lambert Group, Inc., 146 B.R. 98 (Bankr. S.D.N.Y. 1992) .. 14

In re GCO Servs., LLC , 324 B.R. 459 (Bankr. S.D.N.Y. 2005) .................................. 14

In re Ionosphere Clubs, Inc., 101 B.R. 844 (Bankr. S.D.N.Y. 1989).......................... 16

In re James Wilson Assocs., 965 F.2d 160 (7th Cir. 1992)........................................... 4

In re Johns-Manville Corp., 68 B.R. 618 (Bankr. S.D.N.Y. 1986), aff’d , 78 B.R. 407(S.D.N.Y. 1987), aff’d sub nom, Kane v. Johns-Manville Corp., 843 F.2d 636 (2dCir. 1988) .................................................................................................................... 9

In re Keck, Mahin & Cate , 241 B.R. 583 (Bankr. N.D. Ill. 1999) ................................ 9

In re Newcare Health Corp., 244 B.R. 167 (B.A.P. 1st Cir. 2000) ............................... 9



iii

In re Pub. Serv. Co. of N.H., 88 B.R. 546 (Bankr. D.N.H. 1988) ................................. 3

In re Quigley Co., Inc., 391 B.R. 695 (Bankr. S.D.N.Y. 2008).................. 1, 3, 4, 5, 8, 9

In re Wonder Corp. of America , 70 B.R. 1018 (Bankr. D. Conn. 1987) .......................9

Kane v. Johns-Manville Corp. (In re Johns-Manville Corp.) , 843 F.2d 636 (2d Cir.

1988) ........................................................................................................................... 7

OneBeacon America Ins. Co. v. A.P.I., Inc., No. Civ. 06-167(JNE), 2006 WL 1473004(D. Minn. May 25, 2006) ............................................................................................8

Schlesinger v. Reservists Comm. to Stop the War , 418 U.S. 208 (1974)................. 6, 7

United States ex rel. Chapman v. Fed. Power Comm’n , 345 U.S. 153 (1953)............. 4

United States v. Richardson , 418 U.S. 166 (1974) ....................................................... 6

Warth v. Seldin , 422 U.S. 490 (1975)................................................................ 4, 5, 6, 7

Williamsport Nat’l Bank v. Caringi (In re Caringi) , 19 B.R. 12 (Bankr. M.D. Pa.

1982) ......................................................................................................................... 16Statutes

11 U.S.C. § 101(41) ...................................................................................................... 11

11 U.S.C. § 1109(b) ........................................................................................................ 8

11 U.S.C. § 1124(1) ........................................................................................................ 4

11 U.S.C. § 1126(f) ......................................................................................................... 4

11 U.S.C. § 502(e)(1)(B) ........................................................................................... 2, 14

11 U.S.C. § 509............................................................................................................... 2

11 U.S.C. § 524(g)(2)(B)(ii)(V) ................................................................................. 3, 11

11 U.S.C. § 524(g)(4)(B)........................................................................................... 3, 11

U.S. CONST. art. I, § 6, cl. 2 ........................................................................................... 6

U.S. CONST. art. III, § 2. ................................................................................................2



1

RESPONSE OF LEGAL REPRESENTATIVE FOR FUTUREASBESTOS CLAIMANTS TO AMENDED STATEMENT OFVOLKSWAGEN GROUP OF AMERICA, INC. IN SUPPORT

OF MOTION TO MODIFY SCHEDULING ORDERENTERED NOVEMBER 25, 2008

Professor Samuel Issacharoff, as the Court-appointed legal representative for

future claimants (the “FCR”), submits this response to the “Amended Statement of

Volkswagen Group of America, Inc. in Support of Motion to Modify Scheduling

Order Entered November 25, 2008” (“Volkswagen’s Statement”) (Dkt. No. 175) and

respectfully states as follows:

I.INTRODUCTION

Volkswagen’s Statement that purports to be in support of the Certain Insurers’

motion to modify the November 25, 2008, Scheduling Order, provides a perfect example

of what the law of standing is designed to foreclose. Strangers lacking a stake in a

debtor’s reorganization cannot just wander into court and insinuate themselves into a

chapter 11 proceeding. That is precisely what Volkswagen is attempting to do.

The threshold question with respect to standing is constitutional: whether

someone seeking to be heard has a sufficiently concrete, personalized stake in the

outcome – a tangible injury in fact. See, e.g., In re Quigley Co., Inc., 391 B.R. 695, 701-

02 (Bankr. S.D.N.Y. 2008). Without supporting details, Volkswagen alleges that it is “a

co-defendant with [THAN] in certain [pending] lawsuits … involving asbestos personal



2

injury tort claims and/or wrongful death actions ….”1 That is hardly sufficient to

establish Volkswagen’s standing to be heard in THAN’s chapter 11 case. Some

hypothetical “claim” that may possibly arise under certain circumstances at some time

cannot demonstrate that Volkswagen has a concrete, personalized stake in THAN’s

reorganization – the hallmark of Article III’s “case or controversy” requirement.2

Volkswagen’s reliance on some remote contingency also runs head-on into the

Bankruptcy Code’s mandate that contingent claims are disallowed under 11 U.S.C.

§ 502(e)(1)(B) and the parallel provision of 11 U.S.C. § 509 that hypothetical

subrogation claims are not recognized in bankruptcy. Reorganization cases deal with

serious issues among parties with real issues. They do not have time to sort out the

hypothetical inquiries of unaggrieved parties.

Volkswagen raises rhetorical questions about the FCR’s role in THAN’s

reorganization case and yet betrays a fundamental misunderstanding of the important

statutory role assigned by Congress to the FCR. It also, intentionally or

unintentionally, sidesteps a critical factual point. Both the Plan and the implementing

Asbestos PI Trust Distribution Procedures (“TDPs”) provide for asbestos demands (i.e.,

future claims) that may be founded upon contribution or indemnity claims of

codefendants. If Volkswagen or anyone else should ever establish a real, concrete,

cognizable claim for contribution arising from THAN’s asbestos liabilities founded on

1 Volkswagen’s Statement, ¶ 6. Despite the allegation, Volkswagen’s Statementidentifies no such lawsuit.

2 U.S. CONST. art. III, § 2.



3

state law, the TDPs provide a mechanism for satisfying such a claim. As will be

demonstrated below, it is not the role of the FCR to represent “individual” future

demand holders or specific “corporate” demand holders who may later bring a concrete

claim against the section 524(g) Trust. Professor Issacharoff’s role is to assure that the

Trust is fair and equitable to all future claimants and that the Trust will be “in a

financial position to pay, present [asbestos] claims and future [asbestos] demands … in

substantially the same manner.” 11 U.S.C. §§ 524(g)(4)(B) and 524(g)(2)(B)(ii)(V).

Whatever Volkswagen’s agenda may be, it is plainly improper. Unaggrieved

bystanders may not disrupt chapter 11 proceedings. The Court’s patience is not a

license to an intermeddler to work mischief in bankruptcy proceedings. Courts must

“take care not to be so liberal in granting applications [to be heard] as to over-burden

the reorganization process by allowing numerous parties to interject themselves into

the case on every issue, to the extent that the goal of a speedy and efficient

reorganization is hampered.” In re Pub. Serv. Co. of N.H., 88 B.R. 546, 554 (Bankr.

D.N.H. 1988). As the Quigley court cogently noted, “[p]roceedings would quickly grind

to a halt if the court had to hear every party on every issue.” In re Quiqley Co., Inc.,

391 B.R. at 703 (citations omitted).



4

II.RESPONSE

A. Volkswagen Lacks Standing to Be Heard in THAN’s Reorganization Case.

Asbestos claimants have standing to be heard in THAN’s chapter 11 case. They

are the principal creditor constituency whose rights stand to be impaired3 by the Plan.4

They have voted on the Plan and have overwhelmingly approved it. Other creditors

whose rights the Plan would leave unimpaired are statutorily deemed to have accepted

the Plan. 11 U.S.C. § 1126(f). And this is as it should be; creditors whose claims a plan

would not impair lack standing to complain about the plan.

As the FCR has previously noted, the Supreme Court describes the law of

standing as a “complicated specialty of federal jurisdiction ….” United States ex rel.

Chapman v. Fed. Power Comm’n , 345 U.S. 153, 156 (1953). “In essence the question of

standing is whether the litigant is entitled to have the court decide the merits of the

dispute or of particular issues.” Warth v. Seldin , 422 U.S. 490, 498 (1975). In the

specific context of an asbestos reorganization case, Chief Judge Bernstein has stated

that only one “‘who has a legally protected interest that could be affected by a

bankruptcy proceeding is entitled to assert that interest,’” and even then, only with

respect to those issues to which its interest pertains. In re Quigley Co., Inc., 391 B.R.

at 703 (quoting In re James Wilson Assocs., 965 F.2d 160, 169 (7th Cir. 1992)). Even a

3 Generally, under the Code a claim is impaired unless a plan “leaves unaltered thelegal, equitable, and contractual rights to which such claim … entitles the holder ….” 11U.S.C. § 1124(1).

4 Prepackaged Plan of Reorganization of T H Agriculture & Nutrition, L.L.C. UnderChapter 11 of the Bankruptcy Code (Dkt. No. 20).



5

party in interest “cannot challenge portions of a plan that do not affect its direct

interests.” In re Quigley Co., Inc., 391 B.R. at 703 (citations omitted).

In Gillespie v. City of Indianapolis , 185 F.3d 693, 701 (7th Cir. 1999), cert.

denied , 528 U.S. 1116 (2000), the Seventh Circuit distilled the standing inquiry to its

earthy, rhetorical essence: whose ox is being gored? There are, of course, two parts to

the inquiry. For one’s ox to be gored requires that one have an ox in the first instance.

Volkswagen has yet to show that it has an “ox” in THAN’s reorganization, and the

burden of alleging facts establishing standing always lies with the party seeking to

invoke the jurisdiction of the court. Warth , 422 U.S. at 518. Standing jurisprudence is

replete with decisions where the complaining party lacked an ox at all, let alone one

with actual or prospective wounds, and was accordingly sent packing.

Warth v. Seldin , a decision widely cited for its standing pronouncements,

involved a municipal zoning ordinance allocating 98% of a town’s vacant land to single-

family, detached housing subject to additional requirements (lot size, setback, floor

area, and habitable space). Warth , 422 U.S. at 495. Certain low and moderate income

plaintiffs alleged that the ordinance and its pattern of enforcement excluded them from

living in the town in violation of constitutional and statutory rights. Id. at 502. The

Court noted the plaintiffs’ failure to “allege facts from which it reasonably could be

inferred that, absent the respondents’ restrictive zoning practices, there is a

substantial probability that they would have been able to purchase or lease in [the

town] ...” and concluded that they lacked standing. Id. at 504-08. Put more succinctly,



6

the plaintiffs could not be heard to complain for want of a reasonable inference that

they had oxen of their own.

Nor is there standing where everyone’s ox is gored. “[W]hen the asserted harm

is a ‘generalized grievance’ shared in substantially equal measure by all or a large class

of citizens, that harm alone normally does not warrant exercise of jurisdiction.” Warth ,

422 U.S. at 499 (citing Schlesinger v. Reservists Comm. to Stop the War , 418 U.S. 208,

220-21 (1974); United States v. Richardson , 418 U.S. 166 (1974); Ex parte Levitt , 302

U.S. 633, 634 (1937)). Schlesinger , for example, was a class action against the

Secretary of Defense on behalf of all U.S. citizens and taxpayers. Schlesinger , 418 U.S.

at 211. The suit challenged the membership of Members of Congress in the Armed

Forces Reserve as an alleged violation of the Incompatibility Clause.5 Schlesinger , 418

U.S. at 209-211. The Court held that the plaintiffs’ status as citizens or taxpayers did

not confer standing on them to challenge the statute in question. Id . at 209.6

5 The Incompatibility Clause provides that “No Senator or Representative shall,during the Time for which he was elected, be appointed to any civil Office under the

Authority of the United States, which shall have been created, or the Emoluments whereof shall have been encreased during such time; and no Person holding any Office under theUnited States, shall be a Member of either House during his Continuance in Office.” U.S.CONST. art. I, § 6, cl. 2. At the time the Schlesinger suit was filed, 130 members of the 91st Congress were also members of the military reserves. Schlesinger , 418 U.S. at 211, n.2.

6 Much of the Court’s reasoning was based on constitutional standing infirmities,particularly the abstract nature of the plaintiffs’ claimed injuries (i.e., that the claimednonobservance of the Incompatibility Clause would deprive citizens of the faithful dischargeof legislative duties by Reservist Members of Congress). Schlesinger , 418 U.S. at 217. “Topermit a complainant who has no concrete injury to require a court to rule on importantconstitutional issues in the abstract would create the potential for abuse of the judicialprocess, distort the role of the Judiciary in its relationship to the Executive and the

[Footnote continued on next page]



7

Finally, it is well-settled that one may be heard only with respect to injuries to

one’s own ox. “[T]he plaintiff generally must assert his own legal rights and interests,

and cannot rest his claim to relief on the legal rights or interests of third parties.”

Warth , 422 U.S. at 499 (citations omitted). The leading decision applying this principle

in bankruptcy context is, of course, Kane v. Johns-Manville Corp. (In re Johns-Manville

Corp.) , 843 F.2d 636 (2d Cir. 1988). There, the court declined to permit Kane, a person

with a current asbestos disease, to champion the rights of third parties—future

asbestos claimants—in addition to his own. It was the court-appointed Legal

Representative for Future Claimants—the one with the ox—who successfully

challenged Kane’s standing to assert the rights of a constituency to which Kane did not

belong. Kane , 843 F.2d at 641.

Here Volkswagen appears to be championing neither its own rights nor those

of anyone else, except to the extent that it allows itself to be a cat’s paw for the

Certain Insurers, supportive of their efforts at delay. Volkswagen lacks an ox

altogether or, alternatively, its conjectural grievances are so generalized as to be

shared, in the most abstract sense, by most of the world at large.

As noted above, Volkswagen declares itself to be a co-defendant with THAN

in certain lawsuits, but does not identify any such lawsuit. Volkswagen complains

of the Plan’s alleged deprivations and impairment of rights of “corporate cross-claim

[Footnote continued from previous page]Legislature and open the Judiciary to an arguable charge of providing ‘government byinjunction’”. Id. at 222.



8

claimants”7 without explaining why such alleged deprivations and impairment are

relevant to Volkswagen. Indeed, in OneBeacon America Ins. Co. v. A.P.I., Inc., No.

Civ. 06-167(JNE), 2006 WL 1473004, at *6, n.1 (D. Minn. May 25, 2006)—an

unreported asbestos decision cited in Quigley 8 —the court rejected an assertion of

standing grounded in a hypothetical cross-claim:

Having failed to offer any support for a contribution claim,OneBeacon cannot demonstrate that the injunctive relief contemplated by the Modified Plan directly and adverselyaffects its pecuniary interests.

OneBeacon Am. Ins. Co., 2006 WL 1473004, at *6, n.1 (citations omitted).

And if dissatisfaction with the generalized effects of Section 524(g) is what prompts

Volkswagen to attempt to involve itself in this case, that would be a generalized

grievance insufficient to confer standing.

Volkswagen’s Statement, without more, does not establish Volkswagen’s bona

fides as a party in interest, though it contrives to cast itself as one.9 As in Quigley ,

only one “‘who has a legally protected interest that could be affected by a bankruptcy

7 Volkswagen’s Statement, ¶¶ 9-10.

8 391 B.R. at 704-05.

9 Section 1109(b) provides that

[a] party in interest, including the debtor, the trustee, a creditors’committee, an equity security holders’ committee, a creditor, anequity security holder, or any indenture trustee, may raise and mayappear and be heard on any issue in a case under this chapter.

11 U.S.C. § 1109(b).



9

proceeding is entitled to assert that interest,’” and even then, only with respect to those

issues to which its interest pertains. In re Quigley Co., Inc., 391 B.R. at 703.

Volkswagen does not come close to making the cut.

The banks in In re Wonder Corp. of America , 70 B.R. 1018 (Bankr. D. Conn.

1987) came somewhat closer to the threshold for standing than Volkswagen, but

still were barred from intermeddling. They had liens and security interests in

virtually all of the debtor’s assets, but lacked standing to object to confirmation of

the debtor’s plan because it left them unimpaired.10 Id. at 1019. The bankruptcy

court focused on the practical importance of standing limitations:

The doctrine of standing serves to protect the adversarial systemwhich constitutes the cornerstone of American judicial process.Pursuant to this system, courts generally will only hear thearguments of parties who have a direct stake in the consequences of aproceeding.

Id. at 1023 (quoting In re Johns-Manville Corp., 68 B.R. 618, 624 (Bankr. S.D.N.Y.

1986), aff’d , 78 B.R. 407 (S.D.N.Y. 1987), aff’d sub nom, Kane v. Johns-Manville

Corp., 843 F.2d 636 (2d Cir. 1988)).

Thus, in chapter 11 a party may have standing for some matters and not

others. In re Newcare Health Corp., 244 B.R. 167, 172 (B.A.P. 1st Cir. 2000). Here,

Volkswagen has no stake at all in THAN’s reorganization. It is not a question of

10 See In re Keck, Mahin & Cate , 241 B.R. 583, 596 (Bankr. N.D. Ill. 1999) (creditors donot have standing to challenge portions of a reorganization plan that do not affect theirdirect interest); In re B. Cohen & Sons Caterers, Inc., 124 B.R. 642, 647 (E.D. Pa. 1991)(creditor “unimpaired by those portions of the [p]lan deemed objectionable” held to lackstanding to challenge plan’s confirmation).



10

THAN’s Plan leaving Volkswagen unimpaired; the Plan does not even affect

Volkswagen. THAN is entirely correct when it asserts that “[h]aving failed to

explain …what interest it holds that are [sic] being compromised by the Plan,

Volkswagen has failed to establish cause to seek to modify the Scheduling Order.”11

B. Volkswagen Need Only Consult 11 U.S.C. § 524(g) to Fully Comprehend the Roleof the FCR in the Plan Process.

Curiously, Volkswagen claims that it needs “additional time to interpret the

Plan” so that it can investigate the “precise role of the appointed Future Claims

Representative.” Volkswagen Statement, ¶ 8. The FCR’s role in THAN’s

reorganization case, however, is not defined in the Plan but prescribed by Congress.

Section 524(g)(4)(B) provides as follows:

(B) Subject to subsection (h), if, under a plan of reorganization, akind of demand described in such plan is to be paid in whole orin part by a trust described in paragraph (2)(B)(i) in connectionwith which an injunction described in paragraph (1) is to beimplemented, then such injunction shall be valid and

enforceable with respect to a demand of such kind made, aftersuch plan is confirmed, against the debtor or debtors involved, oragainst a third party described in subparagraph (A)(ii), if—

(i) as part of the proceedings leading to issuance of such injunction, the court appoints a legal

representative for the purpose of protecting the

rights of persons that might subsequently assert

demands of such kind, and

11 Debtor’s Response to Amended Statement of Volkswagen Group of America Inc. inSupport of Motion to Modify Scheduling Order (Dkt. No. 193), ¶ 22.



12

Volkswagen’s insinuations notwithstanding, the FCR is actively protecting

the interests of all holders of asbestos demands (i.e., future asbestos claims).13 The

FCR has conducted analyses of THAN’s assets and liabilities, including pending

asbestos-related claims against THAN, investigated THAN’s insurance available to

satisfy pending and future asbestos-related claims and demands, participated in

prepetition negotiations leading up to the commencement of this case, and

negotiated the global settlement of the potential asbestos-related liabilities of

THAN and certain related parties, making certain that the terms and provisions of

the Plan, the Trust and the TDPs are fair and equitable to the holders of asbestos

demands and that such provisions are designed to treat current and future asbestos

claims in substantially the same manner. In sum, the FCR has done, and will

continue to do, exactly what Congress mandated.

C. Even if Volkswagen Were a Co-Defendant with THAN in Certain LawsuitsInvolving Asbestos Personal Injury, Volkswagen Could Not Complain of the

Plan.

Under the Plan, Asbestos PI Claims, which include a subset of “Indirect

Asbestos PI Claims”, are to be channeled to and assumed by the Asbestos PI Trust

and determined and paid in accordance with the terms, provisions and procedures

of the TDPs. Plan, Art. 4.4. Indirect Asbestos PI Claims include any cross-claims

and contribution demands (i.e., future claims) derivative of THAN’s own asbestos

13 It must be borne in mind that anyone who currently has an Asbestos PI Claim is notpart of the FCR’s constituency.



13

liability that might arise.14 Such demands include the hypothetical scenario that

Volkswagen describes in its unsupported allegation of being a co-defendant with

THAN in pending asbestos litigation. Volkswagen’s Statement, ¶ 6.

Under the TDPs, Indirect Asbestos PI Claims are subject to the same

categorization, evaluation, and payment provisions of the TDP as all other Asbestos

PI Claims. TDPs, Sec. 2.6. Indirect Asbestos PI Claims are to be treated as

presumptively valid and paid by the Asbestos PI Trust subject to the applicable

Payment Percentage if certain requirements are met.15 To establish a

presumptively valid Indirect Asbestos PI Claim, the Indirect Claimant’s aggregate

liability for the Direct Claimant’s claim must have been fixed, liquidated and paid

fully by the Indirect Claimant by settlement (with an appropriate full release in

14 “Indirect Asbestos PI Claims” is defined broadly, including, inter alia , cross-claims,contribution claims, subrogation claims, reimbursement claims, indemnity claims and othersimilar derivative Claims and Demands, whether in the nature of or sounding in tort, or

under contract, warranty, guarantee, contribution, joint and several liability, subrogation,reimbursement, or indemnity, or any other theory of law for, arising out of, resulting from,or relating to death or personal injury caused, or allegedly caused, by the presence of, orexposure to, asbestos in any way used by THAN or any Entity for whose products oroperations THAN has liability or is alleged to have liability to the extent arising from acts,omissions, business or operations of THAN. Plan, Art. 1.78.

15 The requirements are that (a) such claim satisfied the requirements of the Bar Datefor such claims established by the Bankruptcy Court, if applicable, and is not otherwisedisallowed by Section 502(e) of the Bankruptcy Code or subordinated under Section 509(c)of the Bankruptcy Code, and (b) the holder of such claim (the “Indirect Claimant”)

establishes to the satisfaction of the Asbestos PI Trustees that (i) the Indirect Claimant haspaid in full the liability of the Asbestos PI Trust to the individual claimant to whom the Asbestos PI Trust would otherwise have had a liability under the TDP (the “DirectClaimant”), (ii) the Direct Claimant and the Indirect Claimant have forever and fullyreleased the Asbestos PI Trust and the Asbestos Protected Parties from all liability to theDirect Claimant and the Indirect Claimant, and (iii) the claim is not otherwise barred by astatute of limitations or repose or by other applicable law. TDP, Sec. 5.6.



14

favor of the Asbestos PI Trust and the Asbestos Protected Parties) or a Final Order

provided that such claim is valid under the applicable state law. TDPs, Sec. 5.6.

But even if an Indirect Claimant cannot meet the presumptive requirements, such

claimant may request that the Asbestos PI Trust review the claim individually. Id.

If the Indirect Claimant can show that it has paid all or a portion of such a liability,

the Asbestos PI Trust is obliged to reimburse the Indirect Claimant the amount of

the liability so paid, times the then applicable Payment Percentage; provided,

however, that in no event is such reimbursement to exceed the amount to which the

Direct Claimant would have otherwise been entitled under the TDP. Id.

It is useful to examine what would happen to hypothetical cross-claims and

contribution claims in the absence of the Plan. Section 524(g) is unique in the

Bankruptcy Code in affording protection to “demands” as opposed merely to

“claims.” Without a plan predicated on section 524(g), contingent claims for

reimbursement or contribution would face congressionally-mandated disallowance

under 11 U.S.C. § 502(e)(1)(B), which provides:

[T]he court shall disallow any claim for reimbursement orcontribution of an entity that is liable with the debtor on … theclaim of a creditor, to the extent that … such claim forreimbursement or contribution is contingent as of the time of allowance or disallowance of such claim for reimbursement orcontribution.

11 U.S.C. § 502(e)(1)(B); see also In re APCO Liquidating Trust , 370 B.R. 625, 631

(Bankr. D. Del. 2007); In re GCO Servs., LLC , 324 B.R. 459, 465 (Bankr. S.D.N.Y.

2005); In re Drexel Burnham Lambert Group, Inc., 146 B.R. 98, 100-01 (Bankr.

S.D.N.Y. 1992). Application of section 502(e) is mandatory; a court has no



15

discretion to allow a reasonable estimation of a co-liable entity’s contingent claim

for reimbursement or contribution.

Similarly, section 509 implements this same congressional policy against

consideration of contingent, hypothetical claims, requiring actual payment by a

party seeking to be subrogated to the rights of a creditor before he may participate

in an estate. In re Amatex Corp., 110 B.R. 168, 168 (Bankr. E.D. Pa. 1990) (holding

that “the scope of § 502(e)(1)(B), in conjunction with 11 U.S.C. § 509(a), operates to

disallow any contingent co-liability, even if that co-liability has not been judicially

established, unless the co-obligor pays the liability and becomes subrogated to the

rights of the underlying creditor therefor”), cited with approval by , Aetna Cas. &

Surety Co. v. Georgia Tubing Co., No. 93 Civ. 3659 (LAP), 1995 WL 429018, at *4

(S.D.N.Y. Jul 20, 1995), aff’d , 93 F.3d 56 (2d Cir. 1996). Volkswagen, alleging at

best a hypothetical, contingent claim, is a mere trespasser in THAN’s bankruptcy

case.

THAN’s asbestos creditors, as has been noted, overwhelmingly voted in favor

of the Plan. Volkswagen is not a creditor of THAN’s, asbestos or otherwise.

Volkswagen must not be allowed to delay recoveries to actual asbestos creditors or

to frustrate Congress’ intent to provide for the payment of future asbestos demands

through the creation of a section 524(g) trust.

III.CONCLUSION

Standing rules exist for a reason and form a large part of federal

jurisprudence. No one can be heard in court without a sufficiently discernible stake



16

in the outcome. Volkswagen bills itself as the “Peoples Car”, but it is not the

peoples’ ombudsman in this or any chapter 11 proceeding. The notion that anyone

with anything to say may be heard on any issue in a chapter 11 case is

irreconcilable with chapter 11’s fundamental purpose, which is reorganization. See,

e.g., Williamsport Nat’l Bank v. Caringi (In re Caringi) , 19 B.R. 12, 14 (Bankr. M.D.

Pa. 1982). If anyone could be heard on any issue, the proceedings could be

disrupted or filibustered to the point of torpor. “Only those parties sufficiently

affected by a Chapter 11 proceeding should be able to appear before it and be

heard.” In re Ionosphere Clubs, Inc., 101 B.R. 844, 849 (Bankr. S.D.N.Y. 1989).

Oddly enough, potential demand holders, as Volkswagen seems to regard itself,

actually benefit from the type of plan envisioned by section 524(g) and the

important role played by a specially charged fiduciary, such as the FCR here, in

bringing such a plan to fruition. That is beside the point, however. Lacking an ox

in harm’s way, Volkswagen cannot be heard in this case.

WHEREFORE, for the reasons set forth, the FCR respectfully asks that the

Court disregard and, if deemed appropriate, overrule the “Amended Statement of

Volkswagen Group of America, Inc. in Support of Motion to Modify Scheduling

Order Entered November 25, 2008.”



17

Dated: New York, New York,January 9, 2008 Respectfully submitted,

BRUNE & RICHARD LLPBy: /s/ Theresa Trzaskoma

Theresa Trzaskoma

Susan Brune80 Broad StreetNew York, New York 10004Telephone: (212) 668-1900Facsimile: (212) 668-0315

-and-

STUTZMAN, BROMBERG, ESSERMAN &PLIFKA,

A PROFESSIONAL CORPORATION

Sander L. Esserman (Admitted Pro Hac Vice )Texas Bar No. 06671500

Andrea L. Niedermeyer (Admitted Pro Hac Vice )Texas Bar No. 240327902323 Bryan Street, Suite 2200Dallas, Texas 75201

Counsel for Samuel Issacharoff in his Capacity asthe Legal Representative for Future Claimants



{ THAN / 001 / 00016271.DOC /} - 2 -

2. In the Chapter 11 case of Federal-Mogul Global, Inc., Volkswagen and the other

major automobile manufacturers sought to remove thousands of state-court personal injury and

wrongful death claims related to the manufacture and distribution of asbestos-containing

automotive friction products to the federal district court in Delaware, where the Federal-Mogul

bankruptcy case was pending. See In re Federal-Mogul Global, Inc., 300 F.3d 368 (3d Cir.

2002). The primary reason offered by Volkswagen and the other car manufacturers for the

transfer was to have the district court overseeing the bankruptcy case conduct a “global Daubert

hearing” to determine whether the evidence that brakes and other automotive parts cause

asbestos disease is based on reliable scientific methodology. Id. at 374. The automakers argued

that “the promise of the ‘global Daubert hearing’ is to ‘excise [the Friction Product Claims] from

the American judicial system in one fell swoop and [lift] a substantial cloud … from over

Federal Mogul.’” Id. quoting Brief of Big Three Automakers at 2.

3. The Federal-Mogul court declined Volkswagen’s invitation. The district court

held that it lacked subject matter jurisdiction because the state-law friction product suits were not

related to the Federal-Mogul bankruptcy and remanded all of the cases. In doing so, the district

court recognized, “A judgment against [the Friction Product Defendants] will not bind the

debtors. No asset of the estate is threatened nor is any re-ordering of creditors in the offing. It is

true that recovery by asbestos claimants against movants may give rise to claims, indeed very

substantial claims, against the debtors in the future. It is at that time, when the movants appear as

creditors of the estate and the facts underlying the liability are adjudicated in the context of the

bankruptcy, that the Friction Product Claims will affect the estate.” Id. at 376 (quoting District

Court slip opinion dated February 15, 2002). Here, just as in Federal-Mogul, Volkswagen does



{ THAN / 001 / 00016271.DOC /} - 3 -

not appear as a creditor, but as a corporate defendant in numerous tort suits trying to use this

bankruptcy case to gain advantage in state court tort litigation.

I. VOLKSWAGEN HAS NO LEGALLY PROTECTED INTEREST THAT COULD

BE ADVERSELY AFFECTED BY THIS BANKRUPTCY CASE

4. In ruling on the standing of the insurers, this Court followed In re Quigley Co.,

Inc., 391 B.R. 695 (Bankr. S.D.N.Y. 2008) and recognized that only those with a legally

protected interest that could be affected by the bankruptcy case are entitled to assert that interest

with respect to any issue to which it pertains. Transcript of Motion Before The Honorable

Robert E. Gerber, United States Bankruptcy Judge, December 17, 2008 at p.86.

5. Volkswagen is not a creditor of THAN and has no contractual right of indemnity

against THAN. Indeed, Volkswagen has not even identified a single case where it has been

named as a co-defendant with THAN. This is not surprising because there is no evidence that

THAN ever did business with Volkswagen.

6. According to THAN’s own Disclosure Statement, THAN primarily distributed

bulk shipments of chrysotile asbestos fiber. THAN also distributed laundry products and

vermiculite that may have contained asbestos, but THAN has never been sued for exposure to

laundry products, vermiculite or any other asbestos-containing product. Every case in which

THAN has been sued has alleged exposure to a third-party manufacturer’s product that contained

asbestos fiber distributed in bulk by THAN to the manufacturer. More than 80% of the asbestos

personal injury cases have alleged exposure to joint compound and joint cement products

manufactured by Bondex International and Kelly-Moore Paint Company. The remaining cases

allege exposure to products manufactured by a handful of companies that purchased fiber from

THAN including Ruco, Inc., DAP, Inc., Flintkote Co., Welco, Certainteed Corp., Kaiser Gypsum

Co., Inc., Proko Industries, Inc., W.R.Grace Co., Weyerhauser Co., and United States Gypsum



{ THAN / 001 / 00016271.DOC /} - 4 -

Co. See Disclosure Statement with Respect to a Prepackaged Plan of Reorganization of T H

Agriculture & Nutrition, L.L.C. Under Chapter 11 of the Bankruptcy Code at pp. 3-4 [Docket

No. 21]. None of these companies manufactures automobiles.

7. Despite having no prior business relationship with THAN, Volkswagen claims

that it may assert cross-claims for contribution against THAN if, in the future, Volkswagen is

found liable in suits where THAN also has been named as a defendant. If Volkswagen is correct

and if this unlikely event were to occur, THAN’s Plan of Reorganization explicitly provides

procedures for Volkswagen to assert its claim and, if the claim is valid, get paid.

8. The Plan defines Indirect Asbestos PI Claims to include cross-claims,

contribution claims, reimbursement claims, indemnity claims and other similar derivative claims.

See Prepackaged Plan of Reorganization of T H Agriculture & Nutrition, L.L.C. Under Chapter

11 of the Bankruptcy Code (“Plan”) at § 1.78, p. 10 [Docket No. 20]. Indirect Asbestos PI

Claims are included in the definition of Asbestos PI Claim. Plan at § 1.13, p. 3. All Asbestos PI

Claims, including the Indirect Asbestos PI Claims, are channeled to the Asbestos PI Trust to be

paid in accordance with the Asbestos PI Trust Distribution Procedures. Plan at § 4.4, p. 19.

9. The Asbestos PI Trust Distribution Procedures (Exhibit C to the Disclosure

Statement) explicitly address Indirect Asbestos PI Claims in Section 5.6. The Indirect Claimant

is paid on an expedited basis if the Indirect Claimant meets certain presumptive criteria, such as

payment to an individual asbestos claimant to whom THAN would have had a liability. If the

Indirect Claimant cannot meet the presumptive requirements, the Indirect Claimant may request

individualized review by the Asbestos PI Trust. If the Indirect Claimant is not satisfied with the

determination of the Asbestos PI Trust, the Indirect Claimant may mediate or arbitrate its claim

under the Alternative Dispute Resolution Procedures adopted by the Asbestos PI Trust. If the



{ THAN / 001 / 00016271.DOC /} - 5 -

Indirect Claimant is not satisfied through mediation or arbitration, the Indirect Claimant may

bring an action against the Asbestos PI Trust in the tort system. See Asbestos PI Trust

Distribution Procedures (Exhibit C to Disclosure Statement) at § 5.6, pp. 35-38. The procedures

set forth in Section 5.6 are clear and unambiguous.

II. VOLKSWAGEN SEEKS DELAY FOR REASONS UNRELATED TO THIS

BANKRUPTCY CASE

10. At best, Volkswagen has limited standing to object to the proposed treatment of

its contingent, future claim under Section 5.6 of the Asbestos PI Trust Distribution Procedures.

Not surprisingly, Volkswagen never even addresses Section 5.6 because Volkswagen seeks

much more. Volkswagen seeks to delay this bankruptcy case in order to gain future advantage in

tort cases where it is a named defendant. This ulterior purpose is underscored by the non-

substantive issues Volkswagen raises.

11. First, Volkswagen states, “The need for additional time to interpret the Plan

involves such issues as the role of the Future Claims Representative.” Amended Statement at ¶

8. The role of the Future Claimants’ Representative is created and defined by the Bankruptcy

Code. The court must “appoint a legal representative for the purpose of protecting the rights of

persons that might subsequently assert demands” against the debtor. 11 U.S.C. §

524(g)(4)(B)(i). Demands are defined by the Bankruptcy Code to include a present or future

demand for payment that was not a claim prior to confirmation, arises out of the same or similar

conduct that gave rise to the asbestos channeling injunction, and pursuant to the plan is to be paid

by the asbestos trust. 11 U.S.C. § 524(g)(5). The Bankruptcy Code is unambiguous as to whose

interests are represented by the Future Claimants’ Representative – all future claimants who have

valid claims assertable against the Asbestos PI Trust, including all future Indirect Asbestos PI

Claims. Discovery on this issue is purposeless.



{ THAN / 001 / 00016271.DOC /} - 6 -

12. Next, Volkswagen asserts that the “Plan injunction and its TDPs deprive current

corporate cross-claim claimants of their existing state law rights by explicitly eliminating state

law trial rights against THAN (and other non-bankrupt entities), and relegating some or all

current contribution claim holders to pursuing administrative claims under rules not yet

promulgated.” Amended Statement at ¶ 9. Volkswagen appears to be objecting to the

Bankruptcy Code itself. The automatic stay of pending litigation is one of the fundamental

purposes of a chapter 11 filing and the channeling of present and future asbestos claims,

including indirect claims (see 11 U.S.C. § 524(g)(4)(A)(ii)), to a trust is the reason Congress

enacted section 524(g) of the Bankruptcy Code. This bankruptcy case is not the forum to protest

the Bankruptcy Code.

13. Volkswagen then claims that, “The Plan appears to impair the rights of co-

defendants in asbestos litigation to have fault and damages apportioned among them.” To

amplify this contention, Volkswagen points to the decision of the Illinois Supreme Court in

Ready v. United/GoedeckeServices, Inc., 2008 WL 50446833 (Ill. 2008). Volkswagen contends

that Ready stands for the proposition that in Illinois “comparative fault cannot be apportioned

against an entity that is not a defendant at trial.” Amended Statement at ¶ 10. In fact, in Ready,

the Illinois Supreme Court held that the Illinois joint liability statute in effect required that

settling defendants not be included on the verdict form for purposes of apportioning liability.

Neither this Plan nor this Court can change state law. If Volkswagen is suggesting that the Plan

cannot impair Volkswagen’s state-law rights, Volkswagen is mistaken. A bankruptcy plan of

reorganization invariably alters creditors’ state-law rights by re-negotiating or discharging debts.

If Volkswagen is suggesting that this Plan is unconfirmable because the Asbestos PI Trust does

not consent to being sued by asbestos plaintiffs, Volkswagen once again misunderstands section



{ THAN / 001 / 00016271.DOC /} - 7 -

524(g) of the Bankruptcy Code. The purpose of section 524(g) is to channel present and future

claims away from the courts and to a trust that will provide mechanisms to pay present claims

and future demands. 11 U.S.C. § 524(g)(2)(B).

14. Lastly, Volkswagen contends that, “The Plan, the Trust and the TDP procedures

may prejudice co-defendants by denying them access to information regarding the allowance of

claims.” Amended Statement at ¶ 11. Section 6.5 of the Trust Distribution Procedures addresses

the disclosure of the claimant materials submitted to the Asbestos PI Trust:

The Asbestos PI Trust shall preserve the confidentiality of such

claimant submissions, and shall disclose the contents thereof only

with the permission of the holder, … or in response to a validsubpoena.

In other words, Volkswagen can pursue discovery by requesting information from the claimant

or by serving a valid subpoena on the Asbestos PI Trust. It is hard to conceive how Volkswagen

is prejudiced when it had no greater access to information before the bankruptcy.

CONCLUSION

15. On January 6, 2009, counsel to the Committee, the Debtor, the Future Claimants’

Representative and Volkswagen held a telephonic meeting. During that meeting, Volkswagen

was unable to articulate the nature of its claim against THAN or even identify a single suit where

both THAN and Volkswagen are named defendants. However, during that meeting, Volkswagen

did articulate what it wants from this bankruptcy case: an order or agreement that will give

Volkswagen certain advantages in pending and future asbestos litigation. Volkswagen wants the

consent of Reorganized THAN and the Asbestos PI Trust to name them in tort cases so that

damages can be apportioned, and Volkswagen wants access to the claimant information

submitted to the Asbestos PI Trust. Volkswagen only has standing to object to those provisions



{ THAN / 001 / 00016271.DOC /} - 8 -

of the Plan that affect its legal rights. Volkswagen has no standing to take advantage of this

Court and this bankruptcy case to advance its interests in far-removed asbestos litigation.

For all of the foregoing reasons, the Official Committee of Unsecured Creditors

respectfully requests that this Court not delay confirmation or otherwise allow Volkswagen to

disrupt these proceedings.


January 9, 2009

OFFICIAL COMMITTEE OF UNSECURED

CREDITORS OF T H AGRICULTURE &NUTRITION, L.L.C.

By: /s/ Joseph D. Frank

Frances Gecker (IL ARDC # 6198450)

Joseph D. Frank (IL ARDC # 6216085)

FRANK /GECKER LLP325 North LaSalle Street, Suite 625

Chicago, Illinois 60654

Phone.: (312) 276-1400Fax: (312) 276-0035

Counsel to Official Committee of Unsecured

Creditors of T H Agriculture & Nutrition, L.L.C.



{ THAN / 001 / 00016271.DOC /}

CERTIFICATE OF SERVICE

I, Joseph D. Frank, hereby certify that on January 9, 2009, a true and correct copy of the

foregoing Response of the Official Committee of Unsecured Creditors of T H Agriculture &

Nutrition, L.L.C to Amended Statement of Volkswagen Group of America, Inc. In Support of

Motion to Modify Scheduling Order was filed electronically. Notice of the filing will be sent to

all parties who are currently on the Court’s Electronic Mail Notice List, a copy of which is

attached hereto, by operation of the Electronic Filing System. In addition, a copy was sent to the

parties listed below via electronic transmission on January 9, 2009.

Counsel to the Debtor John H. Bae

Bruce R. Zirinsky

CADWALADER, WICKERSHAM & FAFT LLPOne World Financial Center


Facsimile: (212) 504-6666

[email protected]; [email protected]

Counsel to the Future Claimants’Representative

Sander L. Esserman

STUTZMAN, BROMBERG, ESSERMAN & PLIFKA 2323 Bryan Street, Suite 2200

Dallas, Texas 75201

Facsimile: (214) 969-4999

[email protected]

OFFICE OF THE UNITED STATES TRUSTEE

FOR THE SOUTHERN DISTRICT OF NEW YORK

Att’n: Serene Nakano33 Whitehall Street, 21st Floor



Counsel to the Future Claimants’

Representative

Susan BruneBRUNE & RICHARD, LLP

80 Broad Street



Jo Christine Reed


1221 Avenue of the AmericasNew York, New York 10020-1089

Facsimile: (212) 768-6800

[email protected]

Robert B. Millner


7800 Sears Tower233 South Wacker Drive


Facsimile: (312) 876-7934

[email protected]



{ THAN / 001 / 00016271.DOC /} 2

Constantine D. Pourakis

STEVENS & LEE, P.C.485 Madison Avenue, 20th Floor


Facsimile: (610) 371-1237

[email protected]




Facsimile: (610) 371-7376

[email protected]

John D. Demmy

STEVENS & LEE, P.C.

485 Madison Avenue, 20th Floor


Facsimile: (610) 371-8515

[email protected]

Robert W. Dremluk

SEYFARTH SHAW LLP

620 Eighth Avenue

New York, New York 10018-1405

Facsimile: (212) 218-5526

[email protected]

David C. Christian II

STEVENS & LEE, P.C.

131 South Dearborn Street, Suite 2400Chicago, Illinois 60603-5577

Facsimile: (312) 460-7833

[email protected]

Karel S. Karpe

WHITE AND WHITE LLP

One Penn Plaza, Suite 4110New York, New York 10119

Facsimile: (212) 631-4431

[email protected]

Marc S. CasarinoWHITE AND WHITE LLP

824 Market Street, Suite 902

Wilmington, Delaware 19801

Facsimile: (302 ) 467-4550

[email protected]

Kirk T. HartleyGerald F. Munitz

Karen M. Borg

BUTLER RUBIN SALTARETTI & BOYD LLP70 West Madison Street, Suite 1800


Facsimile: (312) 873-7382 (Hartley)(312) 444-9294 (Munitz)

(312) 444-11116 (Borg)

[email protected];

[email protected];

[email protected]




{ THAN / 001 / 00016271.DOC /}

Mailing Information for Case 08-14692-reg

Electronic Mail Notice List

The following is the list of parties who are currently on the list to receive e-mail notice/service

for this case.

• John H. Bae [email protected], [email protected];[email protected]

• Jacob C. Cohn [email protected]

• Robert W. Dremluk [email protected],

[email protected],[email protected],[email protected],

• Joseph D. Frank [email protected], [email protected];[email protected]

• Alan E. Gamza [email protected],

[email protected];[email protected]

• Jeanette M. Gilbert [email protected]

• Eduardo J. Glas [email protected]• Frederic C. Goodwill [email protected], [email protected]

• Karel S. Karpe [email protected], [email protected]

• David P. McClain [email protected],


• Serene K. Nakano [email protected]

• Constantine Pourakis [email protected]

• Jo Christine Reed [email protected], [email protected]

• Ira A. Reid [email protected]

• Joseph F Rice [email protected]

• Tancred V. Schiavoni [email protected]

• Christina C. Skubic [email protected]• Theresa Trzaskoma [email protected],


• Bruce R. Zirinsky

[email protected];[email protected];[email protected];[email protected];[email protected];[email protected];allison.dipasqua@cwt.

com



PHLDMS1 4969786v.1

APPENDIX

TABLE OF CONTENTS

Exhibit 1 Massachusetts Asbestos Complaint Naming TH Agriculture & Nutrition, L.L.C.,Volkswagen Group of America, Inc. and Phillips Electronics North America

Corporation as Defendants

Exhibit 2 Data Table

Exhibit 3 Declarations of Robert H. Shultz, Somers S. Price, Jr. and Christian J. Singewald

Exhibit 4 Case Management Orders Regarding Cross - Claims Automatically Deemed Filed

in Underlying Asbestos Cases in the Jurisdiction (Rhode Island CMOs 5-7;

Delaware CMO Standing Order No. 1, ¶ 24)

Exhibit 5 September 30, 2008 Opinion - In Re Federal-Mogul Global Inc.

Exhibit 6 T. Lynn Walden & Angela Kneeland, Spreading the Wealth by Sharing the

Responsibility (Defense Research Institute 2007)

Exhibit 7 Bates & Mullen, Having Your Tort And Eating It Too



{ THAN / 001 / 00016271.DOC /}

FRANK /GECKER LLPFrances Gecker

Joseph D. Frank

325 North LaSalle Street, Suite 625Chicago, Illinois 60654

(312) 276-1400 – telephone(312) 276-0035 – facsimile

Hearing Date and Time:

January 12, 2009

4:00 p.m.

Proposed Counsel to Official Committee

of Unsecured Creditors of T H Agriculture &

Nutrition, L.L.C.

IN THE UNITED STATES BANKRUPTCY COURT


In re:


Debtor.

)

)

))

)

Chapter 11

Case No. 08-14692 (REG)

RESPONSE OF THE OFFICIAL COMMITTEE OF

UNSECURED CREDITORS OF T H AGRICULTURE & NUTRITION, L.L.C.

TO AMENDED STATEMENT OF VOLKSWAGEN GROUP OF AMERICA, INC.

IN SUPPORT OF MOTION TO MODIFY SCHEDULING ORDER

The Official Committee of Unsecured Creditors (the “Committee”) of T H Agriculture &

Nutrition, L.L.C. (“THAN” or the “Debtor”), by its counsel, Frank/Gecker LLP, hereby responds

to the Amended Statement of Volkswagen Group of America, Inc. (“Volkswagen”) in support of

Motion to Modify the Court’s First Day Scheduling Order (the “Amended Statement”).

1. Corporate co-defendants in tort actions arising from exposure to asbestos are not

strangers to asbestos bankruptcy cases. But unlike creditors who look to the bankruptcy process

as a means to get paid, opportunistic corporate co-defendants often look to the bankruptcy

process as a means to gain an advantage in tort suits being litigated far from the bankruptcy

court. Volkswagen has engaged in this opportunistic conduct in the past and appears to be doing

so again.



{ THAN / 001 / 00016271.DOC /} - 2 -

2. In the Chapter 11 case of Federal-Mogul Global, Inc., Volkswagen and the other

major automobile manufacturers sought to remove thousands of state-court personal injury and

wrongful death claims related to the manufacture and distribution of asbestos-containing

automotive friction products to the federal district court in Delaware, where the Federal-Mogul

bankruptcy case was pending. See In re Federal-Mogul Global, Inc., 300 F.3d 368 (3d Cir.

2002). The primary reason offered by Volkswagen and the other car manufacturers for the

transfer was to have the district court overseeing the bankruptcy case conduct a “global Daubert

hearing” to determine whether the evidence that brakes and other automotive parts cause

asbestos disease is based on reliable scientific methodology. Id. at 374. The automakers argued

that “the promise of the ‘global Daubert hearing’ is to ‘excise [the Friction Product Claims] from

the American judicial system in one fell swoop and [lift] a substantial cloud … from over

Federal Mogul.’” Id. quoting Brief of Big Three Automakers at 2.

3. The Federal-Mogul court declined Volkswagen’s invitation. The district court

held that it lacked subject matter jurisdiction because the state-law friction product suits were not

related to the Federal-Mogul bankruptcy and remanded all of the cases. In doing so, the district

court recognized, “A judgment against [the Friction Product Defendants] will not bind the

debtors. No asset of the estate is threatened nor is any re-ordering of creditors in the offing. It is

true that recovery by asbestos claimants against movants may give rise to claims, indeed very

substantial claims, against the debtors in the future. It is at that time, when the movants appear as

creditors of the estate and the facts underlying the liability are adjudicated in the context of the

bankruptcy, that the Friction Product Claims will affect the estate.” Id. at 376 (quoting District

Court slip opinion dated February 15, 2002). Here, just as in Federal-Mogul, Volkswagen does



{ THAN / 001 / 00016271.DOC /} - 3 -

not appear as a creditor, but as a corporate defendant in numerous tort suits trying to use this

bankruptcy case to gain advantage in state court tort litigation.

I. VOLKSWAGEN HAS NO LEGALLY PROTECTED INTEREST THAT COULD

BE ADVERSELY AFFECTED BY THIS BANKRUPTCY CASE

4. In ruling on the standing of the insurers, this Court followed In re Quigley Co.,

Inc., 391 B.R. 695 (Bankr. S.D.N.Y. 2008) and recognized that only those with a legally

protected interest that could be affected by the bankruptcy case are entitled to assert that interest

with respect to any issue to which it pertains. Transcript of Motion Before The Honorable

Robert E. Gerber, United States Bankruptcy Judge, December 17, 2008 at p.86.

5. Volkswagen is not a creditor of THAN and has no contractual right of indemnity

against THAN. Indeed, Volkswagen has not even identified a single case where it has been

named as a co-defendant with THAN. This is not surprising because there is no evidence that

THAN ever did business with Volkswagen.

6. According to THAN’s own Disclosure Statement, THAN primarily distributed

bulk shipments of chrysotile asbestos fiber. THAN also distributed laundry products and

vermiculite that may have contained asbestos, but THAN has never been sued for exposure to

laundry products, vermiculite or any other asbestos-containing product. Every case in which

THAN has been sued has alleged exposure to a third-party manufacturer’s product that contained

asbestos fiber distributed in bulk by THAN to the manufacturer. More than 80% of the asbestos

personal injury cases have alleged exposure to joint compound and joint cement products

manufactured by Bondex International and Kelly-Moore Paint Company. The remaining cases

allege exposure to products manufactured by a handful of companies that purchased fiber from

THAN including Ruco, Inc., DAP, Inc., Flintkote Co., Welco, Certainteed Corp., Kaiser Gypsum

Co., Inc., Proko Industries, Inc., W.R.Grace Co., Weyerhauser Co., and United States Gypsum



{ THAN / 001 / 00016271.DOC /} - 4 -

Co. See Disclosure Statement with Respect to a Prepackaged Plan of Reorganization of T H

Agriculture & Nutrition, L.L.C. Under Chapter 11 of the Bankruptcy Code at pp. 3-4 [Docket

No. 21]. None of these companies manufactures automobiles.

7. Despite having no prior business relationship with THAN, Volkswagen claims

that it may assert cross-claims for contribution against THAN if, in the future, Volkswagen is

found liable in suits where THAN also has been named as a defendant. If Volkswagen is correct

and if this unlikely event were to occur, THAN’s Plan of Reorganization explicitly provides

procedures for Volkswagen to assert its claim and, if the claim is valid, get paid.

8. The Plan defines Indirect Asbestos PI Claims to include cross-claims,

contribution claims, reimbursement claims, indemnity claims and other similar derivative claims.

See Prepackaged Plan of Reorganization of T H Agriculture & Nutrition, L.L.C. Under Chapter

11 of the Bankruptcy Code (“Plan”) at § 1.78, p. 10 [Docket No. 20]. Indirect Asbestos PI

Claims are included in the definition of Asbestos PI Claim. Plan at § 1.13, p. 3. All Asbestos PI

Claims, including the Indirect Asbestos PI Claims, are channeled to the Asbestos PI Trust to be

paid in accordance with the Asbestos PI Trust Distribution Procedures. Plan at § 4.4, p. 19.

9. The Asbestos PI Trust Distribution Procedures (Exhibit C to the Disclosure

Statement) explicitly address Indirect Asbestos PI Claims in Section 5.6. The Indirect Claimant

is paid on an expedited basis if the Indirect Claimant meets certain presumptive criteria, such as

payment to an individual asbestos claimant to whom THAN would have had a liability. If the

Indirect Claimant cannot meet the presumptive requirements, the Indirect Claimant may request

individualized review by the Asbestos PI Trust. If the Indirect Claimant is not satisfied with the

determination of the Asbestos PI Trust, the Indirect Claimant may mediate or arbitrate its claim

under the Alternative Dispute Resolution Procedures adopted by the Asbestos PI Trust. If the



{ THAN / 001 / 00016271.DOC /} - 5 -

Indirect Claimant is not satisfied through mediation or arbitration, the Indirect Claimant may

bring an action against the Asbestos PI Trust in the tort system. See Asbestos PI Trust

Distribution Procedures (Exhibit C to Disclosure Statement) at § 5.6, pp. 35-38. The procedures

set forth in Section 5.6 are clear and unambiguous.

II. VOLKSWAGEN SEEKS DELAY FOR REASONS UNRELATED TO THIS

BANKRUPTCY CASE

10. At best, Volkswagen has limited standing to object to the proposed treatment of

its contingent, future claim under Section 5.6 of the Asbestos PI Trust Distribution Procedures.

Not surprisingly, Volkswagen never even addresses Section 5.6 because Volkswagen seeks

much more. Volkswagen seeks to delay this bankruptcy case in order to gain future advantage in

tort cases where it is a named defendant. This ulterior purpose is underscored by the non-

substantive issues Volkswagen raises.

11. First, Volkswagen states, “The need for additional time to interpret the Plan

involves such issues as the role of the Future Claims Representative.” Amended Statement at ¶

8. The role of the Future Claimants’ Representative is created and defined by the Bankruptcy

Code. The court must “appoint a legal representative for the purpose of protecting the rights of

persons that might subsequently assert demands” against the debtor. 11 U.S.C. §

524(g)(4)(B)(i). Demands are defined by the Bankruptcy Code to include a present or future

demand for payment that was not a claim prior to confirmation, arises out of the same or similar

conduct that gave rise to the asbestos channeling injunction, and pursuant to the plan is to be paid

by the asbestos trust. 11 U.S.C. § 524(g)(5). The Bankruptcy Code is unambiguous as to whose

interests are represented by the Future Claimants’ Representative – all future claimants who have

valid claims assertable against the Asbestos PI Trust, including all future Indirect Asbestos PI

Claims. Discovery on this issue is purposeless.



{ THAN / 001 / 00016271.DOC /} - 6 -

12. Next, Volkswagen asserts that the “Plan injunction and its TDPs deprive current

corporate cross-claim claimants of their existing state law rights by explicitly eliminating state

law trial rights against THAN (and other non-bankrupt entities), and relegating some or all

current contribution claim holders to pursuing administrative claims under rules not yet

promulgated.” Amended Statement at ¶ 9. Volkswagen appears to be objecting to the

Bankruptcy Code itself. The automatic stay of pending litigation is one of the fundamental

purposes of a chapter 11 filing and the channeling of present and future asbestos claims,

including indirect claims (see 11 U.S.C. § 524(g)(4)(A)(ii)), to a trust is the reason Congress

enacted section 524(g) of the Bankruptcy Code. This bankruptcy case is not the forum to protest

the Bankruptcy Code.

13. Volkswagen then claims that, “The Plan appears to impair the rights of co-

defendants in asbestos litigation to have fault and damages apportioned among them.” To

amplify this contention, Volkswagen points to the decision of the Illinois Supreme Court in

Ready v. United/GoedeckeServices, Inc., 2008 WL 50446833 (Ill. 2008). Volkswagen contends

that Ready stands for the proposition that in Illinois “comparative fault cannot be apportioned

against an entity that is not a defendant at trial.” Amended Statement at ¶ 10. In fact, in Ready,

the Illinois Supreme Court held that the Illinois joint liability statute in effect required that

settling defendants not be included on the verdict form for purposes of apportioning liability.

Neither this Plan nor this Court can change state law. If Volkswagen is suggesting that the Plan

cannot impair Volkswagen’s state-law rights, Volkswagen is mistaken. A bankruptcy plan of

reorganization invariably alters creditors’ state-law rights by re-negotiating or discharging debts.

If Volkswagen is suggesting that this Plan is unconfirmable because the Asbestos PI Trust does

not consent to being sued by asbestos plaintiffs, Volkswagen once again misunderstands section



{ THAN / 001 / 00016271.DOC /} - 7 -

524(g) of the Bankruptcy Code. The purpose of section 524(g) is to channel present and future

claims away from the courts and to a trust that will provide mechanisms to pay present claims

and future demands. 11 U.S.C. § 524(g)(2)(B).

14. Lastly, Volkswagen contends that, “The Plan, the Trust and the TDP procedures

may prejudice co-defendants by denying them access to information regarding the allowance of

claims.” Amended Statement at ¶ 11. Section 6.5 of the Trust Distribution Procedures addresses

the disclosure of the claimant materials submitted to the Asbestos PI Trust:

The Asbestos PI Trust shall preserve the confidentiality of such

claimant submissions, and shall disclose the contents thereof only

with the permission of the holder, … or in response to a validsubpoena.

In other words, Volkswagen can pursue discovery by requesting information from the claimant

or by serving a valid subpoena on the Asbestos PI Trust. It is hard to conceive how Volkswagen

is prejudiced when it had no greater access to information before the bankruptcy.

CONCLUSION

15. On January 6, 2009, counsel to the Committee, the Debtor, the Future Claimants’

Representative and Volkswagen held a telephonic meeting. During that meeting, Volkswagen

was unable to articulate the nature of its claim against THAN or even identify a single suit where

both THAN and Volkswagen are named defendants. However, during that meeting, Volkswagen

did articulate what it wants from this bankruptcy case: an order or agreement that will give

Volkswagen certain advantages in pending and future asbestos litigation. Volkswagen wants the

consent of Reorganized THAN and the Asbestos PI Trust to name them in tort cases so that

damages can be apportioned, and Volkswagen wants access to the claimant information

submitted to the Asbestos PI Trust. Volkswagen only has standing to object to those provisions



{ THAN / 001 / 00016271.DOC /} - 8 -

of the Plan that affect its legal rights. Volkswagen has no standing to take advantage of this

Court and this bankruptcy case to advance its interests in far-removed asbestos litigation.


respectfully requests that this Court not delay confirmation or otherwise allow Volkswagen to

disrupt these proceedings.


January 9, 2009




Frances Gecker (IL ARDC # 6198450)

Joseph D. Frank (IL ARDC # 6216085)

FRANK /GECKER LLP325 North LaSalle Street, Suite 625


Phone.: (312) 276-1400Fax: (312) 276-0035





{ THAN / 001 / 00016271.DOC /}

CERTIFICATE OF SERVICE

I, Joseph D. Frank, hereby certify that on January 9, 2009, a true and correct copy of the

foregoing Response of the Official Committee of Unsecured Creditors of T H Agriculture &

Nutrition, L.L.C to Amended Statement of Volkswagen Group of America, Inc. In Support of

Motion to Modify Scheduling Order was filed electronically. Notice of the filing will be sent to

all parties who are currently on the Court’s Electronic Mail Notice List, a copy of which is

attached hereto, by operation of the Electronic Filing System. In addition, a copy was sent to the

parties listed below via electronic transmission on January 9, 2009.

Counsel to the Debtor John H. Bae

Bruce R. Zirinsky

CADWALADER, WICKERSHAM & FAFT LLPOne World Financial Center


Facsimile: (212) 504-6666

[email protected]; [email protected]

Counsel to the Future Claimants’Representative

Sander L. Esserman

STUTZMAN, BROMBERG, ESSERMAN & PLIFKA 2323 Bryan Street, Suite 2200

Dallas, Texas 75201

Facsimile: (214) 969-4999

[email protected]

OFFICE OF THE UNITED STATES TRUSTEE


Att’n: Serene Nakano33 Whitehall Street, 21st Floor



Counsel to the Future Claimants’

Representative

Susan BruneBRUNE & RICHARD, LLP

80 Broad Street



Jo Christine Reed


1221 Avenue of the AmericasNew York, New York 10020-1089

Facsimile: (212) 768-6800

[email protected]

Robert B. Millner


7800 Sears Tower233 South Wacker Drive


Facsimile: (312) 876-7934

[email protected]



{ THAN / 001 / 00016271.DOC /} 2




Facsimile: (610) 371-1237

[email protected]




Facsimile: (610) 371-7376

[email protected]

John D. Demmy

STEVENS & LEE, P.C.

485 Madison Avenue, 20th Floor


Facsimile: (610) 371-8515

[email protected]

Robert W. Dremluk

SEYFARTH SHAW LLP

620 Eighth Avenue


Facsimile: (212) 218-5526

[email protected]


STEVENS & LEE, P.C.


Facsimile: (312) 460-7833

[email protected]

Karel S. Karpe

WHITE AND WHITE LLP


Facsimile: (212) 631-4431

[email protected]




Facsimile: (302 ) 467-4550

[email protected]


Karen M. Borg



Facsimile: (312) 873-7382 (Hartley)(312) 444-9294 (Munitz)

(312) 444-11116 (Borg)

[email protected];

[email protected];

[email protected]




{ THAN / 001 / 00016271.DOC /}




for this case.

• John H. Bae [email protected], [email protected];[email protected]


• Robert W. Dremluk [email protected],

[email protected],[email protected],[email protected],


• Alan E. Gamza [email protected],


• Jeanette M. Gilbert [email protected]

• Eduardo J. Glas [email protected]• Frederic C. Goodwill [email protected], [email protected]









• Tancred V. Schiavoni [email protected]

• Christina C. Skubic [email protected]• Theresa Trzaskoma [email protected],


• Bruce R. Zirinsky

[email protected];[email protected];[email protected];[email protected];[email protected];[email protected];allison.dipasqua@cwt.

com



Hearing Date And Time: February 17, 2009 at 9:45 a.m. (prevailing Eastern Time)

Objection Deadline: February 11, 2009 at 5:00 p.m. (prevailing Eastern Time)

GREENBERG TRAURIG, LLP

200 Park Avenue

New York, New York 10166Telephone: (212) 801-9200

Facsimile: (212) 801-6400


Proposed Counsel for the Debtor

and Debtor in Possession



----------------------------------------------------------In re:


Debtor.

----------------------------------------------------------

x:

:

::x

Chapter 11

Case No. 08-14692 (REG)

DEBTOR’S MOTION TO STRIKEOWENS-ILLINOIS, INC.’S OBJECTION TO THE

PREPACKAGED PLAN OF REORGANIZATION FOR LACK OF STANDING



TABLE OF CONTENTS

Page

PRELIMINARY STATEMENT .................................................................................................... 1

BACKGROUND ............................................................................................................................ 2

JURISDICTION AND VENUE ..................................................................................................... 3

BASIS FOR RELIEF REQUESTED ............................................................................................. 4

I. Owens-Illinois Lacks Standing ........................................................................................... 4II. Owens-Illinois’ Specific Objections Are Without Merit .................................................... 6

III. Owens-Illinois Has No Enforceable Right to Contribution................................................ 7

NOTICE.......................................................................................................................................... 9

NO PRIOR REQUEST................................................................................................................. 10




Page

Federal Cases

Arnold v. Garlock Inc., 288 F.3d 234 (5th Cir. 2002) .................................................................... 8In re Drexel Burnham Lambert Group, Inc., 146 B.R. 98 (Bankr. S.D.N.Y. 1992) ...................... 9 In re Martin Paint Stores, 199 B.R. 258, 263 (Bankr. S.D.N.Y. 1996) (Bernstein, J.), aff'd , 207

B.R. 57 (S.D.N.Y. 1997)............................................................................................................. 4 In re N. Am. Refractories Co., 280 B.R. 356 (Bankr. W. D. Pa. 2002) .......................................... 8 In re Provincetown-Boston Airlines, Inc., 72 B.R. 307 (Bankr. M.D. Fla. 1987).......................... 9 In re Quigley Co., Inc., 391 B.R. 695 (Bankr. S.D.N.Y. 2008)...................................................... 4In re Refco Inc., 505 F.3d 109 (2d Cir. 2007)............................................................................. 4, 5

Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) ..................................................................... 4

State Cases

Gemco-Ware, Inc. v. Rongene Mold & Plastics Corp., 360 S.E. 2d 342 (Va. 1987)..................... 8Mattia v. Sears, Roebuck & Co., 531 A. 2d 789 (Pa. Super. 1987)................................................ 8 Nat'Mut. Ins. Co. v. Whitmer , 435 N.E.2d 1121 (Ohio, 1982) ....................................................... 8

Federal Statutes

11 U.S.C. § 1129(a)(3).................................................................................................................... 7

11 U.S.C. § 502(e)(1)(B) ................................................................................................................ 9

28 U.S.C. § 157(b)(2) ..................................................................................................................... 3

28 U.S.C. §§ 1408, 1409................................................................................................................. 328 U.S.C. §§ 157, 1334................................................................................................................... 3



TO THE HONORABLE ROBERT E. GERBER UNITED STATES BANKRUPTCY JUDGE:


debtor in possession, submits this motion (the “Motion”) to strike Owens-Ilinois, Inc.’s

Objection to the Prepackaged Plan of Reorganization (the “Objection”) filed on January 5, 2009.

For the reasons set forth below, the Debtor respectfully submits that Owens-Illinois, Inc.

(“Owens-Illinois”) has no standing or cognizable claim in this chapter 11 case. The Court should

strike Owens-Illinois’ Objection in its entirety and reject Owens-Illinois’ efforts to participate in

this chapter 11 case, including its efforts to obtain discovery from the Debtor.

PRELIMINARY STATEMENT

1. On January 5, 2009, Owens-Illinois filed its Objection, raising objections

to the Debtor’s proposed prepackaged plan of reorganization virtually identical to those

previously raised by Volkswagen Group of America, Inc. (“Volkswagen”) in its joinder to the

motion of certain insurers to modify the scheduling order. The Court rejected Volkswagen’s

efforts to modify the scheduling order based on the Court’s finding that Volkswagen lacks

standing to participate in this chapter 11 case. In every way, Owens-Illinois’ Objection and its

efforts to participate in this chapter 11 case suffer from the same defects the Court found

prevented Volkswagen from having standing to participate in this case.

2. Like Volkswagen, Owens-Illinois has no present claim against the Debtor,

has never prosecuted a claim against the Debtor, and has offered no factual basis to assert a claim

against the Debtor in the future. Owens-Illinois has never engaged in business with the Debtor,

and Owens-Illinois has alleged no facts in its Objection to demonstrate that it has any basis to

assert a claim against the Debtor. Like Volkswagen, the only basis upon which Owens-Illinois

purports to have a connection with the Debtor is that it is a codefendant with the Debtor in



2

certain pending state court actions. Against the exact same set of facts, the Court previously

ruled that Volkswagen lacks standing to participate in this chapter 11 case. Insofar as Owens-

Illinois has offered no facts to distinguish itself from Volkswagen, the Court should likewise rule

that Owens-Illinois has no standing to participate in this chapter 11 case. The Court should

strike Owens-Illinois’ Objection, and deny it the right to participate in this case, including the

right to take discovery.

BACKGROUND

3. On November 24, 2008 (the “Commencement Date”), the Debtor

commenced this case under chapter 11 of title 11 of the United States Code §§ 101, et seq. (the

“Bankruptcy Code”). The Debtor is authorized to operate its business and manage its properties

as a debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.

4. On December 1, 2008, the United Stated Trustee for the Southern District

of New York appointed an Official Committee of Unsecured Creditors.

5. Simultaneously with the filing of its chapter 11 petition, the Debtor filed

(i) the Prepackaged Plan of Reorganization of T H Agriculture & Nutrition, L.L.C. Under

Chapter 11 of the Bankruptcy Code, dated October 10, 2008 [Docket No. 20] (the “Plan”); the

(ii) disclosure statement related thereto, dated October 10, 2008 [Docket No. 21] (the

“Disclosure Statement”), which was used in the prepetition solicitation of votes on the Plan; and

(iii) the vote certification of the Debtor’s balloting agent, describing the overwhelming

acceptance of the Plan by holders of impaired claims entitled to vote. The Asbestos PI Trust

Distribution Procedures are Exhibit C to the Plan.

6. On November 25, 2008, this Court entered an order (the “Scheduling

Order”) scheduling a hearing on January 15, 2009 for approval of the Disclosure Statement and

confirmation of the Plan (collectively, the “Confirmation Hearing”).



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7. On December 12 and 16, 2008, certain of the Debtor’s insurers filed

motions seeking to modify the Scheduling Order and requesting that the Confirmation Hearing

be adjourned for 60 days.

8. On December 24, 2008, Volkswagen filed its motion to modify the

Scheduling Order based on the same alleged injury (as a codefendant in unrelated tort cases) that

Owens-Illinois asserts in its Objection. On January 12, 2009, this Court held a hearing to

address Volkswagen’s assertions (the “Volkswagen Hearing”). After full briefing and lengthy

oral argument, the Court ruled that Volkswagen lacked standing to modify the Scheduling Order

because it did not have standing to participate in this chapter 11 case. The Court concluded that

Volkswagen had not demonstrated in any respect that it had a legal interest in THAN’s

bankruptcy. See Transcript of Telephonic Conference Before the Honorable Robert E. Gerber

United States Bankruptcy Judge at p. 58-59, hereinafter cited as “Tr. at p. ”, attached hereto as

Exhibit “A” ( “Volkswagen only has standing to object to those provisions that affect its legal

rights. It may someday have the latter, to the extent I acknowledged earlier in this decision, but it

doesn't have any such rights now . . . .”)

9. On January 5, 2009, Owens-Illinois filed its Objection, asserting the same

objections previously raised by Volkswagen in its efforts to modify the Scheduling Order.

JURISDICTION AND VENUE

10. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C.

§§ 157 and 1334. This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). Venue is

proper in this Court pursuant to 28 U.S.C. §§ 1408 and 1409.



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BASIS FOR RELIEF REQUESTED

I. Owens-Illinois Lacks Standing

11. Owens-Illinois does not have standing to object to the Plan or any related

document. A party invoking federal jurisdiction has the burden of establishing that it has

standing with respect to each issue on which it wishes to be heard. See Lujan v. Defenders of

Wildlife, 504 U.S. 555, 561 (1992) (“party invoking federal jurisdiction bears the burden of

establishing the[] elements [of standing]”); In re Refco Inc., 505 F.3d 109, 119 (2d Cir. 2007).

12. This Court has stated on more than one occasion that it is going to follow

the “thoughtful authority from the Chief Judge of this district”, Tr. at p. 55, provided in In re

Quigley Co., Inc., 391 B.R. 695, 701-05 (Bankr. S.D.N.Y. 2008), which “teaches us Standing

must be evaluated in light of the legally cognizable issues that the party seeks standing to be

heard on.” Tr. at p. 55 (citing generally In re Quigley Co., Inc., 391 B.R. 695, 701-05 (Bankr.

S.D.N.Y. 2008)). In order to establish that Owens-Illinois has standing, it must show that it has

“a legally protected interest affected by the bankruptcy proceeding.” In re Quigley Co., Inc., 391

B.R. at 701-05 (quoting In re James Wilson Assocs., 965 F.2d 160, 169 (7th Cir. 1992) (Posner,

J.)); In re Martin Paint Stores, 199 B.R. 258, 263 (Bankr. S.D.N.Y. 1996) (Bernstein, J.), aff’d ,

207 B.R. 57, 61 (S.D.N.Y. 1997) (citations omitted). In ruling that Volkswagen lacked standing

to participate in this chapter 11 case, this Court explained:

As the Second Circuit observed in the Refco case, it is important

that a bankruptcy court is not too facile in granting applications for standing. Overly lenient standards . . . potentially overburden the

reorganization process by allowing numerous parties to interjectthemselves into the case on every issue, thereby thwarting the goalof a speedy and efficient reorganization. Granting peripheral

parties status as parties-in-interest thwarts the traditional purpose

of bankruptcy laws, which is to provide reasonably expeditiousrehabilitation of financially distressed debtors with a consequent

distribution to creditors who have acted diligently.



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Tr. at pp. 55-56 (citing Refco, 505 F.3d at 118-119).

13. Like Volkswagen, the sole stated basis for which Owens-Illinois has

asserted that it has an interest in this chapter 11 case is that it is a codefendant with the Debtor in

certain asbestos actions and that it may have a cross-claim against the Debtor. In rejecting

Volkswagen’s assertion of standing, this Court found that the pendency of cross-claims as a

result of state court procedural rules -- as distinct from cross-claims arising out of facts that

would support any such claim -- cannot be a basis to confer standing. “The fact that parties are

named as codefendants, of course, doesn’t mean by itself that one has claims against the other,

especially in the absence of any evidence that they had any dealings with each other, or that one

paid an obligation for which the other is liable.” Tr. at p. 53. Furthermore, Owens-Illinois does

not have a claim against the Debtor by virtue of the “automatic operating of case management

orders that deem cross-claims to have been filed. . . . that [is] a pure procedural mechanism. . . .

A case management order presumably can provide ‘procedural’ in the action in which it was

entered, but it can’t confer substantive rights.” Tr. at p. 53.

To find a “right to payment” under the code, and to inflict upon allof the other parties in the case the burdens that standing

requirements are intended to protect them against, there must be

something more than happenstance that dozens of entities are

named as defendants in the same case, and that an administrativeorders says that they’re deemed to have cross-claimed against each

other.

Id at 54. Owens-Illinois does not aver in its Objection that it now holds or seeks to prosecute a

cross-claim against the Debtor and, in fact, has never prosecuted a cross-claim against the Debtor

in any past or present asbestos action. Indeed, no codefendant in any asbestos-related case has

ever prosecuted a cross-claim against the Debtor. Thus, there simply are no current holders of



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cross-claims whose rights need to be protected, and in any event, Owens-Illinois has no standing

to assert the rights of others.

14. It bears noting that in the Objection not only does Owens-Illinois fail to

assert that it has any actual cross-claims against the Debtor, but it even fails to identify any of the

cases where it holds an enforceable cross-claim. The Debtor submits that Owens-Illinois’

inability to identify even a single case is indicative of the degree to which its interest is

attenuated and does not have standing to object to the Plan or any related documents or

agreements.

II. Owens-Illinois’ Specific Objections Are Without Merit

15. The Court should overrule Owens-Illinois’ specific objections, because

they are without merit. Owens-Illinois’ assertions that the treatment of its purported claim is not

fair or equitable and that a third party may not settle its claim are baseless, because Owens-

Illinois holds no claim against the Debtor. Having no cognizable claim against the Debtor,

Owens-Illinois cannot stand to complain about any provision of the Plan regarding the treatment

of its fictional claim.

16. The Court should also disregard Owens-Illinois’ assertion that the

procedures set forth in the Asbestos PI Trust Distribution Procedures encourage the Debtor’s

creditors to delay their recovery from the asbestos trust, which could lead to allowing creditors to

obtain duplicative recoveries from Owens-Illinois. This Court recently addressed this issue at

the Volkswagen Hearing, stating:

Volkswagen [was] looking for one or more means to achieve a leg

up in litigation against those suing it elsewhere, such as bysubstantive reductions in its possible liability to tort claimant

plaintiffs by means of judgment reductions, if Volkswagen is

found liable by the tort plaintiffs, or to achieve some kinds of benefits or credits in negotiations.



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Tr. at 54. The Court reasoned that permitting Volkswagen to participate in this chapter 11 case

based on this argument would “bring down the entire Bankruptcy Code scheme for dealing with

mass torts, and/or the Code’s express scheme for dealing with asbestos litigation.” Id. at 55.

Congress could not have intended such a perverse result.

17. Owens-Illinois’ conclusory and baseless assertion that the Plan does not

comply with section 1129(a)(3) of the Bankruptcy Code and “is not fair to asbestos co-

defendants” should be rejected. Objection at p. 7. Section 1129(a)(3) provides that the Court

shall confirm a plan if “[t]he plan has been proposed in good faith and not by any means

prohibited by law.” 11 U.S.C. § 1129(a)(3).

18. As stated, Owens-Illinois has no standing to question whether the Debtor

has complied with section 1129(a)(3). Moreover, Owens-Illinois has failed to allege any facts to

demonstrate that the Plan was not proposed in good faith. That the confirmation of the Plan may

somehow alter Owens-Illinois’ rights in some pending state court action does not rise to an act of

bad faith. In addition, the Plan is fair and equitable in its treatment of cross claims against the

Debtor. Section 5.6 of the Asbestos PI Trust Distribution Procedures provides that any Indirect

Claimant (as defined in the Asbestos PI Trust Distribution Procedures), which includes holders

of cross-claims, may file a claim for contribution or other similar derivative claim if such claim

resulted from an injury for which THAN is liable. This provision specifically addresses

enforceable cross-claims against the Debtor. Owens-Illinois has offered no facts to explain how

this provision is unfair or inequitable to holders of cross-claims against the estate.

III. Owens-Illinois Has No Enforceable Right to Contribution

19. Even if Owens-Illinois had sought to prosecute a cross-claim against the

Debtor, such claim would not be enforceable. In many jurisdictions, a codefendant does not

have a right to payment pursuant to a contribution claim unless and until judgment has been



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entered in the underlying lawsuit and the codefendant has paid more than its pro rata share of the

judgment. See, e.g., Arnold v. Garlock Inc., 288 F.3d 234, 237 (5th Cir. 2002) (applying Texas

law and stating that the defendant did not hold a cognizable claim against the debtor where it

could not fulfill the requirements for maintaining a contribution claim because there had not been

a judgment or apportionment of fault in the underlying lawsuit); In re N. Am. Refractories Co.,

280 B.R. 356, 358 (Bankr. W. D. Pa. 2002) (applying Mississippi law and stating that

codefendant did not have a cognizable claim against the debtor because it had no right to

payment or equitable remedy where final judgment had not been entered in the underlying

lawsuit); Nat’l Mut. Ins. Co. v. Whitmer, 435 N.E.2d 1121, 1123 (Ohio, 1982) (under Ohio law,

the right to contribution only becomes enforceable once a claimant makes payment extinguishing

the whole of the common obligation).

20. Although some jurisdictions allow a codefendant to assert a contribution

claim prior to judgment, in the interest of judicial efficiency, the right to contribution does not

become enforceable until final judgment has been entered and the obligation is discharged. See

e.g. Gemco-Ware, Inc. v. Rongene Mold & Plastics Corp., 360 S.E. 2d 342, 344 (Va. 1987)

(under Virginia law, a codefendant may assert a claim based on potential future liability for

contribution; however, the right to recover arises only once the codefendant discharges the

common obligation); Mattia v. Sears, Roebuck & Co., 531 A. 2d 789, 791 (Pa. Super. 1987)

(applying Pennsylvania law and stating that while a codefendant can assert a contribution claim

in the original proceeding, the right to contribution cannot be asserted until a tortfeasor has

“discharged the common liability by paying more than his pro rata share”), app’l den’d 546 A.2d

622 (Pa. Super. 1988).



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21. Here, Owens-Illinois does not even suggest that a judgment has been

entered in any case in which it is a codefendant with the Debtor and that it has actually paid more

than its pro rata share for such judgment (and that the Debtor has not). Thus, Owens-Illinois has

no present right of contribution under state law. Furthermore, any contingent claim for

contribution that Owens-Illinois might assert in this case would be of no avail, as it would be

disallowed under the Bankruptcy Code. Section 502(e)(1)(B) of the Bankruptcy Code provides

in pertinent part:

[T]he court shall disallow any claim for reimbursement or

contribution of an entity that is liable with the debtor on . . . the

claim of a creditor, to the extent that . . . such claim for reimbursement or contribution is contingent as of the time of

allowance or disallowance of such claim for reimbursement or

contribution.

11 U.S.C. § 502(e)(1)(B). See also In re Drexel Burnham Lambert Group, Inc., 146 B.R. 98, 95

(Bankr. S.D.N.Y. 1992) (citing In re Provincetown-Boston Airlines, Inc., 72 B.R. 307, 309

(Bankr. M.D. Fla. 1987) (holding that a claim for reimbursement must be disallowed where the

claimant and debtor are co-liable in the underlying action and there was neither a determination

of the debtor’s proportionate fault in the underlying action nor had the amount owed by the

debtor been fixed, making such claims contingent)).

22. Regardless of whether or not Owens-Illinois asserts a claim against the

Debtor, it cannot do so under state law without first obtaining a judgment. Moreover, even a

contingent claim for contribution would leave Owens-Illinois with no cognizable interest upon

which to base standing to be heard in this case.

NOTICE

23. Notice of this Motion has been provided to (i) the parties on the Master

Service List, as defined in the Court’s Order (I) Establishing Notice Procedures And (II)



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Authorizing Preparation Of A Consolidated List Of Creditors In Lieu Of A Matrix, dated

November 25, 2008; and (ii) Owens-Illinois. In light of the nature of the relief requested in this

motion, the Debtor submits that no other or further notice is required.

NO PRIOR REQUEST

24. No previous request for the relief sought herein has been made to this or

any other court.



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WHEREFORE, for all of the reasons set forth above, the Debtor respectfully

requests that the Court grant the Motion, strike Owens-Illinois’ Objection in all respects, and

hold that Owens-Illinois lacks standing to participate in this chapter 11 case, including the right

to obtain discovery from the Debtor, and grant to the Debtor such other and further relief as is

just and proper


February 2, 2009

By: /s/ John H. Bae



200 Park Avenue


Facsimile: (212) 801-6400

[email protected] [email protected]





EXHIBIT A



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UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK

. Chapter 11IN RE: .

. Case No. 08-14692 (REG)

.T H AGRICULTURE & NUTRITION, .L.L.C., .

. New York, New YorkDebtor. . Monday, January 12, 2009

. . . . . . . . . . . . . . . . 4:06 p.m.

TRANSCRIPT OF TELEPHONIC CONFERENCEBEFORE THE HONORABLE ROBERT E. GERBER

UNITED STATES BANKRUPTCY JUDGE

APPEARANCES: (Via telephone - On the Record)

For the Debtors: John H. Bae, Esq.CADWALADER, WICKERSHAM & TAFT, LLPOne World Financial CenterNew York, New York 10281

Kenneth H. Frenchman, Esq.DICKSTEIN SHAPIRO, LLP1177 Avenue of the AmericasNew York, New York 10036

For the Punitive LegalRepresentative: Sander L. Esserman, Esq.

STUTZMAN, BROMBERG, ESSERMAN &PLIFKA, P.C.2323 Bryan Street, Suite 2200Dallas, Texas 75201

(Appearances Continued)

Audio Operator: Electronically Recordedby Kendra Harris, ECRO

Transcription Company: Rand Reporting & Transcription, LL80 Broad Street, Fifth FloorNew York, New York 10004(212) 504-2919www.randreporting.com

Proceedings recorded by electronic sound recording, transcriptproduced by transcription service.



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APPEARANCES: (Continued)

For PENAC: Garrard R. Beeney, Esq.SULLIVAN & CROMWELL, LLP125 Broad StreetNew York, New York 10004

For related Travelersentities: Robert B. Millner, Esq.

SONNENSCHEIN, NATH & ROSENTHAL, LL1221 Avenue of the AmericasNew York, New York 10020

For ContinentalCasualty Company: David C. Christian, Esq.

SEYFARTH SHAW, LLP131 South Dearborn Street

Suite 2400Chicago, Illinois 60603

For Volkswagen Group ofAmerica: Kirk T. Hartley, Esq.

Gerald Munitz, Esq.BUTLER, RUBIN, SALFARELLI& BOYD, LLP

For Creditors' Committee: Joseph Frank, Esq.FRANK GECKER, LLP325 N. LaSalle, Suite 625Chicago, Illinois 60610

For Owens Illinois: Katherine L. Mayer, Esq.MC CARTER & ENGLISH

For Larson, et al: Joseph Rice, Esq.MOTLEY RICE, LLC

Also Appearing: Dennis Valenza, Esq.MORGAN & LEWIS



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(Proceedings commence at 4:06 p.m.)

THE COURT: We're here on THAN. And as I understand

it, we're going to get an update on the status of the dialogue

on the insurers' issues, and we're going to deal with the

issues raised by Volkswagen.

Who's going to take the lead?

(No verbal response.)

THE COURT: Can anybody hear me?

UNIDENTIFIED: (Indiscernible.)

THE COURT: I'm sorry. You're breaking up.

MR. VALENZA: I can hear you, Judge. This is Dennis

Valenza. I can't (indiscernible) hear the operator, but nobod

else.

THE OPERATOR: (Indiscernible.)

THE COURT: All right. Then let me repeat what I

said.

First of all, I'm Judge Gerber.

As I understand it, we're here in THAN for two

separate things: One, to get an update on the dialogue with

the insurers, and second to deal with the issues raised by

Volkswagen and by the various responses to the Volkswagen

submission.

Who is going to take the lead?

MR. MUNITZ: Your Honor, this is Gerald Munitz in

Chicago. Kirk Hartley and I, we take the lead on the standing



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issue on behalf of Volkswagen.

THE COURT: All right, Mr. Munitz, but I want to deal

with the insurers' issues first.

MR. RICE: Your Honor, this is Joe Rice; I'm calling

on behalf of individual objectors that have filed objections to

the claim, but I don't know if that's on the -- anything today

but I'm on behalf of Larson (indiscernible) and

(indiscernible).

THE COURT: Well, I didn't -- can I get your name

again, sir?

MR. RICE: Joseph Rice, R-i-c-e.

THE COURT: Rice?

MR. RICE: Yes, sir.

THE COURT: Well, I didn't even understand that to be

a purpose of today's call, Mr. Rice.

MR. RICE: It may not be, Your Honor.

THE COURT: All right.

MR. RICE: I'll just put it on the record that --

THE COURT: Okay. Well, I thought I was going to hea

initially --

MR. MILLNER: Yes, Your Honor?

THE COURT: Yes, go ahead.

MR. MILLNER: It's Robert Millner for Travelers.

THE COURT: Okay, Mr. Millner.

MR. MILLNER: Good afternoon. And I will be pleased



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to give a report if somebody from the debtor is not.

MR. BAE: Your Honor, this is John Bae from -- as an

aside, Your Honor, I no longer (indiscernible) with Greenberg

Traurig as of today, but I have been retained by the debtor.

I was hoping that Mr. Frenchman would have been on the

phone to provide the Court with a report of the status of the

discussions with the insurers. I don't think Mr. Frenchman is

on.

MR. FRENCHMAN: I am on the phone. I'm sorry about

that, Your Honor. I will be taking the lead for the insurance

issues; and, to the extent that there are other issues,

including the Volkswagen issue, I believe Mr. Bae will be

taking the lead on behalf of the debtor.

THE COURT: All right. Mr. Frenchman, let's start

with you, please.

MR. FRENCHMAN: Yes, Your Honor.

The status is that the -- we provided plan language

and a draft stipulation to the insurers last week. We had a

meet-and-confer last Thursday. I think at that meet-and-confe

we narrowed some of the issues and crystallized other issues;

yet, we still certainly have some work to do and know that

there were other carriers who were unavailable for the meet-

and-confer. And although they sent representatives, they

certainly voiced a concern that they needed to be heard.

We have -- well, we are supposed to be receiving new



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language, plan language and a new stipulation, from the

insurance carriers on Wednesday. We have scheduled a meet-and

confer to occur at one o'clock Thursday, and we have all agreed

to block off Friday for an all-day meet-and-confer, should that

become necessary.

We are hopeful that, at the end of this week, at the

end of the meet-and-confer Friday, if that becomes necessary,

we will have reached an agreement.

THE COURT: Okay. Mr. Millner, can I get your

perspective, please.

MR. MILLNER: My perspective is as follows:

We did receive plan language last Tuesday, and then

some additional significant part of the plan language last

Wednesday night, and we met Thursday. We did as best we could

with the language, and we still have some significant issues

remaining, and we are continuing in our work. And Mr.

Frenchman is correct that he will receive back from the

insurers this Wednesday a further draft, which will address

several major issues, which, as he said, were crystallized at

our last meeting.

And the one point that I would make is that, when we

finish this week, while everybody is always hopeful about

reaching agreements, we of course will have to go back to our

clients; Mr. Frenchman may have to confer with his client. So

we're hopeful is -- what I'm hopeful of is of the lawyers



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reaching at least their own consensus that they can go back to

their own clients with, but I -- so that's point one.

Point two, just so that we understand, we are

continuing on this stipulation path, as the debtor wants, and

we have not received any discovery. And we're certainly not

waiving any rights on that part, Your Honor, if this does not

work. I just want to make that clear. And with that, that's

my perspective. We're working on it.

THE COURT: All right. Anybody else on the insurers'

side want to comment?


THE COURT: All right. I hear no response.

All right. Well, gentlemen -- ladies and gentlemen,

think that this dialogue should continue, and I'm going to

allow it to continue and encourage it to continue; and of

course, it can without prejudice to anyone's rights.

And as a consequence, I would like recommendations

from the plan proponents on the one hand and the insurers on

the other as to what a useful time would be for a follow-up

conference call, to see how you're doing and/or to respond in

any other way to the outcome of your efforts to resolve this.

Mr. Frenchman, let me get your perspective first,

please.

MR. FRENCHMAN: Well, I think in terms of the follow-

up conference call, I take Mr. Millner's point that there may



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be some conferring with the clients, although I would say from

the debtors' perspective, knowing full well, I think, the state

of mind of the insurers, we intend to have those communication

with the client in advance of the meet-and-confer, and our

client will be available to confer with at any point in time

during the meet-and-confer, so we'll be able to straighten out

those authority issues. Nevertheless, I think giving until

Monday for that would be fair, and that the conference call

should be scheduled for a week for today, if the Court is

available.

THE COURT: Mr. Millner, do you concur or have an

objection?

MR. MILLNER: I don't, for two reasons:

This is a process, which if the Court were not here a

all, is underway. We are talking and negotiating. And if we

finish Friday with something useful, hopefully, we will go bac

to our clients -- we have several insurers, as you know --

Perhaps Monday, which would be the earliest next business day;

maybe for some it will end up being Tuesday. And to the exten

we still have some issues, my thinking is we would call Mr.

Frenchman back on the phone. I think that the best status is

week from Friday, but I certainly think that a week from today

is too soon, is too soon. And that's my perspective on that.

THE COURT: Mr. Millner, I assume you're keeping your

client or clients in the loop on this, aren't you?



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MR. MILLNER: We do. We do. But if we leave Friday,

we would certainly need to speak to our clients the following

Monday, and I assume the other insurers would also. And

depending on what happens then, my thinking is we may have to

come back and talk further with Mr. Frenchman. So my thinking

is you give a little time for that to play. So I think that

the Monday is too soon, for sure.

THE COURT: Uh-huh. Has everybody had a chance to

speak their piece on this?

MR. CHRISTIAN: Your Honor, may I be heard?

THE COURT: Who is speaking, please?

MR. CHRISTIAN: This is David Christian on behalf of

Continental Casualty Company and Pacific Casualty Company.

THE COURT: Yes, Mr. Christian.

MR. CHRISTIAN: Thank you, Judge.

I agree with Mr. Millner, and I guess I'd add a

further clause on that point. I heard Mr. Frenchman say that

he would doing his conferring with the debtor in advance of the

meeting, and so I guess the implication is that he'll come in

with all of the authority he needs and all of the information

from his client that he needs. I guess I have two thoughts in

response to that:

One is that, given the complexity and the number of

issues involved here, I'm not sure that Mr. Frenchman can

anticipate every issue and everything we might ask for, or



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everything that might be asked for of the client, just as I'm

not sure I can anticipate everything he might ask of me and my

client.

And number two, perhaps more importantly, many of the

issues we're dealing with are things on which Phillips, the

debtor-parent, is the final word. In particular, this plan

contemplates that it will be Phillips pursuing any insurance

coverage after confirmation, because it's Phillips making the

contribution in the first instance that it wants to indemnify.

And so, while Mr. Frenchman may be able to speak to the debtor

it may be that some of the issues addressed by the stipulation

or changes in the plan language affect more than just the

debtor, and Phillips may need to be consulted, as well, so I -

THE COURT: Pause, please, Mr. Christian.

MR. CHRISTIAN: Sure.

THE COURT: Has Mr. Beeney or some attorney from

Phillips been excluded from the meet-and-confers?

MR. CHRISTIAN: I wouldn't say, Your Honor, that

Phillips has been excluded (indiscernible) they have been

invited, but they have not come.

THE COURT: I see.

MR. BEENEY: Your Honor, if I may, it's Garrard Beene

for Phillips.

THE COURT: Yes, go ahead.

MR. BEENEY: We are in touch more than daily with



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counsel for the debtor, and in fact, we have been advised every

step of the way on the proposals that the debtor is going to

make. We get a complete report of the insurers' position

(indiscernible). There is no delay that needs to be built int

the schedule because of needing approval and needing time to do

that. The debtor's counsel certainly knows where to find me

(indiscernible) in regular contact with my client and they're

right on top of it.

THE COURT: All right. Back to you, Mr. Christian.

Do you want to finish up any further observations you want to

make, please.

MR. CHRISTIAN: Thank you, Your Honor. Just by way o

response to your question, I would say we've not only invited,

but we would actually encourage Phillips' direct participation

I don't know one way or another, and I take Mr. Beeney at his

word, with respect to their level of contact with the debtor a

intermediary.

THE COURT: All right. Anybody else want to be heard

MR. FRANK: Your Honor, this is Joseph Frank; I

represent the creditors' committee.

I just want to encourage the Court to set an earlier

date, rather than a later date, because it may become clear

next Monday that there isn't going to be a deal, in which case

we want to set a confirmation hearing for a contested

confirmation hearing; or it may become clear that we need more



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time.

But I really do think it's important to keep the

pressure here. As I think Your Honor knows, I'm very much

desirous of getting this case confirmed sooner, rather than

later. And I think leaving us to two weeks, given that we're

going to meet by phone, so there isn't a great deal of

inconvenience or expense for the parties -- I can't speak as to

the Court -- I think a Monday date makes more sense than a

Friday day, and there is no harm if there isn't a whole lot to

report on Monday, Your Honor.

THE COURT: All right. Everybody had a chance to

speak their piece?

MR. RICE: Your Honor, this is Joe Rice on behalf of

the plaintiffs.

THE COURT: Pause, please, Mr. Rice. Tell me who you

claimant is and, more importantly, not his name, but his

attitude about it. Is this a tort claimant who voted against

the plan?

MR. RICE: This plaintiff did vote against the plan.

There are three separate claimants --

THE COURT: I need you to speak up, Mr. Rice.

MR. RICE: I'm sorry. There are three separate

claimants that have filed objections; we represent all three o

them. Their objections have been set out, but it deals with

provisions of the trust distribution process for the most part



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and in the voting procedures in one part. They have objected

to the application of -- I can go into such detail as Your

Honor wishes, but they have filed objections to the voting

process, they've filed objections to the process of the claims

or the way they're reviewed and the equality of that; they've

challenged it on constitutional and due process grounds and

individual review process.

They have challenged the block-out of non-related

cases that occurs in the plan. They have challenged the use o

a limited amount of data. It's (indiscernible) understanding

and position that trying to (indiscernible) a bankruptcy claim

that goes on for the next forty years (indiscernible) cases

that have been processed over the last three years is

inadequate to allow the Court to approve any permanent

bankruptcy (indiscernible); and, therefore, they rejected the

block-out provisions that are (indiscernible).

THE COURT: Okay. So I assume you're going to object

to confirmation.

MR. RICE: Yes.

THE COURT: All right. You understand that I'm not

going to rule on the merits of your objections today.

MR. RICE: Yes. I was just making (indiscernible) Mr

Frenchman (indiscernible) indicated that (indiscernible)

insurance issues got worked out, there would not be a contested

confirmation, and I wanted to bring to the Court's attention



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that, as of the current status, there would be a contested

confirmation on behalf of these claimants even if the insurance

got worked out. And there is not an insignificant amount of

discovery that needs to be done in contemplation of the

confirmation hearing.

THE COURT: Well, have you already served your

discovery demands?

MR. RICE: No, sir, we have not.

THE COURT: Why not?

MR. RICE: We were -- we filed our objections and we

understood that the Court was having a hearing on Thursday to

perhaps (indiscernible) everything that needed to get done.

THE COURT: Have you read my case management order,

Mr. Rice?

MR. RICE: Yes, sir, I have.

THE COURT: Then you know that you didn't need to fil

your objection to get your discovery underway, didn't you?

MR. RICE: If our objection -- yes, sir, we could hav

done it that way; that's what we understand. We were hoping t

narrow down -- there was a significant amount of information

exchanged before the filing (indiscernible). Once we filed ou

objections, we were hoping to be able to work out with the

debtor's counsel (indiscernible) agreement to make use of

(indiscernible) so that we wouldn't have to go through a full-

blown discovery process. (Indiscernible) that process



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(indiscernible).

THE COURT: Well, Mr. Rice, I'm expressing no view on

whether you get discovery or not or whether any of the

discovery you want is over-broad or entirely appropriate. But

what I am telling you is that, if whatever discovery you think

you want, the time to ask for that was about four weeks ago,

and you're way behind. And the time for getting your needs an

concerns done was quite awhile ago.

I am not saying today, absolutely, positively no

adjournments of anything. But what I am telling you is that,

with so many other clients similarly situated having supported

this plan, and with the principal issue on the table being the

needs and concerns of the insurers, I think you would be well

served to get your work done because you might be very

unrealistic in assuming that this case is going to be held up

in its entirety to meet your needs and concerns.

MR. RICE: Your Honor, we will -- I do want to bring

the Court's attention that one of our issues is that the Court

has been told that there was approximately 90,000 votes in

favor of the plan, but we've been led to believe that

approximately 45,000 of those people were people that had been

told they had no claim against THAN. So that's part of the

issue we're trying to get to. Because there was a significant

number of (indiscernible) votes, and we can establish that.

THE COURT: Well, I don't know if people want to



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respond to that now or not. That sounds like the kind of thin

that is probably better addressed in a more fulsome discussion

when that issue is on the table.

MR. BAE: Your Honor, this is John Bae on behalf of

the debtor.

THE COURT: Yes, Mr. Bae.

MR. BAE: Mr. Rice's representation is false. We wer

-- I'm actually glad that Mr. Rice spoke up because I was going

to ask the Court -- I understand -- while I understand that the

discussions with the insurance carriers are ongoing, the debto

would like to respond to the objections filed by Mr. Rice, as

well as the objections filed by -- well, filed by Owens

Illinois, which frankly raised very similar issues as those

raised by Volkswagen. And we question the standing of Owens

Illinois.

But we want to keep the process moving, Your Honor;

and frankly, we don't believe that Mr. Rice has raised any

legitimate issues that warrant discovery. And once we submit

our response to what Mr. Rice has filed, I think at that point

we can have a fulsome discussion on the merits of the

allegations in Mr. Rice's (indiscernible). And I think that's

a more orderly way to address this. And we, the debtor,

intends on -- with the Court's permission of course, the debto

intends on filing a response to the objections.

THE COURT: Well, okay. But we're not going to deal



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with it today.

MR. BAE: That's correct, Your Honor.

THE COURT: All right. Mr. Rice, all we can and

should deal with today is for me to reiterate the importance o

you getting to work to deal with any discovery that you

perceive to be necessary or appropriate, and I forgot what was

ordered, vis-a-vis objections to confirmation, but I assume

you're working on your objection to confirmation, as well.

When the matter is fully briefed, I'll decide the issues as the

papers reflect. It's that simple.

Now the open issue for which I had solicited anybody

else who wanted to be heard was whether all of folks who were

involved in the debtor-insurer dialogue had a chance to speak

their piece; that was when Mr. Rice spoke up. Is there anybod

else who wants to be heard before I deal with when we're going

to have a follow-up call?


THE COURT: All right. Hearing no response.

Mr. Frank, I understand your desire to keep things

moving forward, but I -- and I certainly don't think that

waiting a full, I guess it's more than ten days; it's almost

sixteen days -- or thirteen days, is excessive, so we're going

to have a follow-up call on this time, four o'clock eastern

time, on January 21, which is Wednesday -- excuse me, January

14 -- no, January 21 was right -- January 21, a Wednesday, nine



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that the submissions were filed substantially

contemporaneously, so I guess there's a risk of ships passing

in the night -- that there was no evidence or even allegations

at this point that THAN had done any business with your client

Volkswagen. I didn't see any allegation in your papers that

your client had done business with THAN, aside from any proof

of that, and it struck me that the silence in that regard was

deafening.

I would assume, subject to your opponents' rights to

be heard, that if you had actually asserted a cross-claim

against THAN, you would have a claim, albeit contingent, and

would have 1109 status, but your opponents seems to be

suggesting to the contrary. I think we need to get our arms

around the facts and then we can get to the various points that

were made in your brief, which cause me some material concerns

Mr. Munitz, as to whether we should be holding up the case to

address these needs and concerns; and some material concerns in

my mind as to why discovery would be appropriate for them,

whether or not you have the 1109 status to be heard in

opposition to confirmation.

So let me hear from you first; and then, if there's

anybody else who has your view in life, I want to hear from him

or her next, and then I'll hear from Mr. Frank or Mr. Esserman

or Mr. Bae or anyone else who wants to be heard in opposition,

and I'll give you each a chance to reply and surreply.



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MR. MUNITZ: Your Honor, with your permission, I'd

like to defer to my partner Mr. Hartley, with respect to the

question posed regarding the status of the (indiscernible)

litigation.

THE COURT: Okay. That's Mr. Hartley, H-a-r-t-l-e-y,

the second name on the papers?

MR. MUNITZ: That's right.

MR. HARTLEY: Right.

THE COURT: Okay. Go ahead, Mr. Hartley.

MR. HARTLEY: Thank you, Judge.

I'm sorry if we were not clear enough, but, in fact,

the papers do demonstrate that there are sixteen pending cross

claims by Volkswagen America against THAN in certain underlying

cases. The way you come to this conclusion is (indiscernible)

two provides you with a list of various state courts, that we

were able to get done in a few days, in which there are cases

pending, in which both THAN and VWGOA are defendants. Then we

have provided you in Exhibits 3 and 4 with declarations and

case management orders, establishing the fact that in some of

these particular jurisdictions, cross-claims are automatically

deemed filed in these underlying cases.

So when you put the two together, the conclusion you

reach is that in Delaware there is an automatic cross-claim,

there are two pending cases involving both VWGOA and THAN, so

there are two cross-claims there.



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THE COURT: All right. Pause, please, Mr. Hartley.

To what extent do these orders take into account

whether or not the two parties have had any dealings with each

other?

MR. HARTLEY: Judge, they are not dependent on that,

nor is the existence of the cross-claim or contribution claim

dependent, under state law, on the existence of a prior

business relationship. So, essentially, they're offered you a

straw man there; that's not a prerequisite to a contribution

claim under at least the law in most states. I won't claim to

know all of them. But in Illinois, for example, where I've

grown up doing half asbestos cases and half commercial

litigation, there is no such requirement. Contribution claims

or an indemnity claim or (indiscernible) default does not

require a preexisting business relationship.

Now what we have shown you there, Judge, with the las

column in Exhibit 2, is that, in fact, there are many

codefendants in these cases which are (indiscernible) from

THAN, if we take us through what THAN said in their disclosure

statement as to who their customers were, and we of course take

that at its face value. So while we were going through the

complaints, we looked and found in many cases that, in fact,

some of the fiber customers are in those cases.

And what that means as a general rule, Judge, is that

the underlying tort victim has said to his lawyers or in



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interrogatories -- in answers to interrogatories, excuse me,

that he believes or she believes they were exposed to fibers

that came from those people who were customers of THAN. So

they are clearly squarely in the mix in the case, and the

claims, by our count we have proved up sixteen: Two in

Delaware, one in Rhode Island, thirteen in Illinois. We have

ongoing work to find more. And these are exactly the sorts of

proofs that were submitted in Federal-Mogul and deemed

satisfactory (indiscernible) not even questioning the standing

of VWGOA, Daimler-Chrysler, and other auto manufacturers.

So with respect to the facts, Judge, which is really

my side of the case, that's what I can say to you. On the

bankruptcy law, I of course defer to Mr. Munitz.

THE COURT: Okay. So are we back to you, Mr. Munitz.

MR. MUNITZ: Your Honor, I believe so.

Respectfully, Judge Gerber, if there are cross-claims

existing cross-claims, even though they may be contingent,

unliquidated, and disputed, we nevertheless fit within the

definition of "claim" contained in Section 1015 of the

Bankruptcy Code. As --

THE COURT: Pause, please, Mr. Munitz.

Respectfully or not, I don't need to be told that. I

understood that, and I said that was part of the assumptions

under which I was asking the question. But what I needed to

know from you -- and you passed me off to Mr. Hartley -- was



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among other questions, is a 524(g) injunction appropriate in

the facts of this case? You know, is THAN, which is not -- yo

know, which might not be eligible for a discharge, entitled to

a 524(g) injunction? I do not know where the, you know, facts

on that matter stand. We realize the need to get to those

immediately, you know, but absent a ruling as to standing, we

have no opportunity to do so.

THE COURT: All right. Anybody else who's allied with

Mr. Munitz?

MR. MUNITZ: Your Honor, I have two other comments.

I would invite your attention to Paragraph 3 of the

committee's response to our position, and there is a sentence

that appears in that paragraph, which I quote:

"It is true that recovery by asbestos claimants

against movants may give rise to claims; indeed, very

substantial claims, against the debtors in the

future."

Your Honor, I think that is an admission that we do

hold present contribution or reimbursement-type claims; and,

therefore, even though our claims are contingent, unliquidated

and disputed, it gives us the status of a creditor, and when we

follow through with the definitions of being a creditor, we

have the right to oppose confirmation.

Similarly, with respect to the future claims

representative's opposition, there is a footnote on Page 8 that



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refers to Section 1109(b), it's a quote. The word "creditor"

appears in there, but there is no substance given to the fact

that the term appears. They would (indiscernible) --

THE COURT: Pause, please, Mr. Munitz. Pause, please

Where were you referring in the future claims

representative's submission?

MR. MUNITZ: There is, Your Honor, on Page 8, Footnot

9, there's an excerpt from the Section -- it's a quotation from

Section 1109(b).

THE COURT: All right. I found it now. And your

point again, please?

MR. MUNITZ: Your Honor, they recognize that 1109(b),

you know, would be applicable to the matter. They refuse to

acknowledge that we're a creditor (indiscernible) in there

would pertain to someone in Volkswagen's position.

THE COURT: Uh-huh.

MR. MUNITZ: The holder of, you know, albeit a

contingent future and disputed claim.

THE COURT: Okay. Anything else, Mr. Munitz?

MR. MUNITZ: No, Your Honor, unless you have further

questions.

THE COURT: No. Thank you.

All right. Is there anybody else who wants to argue

on Volkswagen's side before I give others a chance to be heard

MS. MAYER: Your Honor, this is Katherine Mayer from



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McCarter & English; I represent Owens Illinois in this matter.

I'm not chiming in to argue because during the call today is

the first I've heard that the debtors would plan on contesting

the standing of Owens Illinois in this case. We have

participated in numerous (indiscernible) bankruptcies, and

this is the first time our standing would be challenged. But

would respectfully request the opportunity to respond when

papers are filed by the debtors with respect to the standing

issue.

THE COURT: All right. Let's add that to the list of

things we've got to talk about.

All right. Mr. Frank, do you want to be heard first?

MR. FRANK: Thank you, Your Honor. Joseph Frank on

behalf of the committee.

Your Honor, it's clear you've read our papers, and I

don't want to repeat or belabor. I do want to respond to

several things Mr. Munitz said, and then make some general

comments.

The quotation Mr. Munitz read from the third paragraph

of our pleading was a quotation from a ruling by the Third

Circuit in the Federal-Mogul case, and it's a case that should

have been cited by Volkswagen, but wasn't, and it's a case that

demonstrates among other things that their reliance on

157(b)(5) to try and bootstrap themselves into this bankruptcy

case is -- you know, while not against the law in the Second



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Circuit, is certainly against the law in the Third Circuit, and

just has no basis. It's a case they should have cited. And t

try and quote it against us now is kind of silly, Your Honor.

You know, getting back to the other points, the notion

that a deemed cross-claim is a cross-claim remains to be seen,

in our opinion. All they've shown has been that some standing

orders in state courts deem a cross-claim between the various

codefendants, and that's not to say that they've ever been a

cross-claim (sic).

In addition, Your Honor, to compare the fact that

standing wasn't contested in Federal-Mogul and is being

contested here is to admit the point that the contribution

rights between codefendants bears a relationship to their

business relationship, Federal-Mogul was a case involving brake

manufacturers, where car manufacturers came into the

bankruptcy, and this is a case involving a fiber distributor

who, as far as I can tell, didn't distribute fiber to brake

manufacturers, so ...

THE COURT: Pause, please, Mr. Frank.

Did you say "did" or "didn't"? You broke up.

MR. FRANK: Did not, Your Honor.

So to try and draw a parallel between Federal-Mogul

doesn't really hold any water. And in addition, to draw a

parallel between Federal-Mogul and this case, where this Court

has adopted, in Quigley, standing position, doesn't really get



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you anywhere. So Federal-Mogul is a (indiscernible) utility,

particularly a bankruptcy court order on a non-contested

matter; or, it is, I think, the Third Circuit opinion basically

telling the auto manufacturers to stop the mischief and let the

state court cases go forward against them, has a great deal of

bearing on this case.

Beyond that, Your Honor, based on the ruling with

respect to the insurers' standing, it's one thing to say you're

a creditor. Even if we take that as a given, that they're a

creditor because of a contingent contribution claim that

apparently arises from a deemed cross-claim, being a creditor

in this case, the Court has already ruled, is not called

"standing," and it's certainly not equal to broad standing.

You still have to demonstrate where your ox is being gored.

And Volkswagen really hasn't made that demonstration.

They've laid out a few rote points (sic); they say the trust

terms would block codefendants from invoking state statutes or

common law rules, but they haven't really demonstrated how that

would occur, and they haven't really demonstrated how that

would occur in a way that (indiscernible) the Bankruptcy Code.

They said that the trust distribution procedures in

the confirmed plan would block transparency, but I don't really

think that's the case. They would have the same rights to

information that they have right now, which is to subpoena

information from people who are suing them, and subpoenaing



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information from third parties. When the information is

properly subpoenaed, the information, I'd have to presume,

would be produced by, you know, law-abiding third parties.

The other issue they raise is the allocation among

codefendants. And you know, everything they say about that is

just the nature of bankruptcy and the nature of 524(g). And

I'm not going to lecture anyone on federalism, and I'm not

going to lecture them on what creates standing; in other words

something the plan doesn't contemplate, versus what the

Bankruptcy Code does. That doesn't really create standing,

Your Honor.

So those are really my only points, which is -- and t

sum it up, which is that, to the extent -- even if the Court i

to buy it as a deemed cross-claim creating a creditor

relationship with it in this bankruptcy, based on Your Honor's

adoption of the Quigley standing position, we haven't seen

anything to create standing here. And I think Volkswagen need

to go back, read the plan carefully, rather than continuing to

say they haven't had time to read the plan carefully, and tell

us where their ox is being gored, or they just need to go back

and defend the state court claims.

THE COURT: All right. Who wants to be heard next?

MR. BAE: Your Honor, John Bae on behalf of the

debtor.

THE COURT: Uh-huh.



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MR. BAE: Your Honor, what Volkswagen is saying is

that, because certain state courts adopted a procedural

mechanism to avoid papers, needless papers being filed, so that

every defendant -- every codefendant is deemed to have asserted

a cross-claim against every other defendant does not create a

substantive claim. It is purely a procedural mechanism the

courts have adopted to manage their docket; that's all that is

Now for Volkswagen to come in here now and claim that

based on that procedural mechanism, that they have a

substantive cross-claim against THAN is ridiculous. Under tha

logic, 1,500 defendants, who are constantly named in these

asbestos actions, even though they have no business being in

that action, every single one of those codefendants would have

the ability to come into a bankruptcy case and be disruptive,

and there's no law to support that.

More importantly, Your Honor, we've asked Volkswagen

countless time as to what is the factual basis for which you

believe you have a cross-claim against THAN. We have yet to

get a response that is based on facts. It's ironic that Mr.

Munitz refers to facts, that he be focused on facts, but there

are no facts that they've cited.

The only fact that they've cited is that we were

unfortunately named as a codefendant in (indiscernible) action

just because the plaintiffs decided to name a handful of

companies, whether or not there was any connection is



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irrelevant; they named companies as defendant. THAN is a name

codefendant, and we happen to be in a jurisdiction where the

Court adopted a case management order that deems cross-claims

to be asserted. Those are the only facts that they've

presented to the Court. And that, in and of itself, does not

provide a substantive claim for which a company can get

recovery.

But this is worse, Judge, than being a contingent

claim that's not liquidated. There is no claim that's even

articulated. A case management order cannot create a

substantive case law claim that is enforceable, and that is

what they're advocating here.

And the bigger question, Your Honor, is: What is it

they're trying to achieve here? We had a mechanism built into

the trust distribution procedures, which governs how the claim

are satisfied. And that contemplated in the event somebody ca

demonstrate that they have an enforceable cross-claim or an

indemnity claim that is fixed, so as to be able to satisfy the

provisions of the Bankruptcy Code, so they will be enforceable

that there's a mechanism to be paid under the trust

distribution procedures.

Volkswagen doesn't complain about this because they

don't care (indiscernible) what their recovery is going to be,

because they know they don't have a claim against this debtor.

What they're trying to do is essentially find a way to be



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disruptive here, so that they can solve a greater problem they

have, which is in the state court litigation, the asbestos

litigation system.

And unfortunately or fortunately, this bankruptcy is

not the right place to try to solve the world's problems.

We're here to solve this debtor's problems with the claims that

are being asserted against it. That's all we're trying to do.

We're not trying to change the world. What we want to do is

pursue our rights under the Bankruptcy Code and the law and get

the best outcome that we can get.

Volkswagen has no place in this case. And just

because they so -- they claim that they have standing here,

just because they say they have an interest, doesn't make them

have -- make them a creditor, whether it's contingent or not.

They do not have a claim. And until they can present to the

Court how or why they have a legitimate and enforceable claim

- it's a not a question of whether or not a claim is

automatically asserted; that's superficial, that's completely

irrelevant. What is relevant is, substantively, what claim do

they have, and they can't articulate a claim.

So, Your Honor, I would respectfully submit that they

do not have standing here. The mere fact that some state cour

adopted a case management order that permits these cross-claim

to be asserted automatically doesn't make them a creditor; it

is purely a procedural mechanism, it was never intended to



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create a substantive right. Thank you, Your Honor.


MR. ESSERMAN: Your Honor, Sandy Esserman. May I be

heard?

THE COURT: Yes, Mr. Esserman.

MR. ESSERMAN: I would like to reiterate what Mr. Bae

said. If, in fact, Volkswagen had a claim, it would be very

easy to say, we bought THAN fiber on X date, we incorporated it

into our product, we're getting sued for THAN's liability, and

we paid THAN's liability. Nowhere has that ever been asserted

or alleged by Volkswagen.

In fact, Volkswagen has never, ever sued THAN. And

when I say "sued THAN," I'm now talking about the operation of

law and procedural mechanism of filing a complaint, a

counterclaim in which they allege facts as to why THAN is

somehow liable. And they've really pussyfooted around trying

to do that. And despite -- if a plaintiff has a case against

THAN, they've got to allege exposure damages, et cetera. Well

that is not being done here by Volkswagen. They're not

alleging exposure damages or telling you that they've paid

THAN's share because they can't, they just can't. They're

sorting of coming in here and hoping to get as much generalized

standing (indiscernible) against 524(g) in general.

I'd like to respond to this business about the FCR as

Volkswagen's representative. That's just pure silliness. The



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statutory obligation of the FCR is set forth in the statute;

the FCR has complied with that. Volkswagen -- the FCR doesn't

represent Volkswagen; Volkswagen represents Volkswagen. Under

the statute, if a claim comes into being, that person

represents his own claim.

What the duty of the FCR is, is to make sure that

there's a process and mechanism to treat future claims and

current claims substantially similar, and that the process is

fair, and that future claims would have their fair share of the

assets in the pie. It's not to represent Volkswagen ever, it'

not to represent any claimant ever. It's sort of almost in th

nature of a guardian ad litem for a class, which -- who doesn't

represent anyone individually. That's very, very clear from

the statute.

If, in fact, there is any kind of standing here --

which we don't think that they've shown factually -- and

frankly is a very simple and easy to show standing if they had

any facts: THAN sold me product, THAN damaged me, I sued THAN

I've made a demand on THAN, THAN owes me money, THAN owes me

this amount of money and this is how I calculate it in this

lawsuit; they have not done any of that, nor can they. Nor ca

they.

This is an effort by a defendant who's decided to make

a statement in a bankruptcy; they've chosen, unfortunately or

fortunately, your bankruptcy, Judge Gerber, to make that



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statement. And they're going to try and come in here and wrea

whatever havoc that they can.

Next, I'd like to talk about Federal-Mogul because

Volkswagen wants Federal-Mogul to be taken somehow to give them

standing because cross-claimants were recognized as having

standing. You know what? Cross-claimants can have standing.

in Federal-Mogul, cross-claimants -- they weren't just cross-

claimants who had standing; they were cross-claimants with

judgments against the debtor that had standing. They had

actual judgments, not just some assertion -- some general

assertion through some case management order of the standing

issue; they had judgments. Now of course, someone with a

judgment against a debtor, you know, no one is going to

challenge standing, and that's what happened in the Federal-

Mogul case.

So I think what Volkswagen is trying to do here is

they're trying to create as wide a swath as they can with

whatever political agenda they've got to disrupt a potential

(indiscernible), make havoc on (indiscernible) information they

can about the process (indiscernible) you know, I guess we have

to admire them for trying. But on the other hand, standing is

(indiscernible) it's constitutional, it's prudential, and it's

very -- and it's limited to issues in which an ox is being

gored. And frankly, these guys have now shown how their ox ha

been gored. When they do that, maybe they can have standing



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for limited purposes for showing how their ox is being gored.

These generalized sort of statements that they're making just

don't cut it. Thank you.

THE COURT: All right. Anybody else who agrees with

Mr. Frank and Mr. Bae and Mr. Esserman before I give it back to

Mr. Munitz to give him a chance to reply?


THE COURT: Hearing none, Mr. Munitz, anything you

want to say before I --

MR. MUNITZ: Your Honor, may I first defer to Mr.

Hartley again?

MR. HARTLEY: Judge, to -- this is Kirk Hartley, to

address the points that have been raised.

First, they have not cited you the case for the

proposition that there needs to be a preexisting business

relationship in order to have a contribution or other cross-

claim. If this were really so simply, I'm sure they would

provide that to you. It is not so simple.

THE COURT: Hang on a second. Are you telling me, Mr

Hartley, that if you have, let's say for sake of example, fifty

defendants, and certain defendants are held liable and other

defendants aren't held liable, that anybody who pays has claim

against the ones who weren't held liable?

MR. HARTLEY: Well, Judge, the way the trials are

conducted varies state by state. But as a general rule, what



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you have happening in one of these underlying trials is a

debate about whether the exposure to any particular defendant'

product is sufficient to be causative of the disease. And in

given case, for example, we might have a plaintiff who says, I

am sick with mesothelioma or asbestosis as a result of having

worked with products produced by Bondex or Kelly Moore, these

various drywall and other kinds of products, and that one day,

one time, I changed a brake lining from a Volkswagen car. In

that case, my position as a defense lawyer for VW would be that

any fault or any harm was caused by the products that came from

the companies using the THAN fiber, and not the one time that

he changed one brake line. Depending on the state, that might

be framed as a claim for contribution or a portion of default;

it might be viewed as a proximate cause issue. These issues

vary state by state. But it is, in fact, the way these cases

are tried.

And to the point they were saying this has all been

deemed, well, they were deemed because we -- when I was a young

lawyer, we used to spend our lives generating these things, and

actually filing them in the clerks' offices that held

(indiscernible) because they were being asserted. So they did

exist at one time, and then we stopped doing it because it was

just too much paper inundating things. This is not -- they go

into CMOs for a reason, and that was because these were big

processes, and they still are. They are a very important



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calculus, Judge, of what's going on in the dynamic as you run

up to trial.

THE COURT: Pause, please, Mr. Hartley.

MR. HARTLEY: Sure.

THE COURT: Because I think you need to slice and dic

it. You have to help me, because my specialty is in bankruptc

and general civil litigation, and I didn't do, even as a

lawyer, asbestos litigation.

MR. HARTLEY: Okay.

THE COURT: When you're talking about contributory

fault or something like that, or saying that it's somebody

else's fault, and therefore the judgment against you should be

reduced, I understand that. If you're saying something

analogous to contributory negligence or something like that, so

that you're not liable for a hundred percent of the damages, I

understand that.

But if you're talking about a claim against the

debtor, a cross-claim against the debtor, I have difficulty as

a person who's been a lawyer for almost forty years

understanding how THAN could be liable on a cross-claim unless

THAN had some dealings with the underlying circumstance upon

which your client was held liable. Can you help me in that?

MR. HARTLEY: I think I can, Judge. And I appreciate

the framing of the question. And where these kinds of claims

come from, among other things, is if in any (indiscernible)



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there is a contribution between joint tort feasors. And

essentially, Judge, these have grown into place over the last

ten or fifteen years because, when we started out with this

tort, it was all -- everyone was liable for everything. And

over the years, it has become, according to some legislatures,

more important to apportion fault between the relative

different tort feasors.

And there are, for example, specialized rules in some

states, some of which come under the heading of tort reform,

that say, if this particular defendant is deemed by the jury to

be less than X percent at fault here, then they are liable only

for a limited subset of the damages; if the defendant's

relative responsibility is deemed to be more than X percent,

then there is a more expansive liability (indiscernible).

So where you are distinctively looking for contract

relationships for the basis of these claims, in fact, by the

legislative acts, that has been abolished, and all of this is

balled up in the (indiscernible) state by state consistent, and

frankly, rather it's someplace hard to follow, rules about

contribution between joint tort feasors or alleged joint tort

feasors.

And these are, you know, something that we haven't

even touched on today here, but that's cited in the papers --

or our papers is the settlement credit issue. In an underlyin

case, having a credit for a payment that's made by another



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defendant, which in this case would be THAN, would reduce my

potential liability if VWGOA goes to trial. And we gave you a

example of that, very recent, from Illinois, where the way the

whole trial and settlements played out, one defendant was

essentially freed from paying damages because they were getting

credit for payments made by others to resolve the case.

That's why, for something like VWGOA, Owens Illinois,

or any of the other codefendants, who are starting to pay

attention to these very important facts, an entity such as THAN

or the (indiscernible) entities that are not in bankruptcy, but

(indiscernible) injunction, we want them intra (sic) on the

verdict sheet, which in some states they have to be in the

trial to be on the verdict sheet, so that we can apportion

fault here.

THE COURT: Then, Mr. Hartley, how could any asbestos

case ever be confirmed within the statutory scheme that Section

524 contemplates?

MR. HARTLEY: Well, Judge, there are a lot of things

in asbestos litigation that are being done now and haven't been

done before for a variety of reasons. In my personal

estimation, many codefendants should have been (indiscernible)

long ago for a wide variety of reasons, they have chosen not

to. But there are some real issues here, and they are really

coming to the fore these days, Judge, because we truly are

moving into a world in which there is a (indiscernible) tort



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system and an outside trust system, if you will. And very

clearly, the goal of the plaintiffs, who are trying to serve

their clients, to go mine the tort system; and then, after they

are done with that, go mine the trust system, thereby depriving

my client, Owens Illinois, and everybody else of offsets or

credits for the amounts they are taking out of the bankruptcy

system.

And I agree with you, this has not been

(indiscernible) of any challenge before to my knowledge, but

they are starting to pop up in Thorpe (phonetic), in Sarco

(phonetic), and in the other cases because the different

remaining defendants are forced to start paying attention

because of losing the economic benefit of the payments and the

departure of these other entities. And it's going to be an

issue, I think, Judge, because we're seeing more and more about

it.

And then to switch to this issue of the FCR, this is

significant issue, Judge. As we read the FCR's papers, they

are suggesting that the professor (sic) is able to represent

both the interests of the personal injury claimant and

codefendants, both of whom want money out of the debtor. I

think under AmCam, Ortiz, he cannot do that because it is

simply an inherently conflicted position. The tort claimants

want more money, Mr. Rice wants more money; Volkswagen and

others want money or credits. I don't see how Mr. Issacharoff



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can handle both roles.

This is, to my knowledge, Judge -- and I will not

claim to have been in every asbestos bankruptcy, obviously

federal law will (indiscernible). This is, to my knowledge,

the first time there really has been precedent on the issue of

the scope of the representation of the futures representative.

And I think the position you are hearing is fairly remarkable,

in that I do think that Mr. Issacharoff's role is leaving him

purporting to protect the interests of Volkswagen in a future,

as yet unknown case, in which we would want to make a cross-

claim. I don't see how he can do that under the case law.

That, Your Honor, is one of the things that I do think needs to

be the subject of some very focused discovery, so we can try

and leave you with a record of exactly what he has done or not

done to protect the interests of entities in the position of VW

or OI.

I think what we're going to find is that he did not

take any steps to determine (indiscernible) to determine

(indiscernible), and that in fact it's simply a role that is

not properly (indiscernible), and instead, his role is to

represent the personal injury (indiscernible). But that's

going to be here, Judge, an issue of first impression.

Have I helped at all, Judge, on your question?

THE COURT: You've helped clarify my thinking on the

matter, yes. All right.



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MR. HARTLEY: Did I address (indiscernible.)

MR. ESSERMAN: May I respond briefly, please?

THE COURT: Who is that, Mr. Esserman?

MR. ESSERMAN: Yes.

MR. HARTLEY: Yes, Judge, can I make -- this is

Hartley -- can I make one more point (indiscernible).

THE COURT: Yes. First Mr. Hartley, then Mr.

Esserman.

MR. HARTLEY: Judge, if -- I've read your case

management order and understand the process. The assertions

we've made are supposed to be taken as correct. If people wan

to contravene them, then we're supposed to have a formal

evidentiary hearing.

I believe, and I'm confident we can bring you

underlying tort lawyers to testify in more detail if you need

further education or want further education about how the

underlying tort cases work. And I think to say at this

juncture we do not have standing in light of sixteen

indisputable cross-claims would be a mistake.

I also want to address the transparency issue that wa

alluded to when our opponents were saying we're not harmed. I

a present claim, Judge, the plaintiff is sitting in court, in

deposition, and saying, I was exposed the products of X, Y, and

Z, and all of that is on the table during his deposition and

during trial, so we are able to point to that evidence as we



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are trying to make our trial proofs.

Under this system, they are creating a deferral

process under which the plaintiff in my tort trial will not be

required to have made his claim against THAN, and will be

depriving him evidence. If the claims is --

THE COURT: Pause, please, Mr. Hartley.

Are you telling me that you're not going to have the

ability to depose the plaintiff in that tort litigation?

MR. HARTLEY: We will have the ability, Judge, but

that is not -- in a normal case, we will have access to the

papers and the product ID, which has been identified by

plaintiff, the physical process, the answers to the

interrogatories (indiscernible) deposition. The way this is

being set up, the claim may not even be on file at the time,

and I may not have access to the information that was

submitted.

There have been some significant controversies

already, Judge, in which the claimant, the tort claimant was

found after the fact to have submitted a claim to a bankruptcy

trust, and in deposition he has denied doing so. But the way

this is all being structured, I'm not going to have access to

that information in the real important time, which is when

these cases are being discovered for trial.

So the transparency is a major issue for all of the

codefendants. We need access to claims as they are being



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filed; and when payments are being made, that too needs to be

known, so that we're obtaining appropriate (indiscernible).


MR. VALENZA: Your Honor, this is Dennis Valenza. I

have a comment to make when Mr. Esserman is finished.

THE COURT: All right. Are you --

MR. ESSERMAN: Your Honor?

THE COURT: Wait, just a second. Did I hear

"Valenza"? I don't --

MR. VALENZA: Yes, Your Honor. I'm the special

counsel for THAN in the litigation, so I've been actively

engaged in the (indiscernible).

THE COURT: All right. Just a minute, Mr. Valenza, I

don't see you on my log here.

MR. VALENZA: Oh --

THE COURT: Oh, yes, now I do. All right. All right

You're up after Mr. Esserman. But Mr. Esserman, I promised yo

a chance to respond.

MR. ESSERMAN: Okay. This has been very productive

and (indiscernible) because, finally, after all the obfuscation

of VW has given this Court, we finally hear from VW exactly

what this is all about, and it has nothing to do with THAN, it

has nothing to do with THAN exposure, it has nothing to do with

THAN liability; it has to do with their concern that they're

one of fifty defendants, and that there's going to be some



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trust claim filed, there are going to be some other claims

filed in the court system that they're getting sued, and

they're not -- their concern is they're somehow not going to be

able to discover exactly what exposures or what other claims

that particular plaintiff had against others, so they can

attempt to get a judgment reduction or some other benefit or

credit.

And you know what? This bankruptcy is not here to

solve that problem. To the extent that they've got a problem

with a plaintiff and they want to find out what the plaintiff

has received from other places, it's very simple. The courts

allow subpoenas. He can subpoena -- he can subpoena the

plaintiff, he can take the plaintiff's deposition, he can do

all sorts of things to find out exactly from the plaintiff

exactly what the liability of Volkswagen is, to the extent he'

allowed -- and that's another issue, that's a state court

issue, to get into these other issues. He may or may not do

so, depending on the state court. But this is not a forum to

try and fix Volkswagen's codefendant problems that they're

somehow generally concerned about; that they're concerned that

they're either overpaying on a case, they're not getting

credit, they're not doing whatever, none of which has anything

to do with THAN liability. It has to do with the general tort

system, a generalized problem that they say.

And I think -- you know, I commend Volkswagen for at



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least finally getting it out on the table exactly what they're

wanting and exactly what this is all about. This isn't about

trying to find a case that they can't find, where they've got

(indiscernible) exposure. This is about a generalized

complaint about the legal system in general and about 524(g) in

general, and how that operates. So to that extent, this has

been very beneficial. Thank you.

THE COURT: All right. Mr. Valenza.

MR. VALENZA: Yes, Your Honor. And to -- just a

couple of points, and following up on what Mr. Esserman just

said, you know, the codefendants in the litigation have

mechanisms to do discovery against the plaintiff, and they can

use subpoena power, and in fact that's what's done in the

litigation. The various trusts, bankruptcy trusts, are

routinely subpoenaed to get the information with respect to

payments in order to get credit information.

What is important and what Mr. Hartley said is that

some of the plaintiffs can mislead and, in fact, perjure

themselves in the process, and not give information to the

plaintiff about THAN's potential exposure in a case. But

rarely, if ever -- and I can think of no occasion, Your Honor

- was THAN sued because of a direct exposure to asbestos

supplied by (indiscernible); to the contrary, it was always the

case that another codefendant is sued, along with THAN, for a

product that that codefendant manufactured using asbestos



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supplied by THAN.

So there is in the litigation today those individual

companies with which THAN had a contractual relationship, so

that Volkswagen can pursue whether or not there is an

appropriate contribution for an appropriate level of fault,

because the codefendant is there in the courtroom that made the

product.

So I hope I haven't confused the issue, but they're

basically making a statement that, because THAN is not

available in the litigation, that there's no way that they can

get information, and that's just not correct.

MR. MUNITZ: Your Honor, this is Mr. Munitz.

Our memorandum cited two bases for our standing in the

matter: One was that, as a matter of state law or orders

entered in state court proceedings, we are deemed a cross-

claimant and thereby become a creditor.

We also refer to 28 U.S.C. 157(b)(5), and perhaps if

got an answer, it would probably go away. Assuming the THAN

plan were to be confirmed, would that preclude Volkswagen's

right to ask that a particular pending lawsuit be tried

pursuant to the provisions of that section or remanded by the

District Court to the state court for trial, so that a state

court allocation provision could be had in the course of that

trial? In other words, if THAN and Volkswagen and three other

people are defendants in a particular action, is there anything



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in the THAN plan, such as a 524(g) injunction, that would

prevent Volkswagen from asking that the liability be determined

under 157(b)(5)?

THE COURT: Now are you talking about the injured

asbestos victim's ability to get his damages from THAN, or are

you saying that you have -- that 157(b)(5) applies to your

claim for contribution, as well?

MR. MUNITZ: Your Honor, I looked at the very languag

of the section, and I do not see anywhere where the right to

request that release is limited to the plaintiffs, to the tort

victim. So I should think, especially in view of recent

developments with respect to allocation statutes, that a

defendant would have the right to ask for invocation of that

section.

MR. BAE: Your Honor, this is John Bae. May I be

heard?

THE COURT: Yes.

MR. BAE: I'm a little confused by Volkswagen's

reference to 157(b)(5). 157(b)(5) does not provide a basis fo

a codefendant to bring back and to assert a claim against a

reorganized debtor or a trust that has been established by a -

MR. MUNITZ: No. Your Honor, this is not

(indiscernible) --

THE COURT: Wait. Gentlemen -- Mr. Munitz, we do not

interrupt in my courtroom.



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MR. MUNITZ: I apologize, Your Honor.

MR. BAE: Your Honor, to continue --

THE COURT: I lost the train of thought, Mr. Bae.

You're going to have to go back over it again, please.

MR. BAE: Yes, Your Honor.

Section 157(b)(5) is a provision under the statute

that provides jurisdiction to the district court in which a

bankruptcy case is pending to address and resolve personal

injury and wrongful death actions. It is not -- it is purely

jurisdictional mechanism to be sure that, if there is a

personal injury action, that that issue is addressed by the

District Court, not by the Bankruptcy Court in the claims

resolution process. That's what 157(b)(5) is intended to do.

Hence, in the Dow Corning bankruptcy case, Your Honor

the issue was raised as to whether claims that are related to

the bankruptcy could be transferred to the District Court where

the bankruptcy case was pending because the wrongful death and

personal injury claims should be resolved by the District

Court, and not by the Bankruptcy Court. That is wholly

different than the issue that is being raised by Volkswagen.

What Volkswagen is raising is it is saying that,

because it has been sued with the debtor in a pending asbestos

action, that somehow its rights are being compromised in its

defense of the state court litigation. And it is now asking

this Court to fix that problem that they have in the state



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court system.

I don't believe that that creates standing. What tha

does is it creates -- it's an inevitable problem, I suppose, in

any litigation where there are multiple defendants, and

individual defendants have -- are seeking relief under the

Bankruptcy Code, and they are no longer present in the pending

litigation. Whether it's fortunate or unfortunate, that is th

reality of life. Companies have a right to seek relief under

the Bankruptcy Code, and they can pursue those rights.

I think what Volkswagen is trying to do here is to sa

that THAN and its creditors, who have legitimate claims against

the debtor, are not entitled to the protections of the

Bankruptcy Code because they don't like the impact of the

relief that this Court may grant in any pending state court

action, and that's not what this should be about.


MR. HARTLEY: Judge, this is Kirk Hartley. May I jus

follow-up on Mr. Valenza's (indiscernible).

THE COURT: Yes.

MR. HARTLEY: The reality is that, of some of those

THAN fiber customers that he identified, several of them are

now in bankruptcy; and so, therefore, it is very important for

my client to be able to reach the fiber supplier which sold

them the fiber. And just going off the list in their plan

disclosure statement, and going from memory, which could be



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faulty, they list the following entities as customers, that I

believe are now bankrupt: (Indiscernible), Kaiser Gypsum, W.R

Grace, and United States Gypsum. So it is very important for

my client to be able to go behind them and reach back to that

fiber supplier, which is THAN, which is why I want to be able

to bring a claim. That's all I wanted to follow up on.

THE COURT: All right. Have I now heard from

everybody?


THE COURT: All right. I am going to be leaving the

bench. Stand by, keep your telephone lines open, and I'll be

back with a ruling as soon as practical.

(Recess taken at 5:22 p.m.)

(Proceedings resume at 6:50 p.m.)

THE COURT: All right. This is Judge Gerber. I

apologize for keeping you all waiting.

Ladies and gentlemen, I'm ruling that Volkswagen

hasn't satisfied me that it has the requisite standing, and

most assuredly that it hasn't satisfied me that it needs any

discovery or any accommodation for its stated desires in the

scheduling for this case. The following is a summary of the

bases for this decision:

First, while Volkswagen has given me evidence that

Volkswagen and THAN are named as defendants in a number of

lawsuits, it hasn't given me any evidence of Volkswagen having



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Court Decision 5

actually asserted any cross-claims against THAN, other than by

the automatic operation of case management orders that deem

cross-claims to have been filed.

The fact that parties are named as codefendants, of

course, doesn't mean by itself that one has claims against the

other, especially in the absence of any evidence that they had

any dealings with each other, or that one paid an obligation,

for which the other is also liable.

Now the answer that I was given was that, under

various case management orders, cross-claims were deemed to

have been filed. But as Mr. Bae pointed out, that was a pure

procedural mechanism, and what a case management provides for

convenience lacks both the safeguards, like Rule 11 or any

state law equivalent, or Rule 9011, of voluntary or intentiona

assertion by the party seeking the "right to payment" that

provides the underpinning of "claim" under 1015 of the Code. A

case management order presumably can provide 'procedural' in

the action in which it was entered, but it can't confer

substantive rights.

Federal-Mogul doesn't teach us that much because, as

was noted in argument without contradiction, their judgments

were entered creating substantive rights to payment. And I sa

this fully recognizing that a claim, once asserted, can be

contingent, unliquidated, or any of the other things 1015

provides. But to find a "right to payment" under the Code, an



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Court Decision 5

to inflict upon all of the other parties in the case the

burdens that standing requirements are intended to protect them

against, there must be something more than the happenstance

that dozens of entities are named as defendants in the same

case, and that an administrative orders says that they're

deemed to have cross-claimed against each other.

That's especially so since the claim of prejudice

here, or perhaps I should say asserted legally cognizable

injury, is not that Volkswagen could never recover anything

from the estate or its trust in the event that -- and perhaps

should say inter alia, A, Volkswagen were held liable; B,

Volkswagen made payments; C, THAN were liable to Volkswagen fo

something THAN sold for which Volkswagen were held liable, a

matter that's conspicuously absent from the showings made in

the papers and in oral argument, because the plan provides for

a means and source of recovery if all of those things ever came

to pass.

Rather, it appears that Volkswagen is looking for one

or more means to achieve a leg up in litigation against those

suing it elsewhere, such as by substantive reductions in its

possible liability to tort claimant plaintiffs by means of

judgment reductions, if Volkswagen is found liable by the tort

plaintiffs, or to achieve some kinds of benefits or credits in

negotiations.

There was also a hint in the oral argument that in the



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Court Decision 5

so-called "case of first impression," Volkswagen wants to bring

down the entire Bankruptcy Code scheme for dealing with mass

torts, and/or the Code's express scheme for dealing with

asbestos litigation. Certainly, arguments I heard today lead

to that conclusion. But agendas of that character do not give

rise to rights of payment.

And as Quigley, 391 B.R. 695, which I've told you

earlier in this case I'm going to follow, teaches us:

Standing must be evaluated in light of the legally

cognizable issues that the party seeks standing to be

heard on.

Quigley is thoughtful authority from the Chief Judge

of this district, and as I've told you before, I'm going to

follow it.

As the Second Circuit observed in the Refco case, it

is important that a bankruptcy court is not too facile in

granting applications for standing.

Overly lenient standards pay potentially overburden

the reorganization process by allowing numerous

parties to interject themselves into the case on ever

issue, thereby thwarting the goal of a speedy and

efficient reorganization. Granting peripheral partie

status as parties-in-interest thwarts the traditional

purpose of bankruptcy laws, which is to provide

reasonably expeditious rehabilitation of financially



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Court Decision 5

distressed debtors with a consequent distribution to

creditors who have acted diligently.

As I said, that's the Second Circuit speaking in

Refco, 505 F.3d at 118-119.

We have exactly those kinds of risks here.

I'm also mindful of the observation that Judge

Bernstein made in Quigley -- once again, that's case law in

this district -- quoting, in part, Refco:

Proceedings would quickly grind to a halt if the Cour

had to head every party on every issue.

That's at Page 703.

Now we heard about a reliance on 28 U.S.C. 157. You

don't need me to tell you that 157 applies to the ability of a

bankruptcy judge to decide certain kinds of matters. But

limits in 157 on the bankruptcy judge's ability to decide

personal injury actions have nothing to do with a bankruptcy

judge's ability to decide core matters. And whether or not a

Chapter 11 plan should be confirm or how 524, including 524(g)

of course, should be construed presents classic core matters,

fully within the province of a bankruptcy judge to decide.

See, in particular, 157(b)(2)(J).

Now I don't yet need to decide, if I ever will, how I

would rule vis-a-vis standing if Volkswagen had actually filed

a claim for contribution against THAN in any of the actions in

which they both happen to be named as defendants -- and by



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Court Decision 5

"filed a cross-claim," I mean by some kind of volitional act

that would stand up to Rule 11 scrutiny, or scrutiny of like

character as imposed under applicable state law -- or if

Volkswagen had filed a proof of claim here. The assertion tha

Volkswagen had done any of those things was conspicuously

absent from what we heard today.

I will also defer judgment pending the possibility

that genuine claims, as contrasted to deemed claims, might be

asserted in the future, or Volkswagen wants to roll the dice by

pressing the issue without such, in which case Volkswagen might

have limited standing to object to the proposed treatment of

any contingent future claim it might have under Section 5.6 of

the Asbestos P.I. Trust Distribution Procedures, or any other

way in which its ox is actually gored with respect to any right

of payment, in contrast to its desire to get advantages in non

bankruptcy litigation against asbestos plaintiffs.

Moreover, even if Volkswagen had made a requisite

showing of status, one that it hasn't yet made, if it every

will, no cause has been shown for delaying the proceedings in

this case. That's the exact thing that the Circuit urged us t

be wary of in Refco. There is no need for discovery to

interpret the plan; that's determined by reading the plan.

There is no need for discovery to consider the role of a future

claims representative; that's determined by reading the

Bankruptcy Code, and to the extent necessary, reading the plan



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Court Decision 5

There extent to which there is an objection to the ability of

the plan to avoid state law trials against THAN? Well, that's

an objection to the provisions of the code itself. And the

effect of not having THAN side by side with Volkswagen to

facilitate Volkswagen's desire for reduction of any judgment

against it, once again as a consequence of the Bankruptcy Code

and does not require discovery.

And Volkswagen doesn't need discovery on its future

ability to subpoena the trust for information, to verify that

tort litigants aren't lying to Volkswagen in the tort

litigations around the country because Volkswagen's ability to

get such information from the trust has been conceded in the

argument today.

As the creditors' committee observes, Volkswagen only

has standing to object to those provisions that affect its

legal rights. It may someday have the latter, to the extent I

acknowledged earlier in this decision, but it doesn't have any

such rights now, and especially to inquire as to the things

that it's told us that it wishes to inquire about. As the

creditors' committee also observed, Volkswagen has no standing

to take advantage of this Court and this bankruptcy case to

advance its interests in far-removed asbestos litigation around

the country.

Standing is denied without prejudice to renew the

request, to the extent, but only the extent I previously noted



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Court Decision 5

in this decision. In any event, no cause has been shown to

change the scheduling in this case to meet Volkswagen's stated

needs.

I am so ordering the record. I assume you'll all

order a copy of the transcript.

Have a good evening, folks. We're adjourned.

COUNSEL: Good night, Your Honor. Thank you. Thank

you, Your Honor.

(Proceedings concluded at 7:02 p.m.)

*****

CERTIFICATION

I certify that the foregoing is a correct transcript

from the electronic sound recording of the proceedings in the

above-entitled matter.

______________________________________ January 14, 2009

Coleen Rand, AAERT Cert. No. 341

Certified Court Transcriptionist

Rand Reporting & Transcription, LLC

Note: Comments and arguments of participants appearing

telephonically not adequately recorded for verbatim

transcription and should be considered "conditionally

certified."



Hearing Date & Time: February 17, 2009 at 9:45 a.m. EST

Objection Deadline: February 13, 2009 at 12:00 p.m. EST

BRUNE & RICHARD LLPSusan BruneTheresa Trzaskoma80 Broad StreetNew York, New York 10004


-and-

STUTZMAN, BROMBERG, ESSERMAN & PLIFKA, A PROFESSIONAL CORPORATIONSander L. Esserman (Admitted Pro Hac Vice )

Andrea L. Ducayet (Admitted Pro Hac Vice )2323 Bryan Street, Suite 2200Dallas, Texas 75201


Counsel for Samuel Issacharoff in his Capacity as theLegal Representative for Future Claimants

UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------------X

)

In re ) Chapter 11) Case No. 08-14692 (REG)

T H AGRICULTURE & NUTRITION, L.L.C. ))

Debtor. )--------------------------------------------------------------X

RESPONSE OF LEGAL REPRESENTATIVE FOR FUTURE

ASBESTOS CLAIMANTS IN SUPPORT OF DEBTOR’S MOTION TO

STRIKE OWENS-ILLINOIS, INC.’S OBJECTION TO THE

PREPACKAGED PLAN OF REORGANIZATION FOR LACK OF STANDING



ii

TABLE OF CONTENTS

I. INTRODUCTION...................................................................................................... 1

II. RESPONSE.............................................................................................................. 2III. CONCLUSION ....................................................................................................... 5


Cases

In re Ionosphere Clubs, Inc., 101 B.R. 844 (Bankr. S.D.N.Y. 1989)............................ 5

In re James Wilson Assocs., 965 F.2d 160 (7th Cir. 1992)........................................... 2

In re Quigley Co., Inc., 391 B.R. 695 (Bankr. S.D.N.Y. 2008).................................. 2, 4

In re Refco, Inc., 505 F.3d 109 (2d Cir. 2007) ........................................................... 3, 5

Lee v. Board of Governors, 118 F.3d 905 (2d Cir.1997) ............................................... 5

OneBeacon America Ins. Co. v. A.P.I., Inc., No. Civ. 06-167(JNE), 2006 WL

1473004 (D. Minn. May 25, 2006) ................................................................................. 4

Warth v. Seldin , 422 U.S. 490 (1975)............................................................................5

Statutes

U.S. CONST. art. III, § 2. ................................................................................................4



2

hereafter cited as “Tr. at p. __”, attached as Exhibit “A” to the Debtor’s Motion to

Strike. Indeed, the alleged “connections” between Owens-Illinois and the Debtor

are factually indistinguishable from the connections between Volkswagen and the

Debtor. Hence, the same arguments relied upon by this Court in determining that

Volkswagen lacked standing apply with equal, if not greater, force to Owens-Illinois’

efforts to insinuate itself into the Debtor’s bankruptcy case. The FCR urges the

Court to follow its prior ruling and conclude that Owens-Illinois has no standing to

participate in the Debtor’s chapter 11 case.

II.

RESPONSE

The threshold question with respect to standing is constitutional: whether

someone seeking to be heard has a sufficiently concrete, personalized stake in the

outcome—a tangible injury in fact. See, e.g., In re Quigley Co., Inc., 391 B.R. 695,

701-02 (Bankr. S.D.N.Y. 2008). In the specific context of an asbestos reorganization

case, Chief Judge Bernstein has stated that only one “‘who has a legally protected

interest that could be affected by a bankruptcy proceeding is entitled to assert that

interest,’” and even then, only with respect to those issues to which its interest

pertains. In re Quigley Co., Inc., 391 B.R. at 703 (quoting In re James Wilson

Assocs., 965 F.2d 160, 169 (7th Cir. 1992)). Even a party in interest “cannot

challenge portions of a plan that do not affect its direct interests.” In re Quigley

Co., Inc., 391 B.R. at 703 (citations omitted). Indeed, as announced by this Court in

its January 12, 2009, ruling on the various Volkswagen objections:



3

Overly lenient standards … potentially overburden the reorganizationprocess by allowing numerous parties to interject themselves into thecase on every issue, thereby thwarting the goal of a speedy andefficient reorganization. Granting peripheral parties status as parties-in-interest thwarts the traditional purpose of bankruptcy laws, which

is to provide reasonably expeditious rehabilitation of financiallydistressed debtors with a consequent distribution to creditors who haveacted diligently.

Tr. at p 55-56 (quoting In re Refco, Inc., 505 F.3d 109, 118-19 (2d Cir. 2007).

Here, Owens-Illinois alleges (just as Volkswagen alleged) that it is an

“alleged joint tortfeasor” with the Debtor and that it “has contribution and

indemnity rights against the Debtors.”3 The Court, however, has already

considered and rejected the notion that such an unfounded allegation constitutes a

sufficient injury in fact to confer standing. See Tr. at 53 (“The fact that parties are

named as codefendants, of course, doesn’t mean by itself that one has claims against

the other, especially in the absence of any evidence that they had any dealings with

each other, or that one paid an obligation for which the other is liable.”). Owens-

Illinois, like Volkswagen, has never prosecuted a cross claim against the Debtor.

See Motion to Strike, p. 5. Nor has Owens-Illinois ever filed or prosecuted any

action seeking contribution or indemnity from the Debtor. Id. at 1; see also Tr. at

18 (describing the lack of evidence that Volkswagen had ever asserted a cross-claim

against THAN as “a pretty big hole in the record”). This is not surprising, given

3 See Owens-Illinois, Inc.’s Objection to the Prepackaged Plan of Reorganization (the“Plan Objection”) [Dkt. No. 195], ¶ 10. Despite the allegation, Owens-Illinois fails toidentify any lawsuit where it has asserted an actual contribution or indemnity claimagainst the Debtor. In fact, Owens-Illinois fails to identify any lawsuit where it is even aco-defendant with the Debtor.



4

that the Debtor never sold asbestos to Owens-Illinois nor conducted any other type

of business with Owens-Illinois. See Motion to Strike, p. 1; see also Tr. at 19

(discussing Volkswagen’s failure to prove or even to allege that it had ever done any

business with THAN, and stating that Volkswagen’s “silence in that regard was

deafening”).

Put simply, Owens-Illinois has failed to prove (or even to allege) any facts

demonstrating that it has a present claim against the Debtor, and any hypothetical

“claim” that may possibly arise under certain circumstances at some future time

does not demonstrate that Owens-Illinois has a concrete, personalized stake in the

Debtor’s reorganization—the hallmark of Article III’s “case or controversy”

requirement.4 See, e.g., OneBeacon America Ins. Co. v. A.P.I., Inc., No. Civ. 06-

167(JNE), 2006 WL 1473004, at *6, n.1 (D. Minn. May 25, 2006) (rejecting an

assertion of standing based on a hypothetical cross-claim, stating as follows:

“[h]aving failed to offer any support for a contribution claim, OneBeacon cannot

demonstrate that the injunctive relief contemplated by the Modified Plan directly

and adversely affects its pecuniary interests”) (cited by Quigley , 391 B.R. at 704-

05).5 Accordingly, Owens-Illinois has failed to carry its burden of establishing that

4U.S. C

ONST. art. III, § 2.

5 Moreover, Owens-Illinois’ reliance on some remote contingency also runs head-oninto the Bankruptcy Code’s mandate that contingent claims are disallowed under 11 U.S.C.§ 502(e)(1)(B) and the parallel provision of 11 U.S.C. § 509 that hypothetical subrogationclaims are not recognized in bankruptcy. Reorganization cases deal with serious issuesamong parties with real issues. They do not have time to sort out the hypothetical inquiries

[Footnote continued on next page]



5

it has standing to participate in the current bankruptcy case. See, e.g, Lee v. Board

of Governors, 118 F.3d 905, 910 (2d Cir.1997) (“[T]he party invoking the authority

of the court bears the burden of proof on the issue of standing.”) (quoting Warth v.

Seldin, 422 U.S. 490, 501-02, 95 S.Ct. 2197, 2206-07, 45 L.Ed.2d 343 (1975)).

III.

CONCLUSION

Standing rules exist for a reason and play a key role in federal jurisprudence.

No one can be heard in court without a sufficiently discernible stake in the outcome,

particularly in a bankruptcy case designed to ensure “a speedy and efficient

reorganization.” Tr. at 55 (quoting In re Refco , 505 F.3d at 118-19; see also In re

Ionosphere Clubs, Inc., 101 B.R. 844, 849 (Bankr. S.D.N.Y. 1989) (“Only those

parties sufficiently affected by a Chapter 11 proceeding should be able to appear

before it and be heard.”). Here, Owens-Illinois lacks any discernible stake in the

outcome of the Debtor’s bankruptcy case, and thus Owens-Illinois cannot

participate in it.

WHEREFORE, for the reasons set forth, the FCR respectfully urges the Court to grant

the Debtor’s Motion to Strike and reject Owens-Illinois’ efforts to participate in this bankruptcy

case based on a lack of standing.

[Footnote continued from previous page]of unaggrieved parties. In the event Owens-Illinois should ever establish a real, concrete,cognizable claim for contribution arising from THAN’s asbestos liabilities founded on statelaw, the TDPs provide a mechanism for satisfying such a claim.



6

Dated: New York, New York,February 11, 2009 Respectfully submitted,

BRUNE & RICHARD LLPBy: /s/ Theresa Trzaskoma

Theresa Trzaskoma

Susan Brune80 Broad StreetNew York, New York 10004Telephone: (212) 668-1900Facsimile: (212) 668-0315

-and-

STUTZMAN, BROMBERG, ESSERMAN &PLIFKA,

A PROFESSIONAL CORPORATION

Sander L. Esserman (Admitted Pro Hac Vice )Texas Bar No. 06671500

Andrea L. Ducayet (Admitted Pro Hac Vice )Texas Bar No. 240327902323 Bryan Street, Suite 2200Dallas, Texas 75201

Counsel for Samuel Issacharoff in his Capacity asthe Legal Representative for Future Claimants




200 Park Avenue


Facsimile: (212) 801-6400






----------------------------------------------------------In re:


Debtor.

----------------------------------------------------------

x:

:

::x

Chapter 11

Case No. 08-14692 (REG)

DEBTOR’S REPLY TO OWENS-ILLINOIS, INC.’S OBJECTION TODEBTOR’S MOTION TO STRIKE OWENS-ILLINOIS, INC.’S OBJECTION

TO PREPACKAGED PLAN OF REORGANIZATION FOR LACK OF STANDING

TO THE HONORABLE ROBERT E. GERBER

UNITED STATES BANKRUPTCY JUDGE:


debtor in possession, submits this response to the February 11, 2009 objection (the “Objection”)

filed by Owens-Illinois, Inc. (“Owens-Illinois”), and in further support of its motion to strike

Owens-Illinois’ objection to the Debtor’s prepackaged plan of reorganization (the “Plan”) for

lack of standing (the “Motion”). For the reasons set forth below, the Debtor respectfully submits

that Owens-Illinois has no cognizable claim in this chapter 11 case. The Court should overrule

Owens-Illinois’ Objection in its entirety, grant the Debtor’s Motion and reject Owens-Illinois’

efforts to force participation in this chapter 11 case, including its efforts to obtain discovery from

the Debtor.



2

1. The Court should grant the Debtor’s Motion, and strike Owens-Illinois’

objection to the Plan, because Owens-Illinois has presented no facts to establish that it has any

claim whatsoever against the Debtor. The only facts Owens-Illinois has presented are the exact

same facts presented by Volkswagen, which this Court already ruled were not sufficient to

establish a claim against this estate.

2. Owens-Illinois’ argument that it should be afforded standing is based on a

single fact: that it is a named codefendant with the Debtor in several pending state tort claims.

This Court, however specifically rejected this claim to standing when ruling that Volkswagen

lacked standing to participate in this case. As the Court stated, “The fact that parties are named

as codefendants, of course, does not mean by itself that one has claims against the other,

especially in the absence of any evidence that they had any dealing with each other, or that one

paid an obligation for which the other is liable”. Transcript of Telephonic Conference Before the

honorable Robert E. Gerber United States Bankruptcy (the “Volkswagen Hearing”) at p.58-59.

3. While Owens-Illinois complains that the codefendants in the pending

asbestos state court actions could stand to pay more than their proportional share of the liability,

Owens-Illinois has offered no facts to demonstrate that it had ever made any payment in any

action on behalf of the Debtor in any case. It is pure conjecture, and nothing more. Indeed, if

Owens-Illinois’ purported claim gave rise to standing, any defendant in a mass tort litigation

involving multiple defendants that seeks relief under chapter 11 would have to invite every

codefendant into the chapter 11 case based on speculation that the remaining defendants may

have to pay more than their proportional share. No law supports such a preposterous outcome.

4. Owens-Illinois complains that the automatic stay under section 362 of the

Bankruptcy Code precludes the remaining codefendants from asking the jury to assess the



3

debtor’s share of the liability. That concern alone, however, does not provide a claim against the

Debtor, and does not confer standing on Owens-Illinois to assert a claim against this estate. It is

an intended function of section 362 as enacted by Congress, and this Court is not the proper

forum to seek to rewrite the Bankruptcy Code.

5. The Court should also disregard Owens-Illinois’ assertion that the Court is

somehow bound to provide full faith and credit to various state court orders that provide as a

matter of docket control and convenience for the automatic assertion of cross-claims among

codefendants. The Court already rejected that argument at the Volkswagen Hearing, where the

Court stated, “automatic operating of case management orders that deem cross-claims to have

been filed. . . . [is] a pure procedural mechanism. . . . A case management order presumably can

provide ‘procedural’ in the action in which it was entered, but it can’t confer substantive rights.”

Volkswagen Hearing Tr. at p. 53.

6. Owens-Illinois’ reliance on 10 Del. C. § 6302 to contend that it provides a

substantive legal right of contribution also is misplaced. That statute merely provides for the

automatic right of contribution among joint tortfeasers, which right of contribution arises only

when payment to such claimant has extinguished the liability to the injured party on behalf of all

joint tortfeasers. See 10 Del. C. § 6302. Owens-Illinois, of course, has not presented any

evidence that it has ever made any payment on behalf of the Debtor as a joint tortfeasor.

7. Having presented no fact to support a claim that Owens-Illinois holds

against the estate, its decision to file a proof of claim should be seen as nothing more than an

effort to manufacture standing. The Court should see it for what it is, and give zero credence to

it. The law is clear that the mere filing of a proof of claim does not confer standing where

standing did not previously exist. See e.g., In re Abijoe Realty Corp., 943 F.2d 121, 125 (1st



4

Cir. 1991) (“a facially meritless proof of claim which plainly evidences no ‘right to payment,’

disputed or otherwise, cannot confer ‘creditor’ standing upon the holder”); In re FirstPlus

Financial, Inc., 248 B.R. 60, 70 (Bankr. N.D. Tex. 2000) (“A proof of claim filed by a party who

is not a creditor is not a properly filed proof of claim”) (cited with approval in In re Musicland

Holding Corp., 362 B.R. 644, 652 (Bankr. S.D.N.Y. 2007)).

8. Owens-Illinois’ conclusory assertion that it has standing to assert “narrow

challenges to specific portions of the plan which adversely affect its interests” misses the point

entirely. Objection at. p. 13. If Owens-Illinois has no claim against the Debtor, it has no

standing to present any objection to the Plan, irrespective of how narrow or broad the objection

may be. Owens-Illinois simply cannot establish standing under Kane v. Johns-Manville Corp.,

843 F.2d 636 (2d Cir. 1988), and In re Quigley Co., 391 B.R. 695 (Bankr. S.D.N.Y. 2008), and

its contention that its “ox is being gored” is baseless.

9. Having shown no facts to demonstrate that it has a claim against the estate,

Owens-Illinois’ baseless speculation that it somehow may have a claim against the Debtor in the

future does not entitle it to be represented by a future claims representative. Owens-Illinois has

presented no factual or legal basis for the appointment of a separate future claims representative

to represent Owens-Illinois’ nonexistent claim.

10. Owens-Illinois has no business participating in this chapter 11 case. It is

no different than Volkswagen, which this Court already ruled lacks standing to participate in this

case. Its efforts to object to the Debtor’s Plan and disrupt this chapter 11 case is nothing more

than an effort to leverage the Debtor to help it obtain a benefit in its pending state court actions.

Fortunately, the law does not allow it to participate here to achieve its ulterior goals. The Court

should grant the Motion.



5

WHEREFORE, for all of the reasons set forth in the Motion and herein, the

Debtor respectfully requests that the Court grant the Motion, overrule Owens-Illinois’ Objection

in all respects, and hold that Owens-Illinois lacks standing to participate in this chapter 11 case,

including the right to obtain discovery from the Debtor, and grant to the Debtor such other and

further relief as is just and proper.


February 13, 2009

By: /s/ John H. Bae



200 Park Avenue


Facsimile: (212) 801-6400

[email protected] [email protected]





{ THAN / 001 / 00016620.DOC /}

FRANK /GECKER LLPFrances Gecker

Joseph D. Frank


(312) 276-1400 – telephone(312) 276-0035 – facsimile

Hearing Date and Time:

February 17, 2009

9:45 a.m.

Counsel to Official Committee

of Unsecured Creditors of T H Agriculture &

Nutrition, L.L.C.

IN THE UNITED STATES BANKRUPTCY COURT


In re:


Debtor.

)

)

))

)

Chapter 11

Case No. 08-14692 (REG)

RESPONSE OF THE OFFICIAL COMMITTEE OF

UNSECURED CREDITORS OF T H AGRICULTURE & NUTRITION, L.L.C.

IN SUPPORT OF DEBTORS’ MOTION TO STRIKE

OWENS-ILLINOIS, INC.’S OBJECTION TO PREPACKAGED

PLAN OF REORGANIZATION FOR LACK OF STANDING

The Official Committee of Unsecured Creditors (the “Committee”) of T H Agriculture &

Nutrition, L.L.C. (“THAN” or the “Debtor”), by its counsel, Frank/Gecker LLP, hereby responds

in support of the Debtors’ Motion to Strike Owens-Illinois, Inc.’s Objection to Prepackaged Plan

of Reorganization For Lack of Standing (the “Motion to Strike”) [Docket No. 294].

1. On January 12, 2009, this Court held a hearing on the standing of Volkswagen

Group of America, Inc. to be heard in this bankruptcy case and ruled that Volkswagen does not

have the requisite standing. Transcript of Telephonic Conference before the Honorable Robert E.

Gerber, January 12, 2009 at p. 52 (hereafter, the “Transcript,” attached to Motion to Strike as

Exhibit A).



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2. However, in so ruling, the Court did not completely close the standing door to the

Debtor’s other corporate co-defendants: “Now I don’t need to decide, if I ever will, how I would

rule vis-à-vis standing if Volkswagen had actually filed a claim for contribution against THAN

in any of the actions in which they both happen to be named as defendants – and by ‘filed a

cross-claim,’ I mean by some kind of volitional act that would stand up to Rule 11 scrutiny, or

scrutiny of like character as imposed under applicable state law – or if Volkswagen had filed a

proof of claim here.” Transcript at pp. 56 – 57. Owens-Illinois, Inc. (“Owens”) now hopes to

squeeze through that slightly-open door.

3.

Owens has bombarded this Court and the other parties with nearly two hundred

pages of documents, attached as exhibits to Owens’ objection to the Motion to Strike (the

“Owens Objection”) [Docket No. 308]. Buried in that stack is a proof of claim filed by Owens

and dated February 5, 2009, three weeks after this Court ruled on the standing of Volkswagen.

The Owens proof of claim is unliquidated as to amount and alleges a claim for

“contribution/indemnification.” Owens has attached to the proof of claim four compact disks

and a four-page written narrative. The disks allegedly contain a list of all asbestos personal

injury cases settled by Owens in the two years before THAN filed for bankruptcy, a list of all

asbestos personal injury cases settled by Owens after the petition date, a list of all asbestos

personal injury claims alleging exposure to Owens products that have been placed on pleural

registries or inactive dockets, and a list of all pending asbestos personal injury cases against

Owens. In the four-page narrative, Owens never affirmatively states that it has a contribution or

indemnification claim against THAN arising from any of these settled, pending or inactive cases.

All Owens is able to assert is that it may have contribution or indemnification claims arising

from these cases and that it reserves its rights to supplement and amend its claims against

THAN. See Owens Proof of Claim, attached hereto as Exhibit A and attached to the Owens



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Objection as Exhibit C. The Committee respectfully suggests that this unliquidated and

speculative proof of claim is not the type of claim that the Court envisioned might afford

standing to a corporate co-defendant.

4. Also buried in Owens’ stack of documents is the answer and cross-claim of

Owens in a pending Massachusetts state court lawsuit, Dimammalena v. Metropolitan Life

Insurance Co., et al. On the last page of that pleading is Owens’ Cross Claim Against All

Defendants, which states in its entirety: “Defendant hereby complains against all present and

future co-Defendants, by adopting and incorporating herein each and every allegation set forth in

the model Crossclaim referenced in Pretrial Order No. 9, section V(D).” See Answer and Other

Affirmative Defenses and Crossclaim of Defendants Owens-Illinois, Inc. and Owens-Illinois

Glass Company to Plaintiffs’ Complaint, attached hereto as Exhibit B and attached to Owens’

Objection as Exhibit D. Again, the Committee respectfully suggests that this generic and

perfunctory allegation is not the kind of cross-claim the Court envisioned would withstand

scrutiny and confer standing upon a corporate co-defendant.

5. In fact, Owens can fare no better than Volkswagen. Today, Owens-Illinois is

among the largest manufacturers of glass containers in the world. However, prior to 1958,

Owens-Illinois also manufactured asbestos pipe and boiler insulation under the Kaylo brand

name. In 1958, Owen-Illinois sold this business to Owens Corning. In 2006, Owens Corning

confirmed its own Chapter 11 plan, which created the Owens Corning/Fibreboard Asbestos

Personal Injury Trust to evaluate and pay asbestos claims. The fact that Owens-Illinois had

standing in other asbestos bankruptcy cases is not surprising because those cases, like the

bankruptcy case of Thorpe Insulation upon which Owens relies, involved exposure to asbestos-

containing insulation. More than 80% of the THAN asbestos personal injury claims allege

exposure to joint compound and joint cement products manufactured by Bondex International



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and Kelly-Moore Paint Company with asbestos fiber supplied by THAN. The remaining claims

allege exposure to other products manufactured by a handful of companies that purchased

asbestos fiber from THAN. See Disclosure Statement with Respect to Prepackaged Plan of

Reorganization of T H Agriculture & Nutrition, L.L.C. Under Chapter 11 of the Bankruptcy

Code at pp. 3 – 4 (the “Disclosure Statement”) [Docket No. 21]. Owens is not among those

companies.

6. Owens is no different than Volkswagen and its claim to standing must fall.

7. Moreover, the merits of Owens’ objection to the Plan also have been addressed by

this Court and found lacking. Owens objects that because the Trust Distribution Procedures

allow claimants to file a claim and defer evaluation by the Trust for a period of time, Owens is

deprived of its substantive legal right to contribution and set-off in personal injury lawsuits

against Owens. Owens also objects because the Plan may preclude Owens from having liability

allocated to THAN in these lawsuits. Owens Response at pp. 13 – 15.

8. At the January 12, 2009 hearing on the standing of Volkswagen, this Court stated:

“The extent to which there is an objection to the ability of the plan to avoid state law trials

against THAN? Well, that’s an objection to the provisions of the code itself. And the effect of

not having THAN side by side with Volkswagen to facilitate Volkswagen’s desire for reduction

of any judgment against it, once again is a consequence of the Bankruptcy Code and does not

require discovery.” Transcript at p. 58.

9. Like Volkswagen, Owens has never asserted a specific right to contribution or

indemnification from THAN. Like Volkswagen, Owens is primarily concerned with how this

bankruptcy case and this Plan will affect Owens in future asbestos litigation. Like Volkswagen,

Owens has no standing to take advantage of this Court and this bankruptcy case to advance its

interests in far-removed asbestos litigation pending across the United States.



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10. Finally, Owens’ hyperbolic attacks on the Future Claimants’ Representative (the

“FCR”) rely on out-of-context quotations and a purposeful disregard for the provisions of the

Bankruptcy Code. Owens argues that “[t]he Plan Proponents would likely agree that the FCR

does not represent the interests of the co-defendants, such as Owens-Illinois and therefore a class

of future claimants is without the representation contemplated by 11 U.S.C. § 524(g)(4)(B)(i).”

Owens Objection at 12. This argument, which relies on snippets from the argument made by

counsel to the FCR at the Volkswagen standing hearing, ignores the substantive position set forth

by the FCR’s counsel at that hearing.

What the duty of the FCR is, is to make sure that there’s a process and mechanismto treat future claims and current claims substantially similar, and that the process

is fair and that future claims would have their fair share of the assets in the pie.

It’s not to represent Volkswagen ever, it’s not to represent any claimant ever. It’s

sort of almost in the nature of a guardian and litem for a class, which – whodoesn’t represent anyone individually. That’s very, very clear from the statute.

Transcript at p. 34. This is an apt restatement of 11 U.S.C. § 524(g)(4)(B)(i), which provides:

“as part of the proceedings leading to issuance of such an injunction, the court appoints a legal

representative for the purpose of protecting the rights of persons that might subsequently assert

demands of such kind.”

11. That the FCR has fulfilled his statutory duty in this case on behalf of

Owens-Illinois and all other future indirect asbestos claimants is manifestly clear from the

provisions of the Asbestos PI Trust Distribution Procedures (the “TDP”) (Exhibit C to the

Disclosure Statement). As set forth in the Committee’s Response to Volkswagen, it is simply

necessary to point out again that if Owens ever were to present a valid cross claim to the

Asbestos PI Trust, it would be paid. The TDP, at section 5.6, pop. 35-38, provides that an

Indirect Claimant such as Owens would be paid on an expedited basis if the Indirect Claimant

meets certain presumptive criteria, such as payment to an individual asbestos claimant to whom



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THAN would have had a liability. If the Indirect Claimant cannot meet the presumptive

requirements, the Indirect Claimant may request individualized review by the Asbestos PI Trust.

If the Indirect Claimant is not satisfied with the determination of the Asbestos PI Trust, the

Indirect Claimant may mediate or arbitrate its claim under the Alternative Dispute Resolution

Procedures adopted by the Asbestos PI Trust. If the Indirect Claimant is not satisfied through

mediation or arbitration, the Indirect Claimant may bring an action against the Asbestos PI Trust

in the tort system. See TDP at § 5.6, pp. 35-38. The procedures set forth in Section 5.6 are clear

and unambiguous and demonstrate that Owens’ attack on the FCR is neither accurate nor

compelling.

CONCLUSION


respectfully requests that this Court find that Owens-Illinois, Inc. lacks standing and strike its

objection to the Debtor’s prepackaged plan of reorganization.


February 13, 2009




Frances Gecker (IL ARDC # 6198450)Joseph D. Frank (IL ARDC # 6216085)

FRANK /GECKER LLP


Phone.: (312) 276-1400

Fax: (312) 276-0035





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Jo Christine Reed

SONNENSCHEIN NATH & ROSENTHAL LLP1221 Avenue of the Americas


Facsimile: (212) 768-6800

[email protected]

Robert B. Millner

SONNENSCHEIN NATH & ROSENTHAL LLP7800 Sears Tower

233 South Wacker Drive


Facsimile: (312) [email protected]


STEVENS & LEE, P.C.

485 Madison Avenue, 20th FloorNew York, New York 10022

Facsimile: (610) 371-1237

[email protected]


STEVENS & LEE, P.C.

485 Madison Avenue, 20th FloorNew York, New York 10022

Facsimile: (610) 371-7376

[email protected]

John D. Demmy



Facsimile: (610) 371-8515

[email protected]

Robert W. Dremluk

SEYFARTH SHAW LLP620 Eighth Avenue


Facsimile: (212) 218-5526

[email protected]


STEVENS & LEE, P.C.


Facsimile: (312) 460-7833

[email protected]

Karel S. Karpe

WHITE AND WHITE LLP


Facsimile: (212) 631-4431

[email protected]




Facsimile: (302 ) 467-4550

[email protected]


Karen M. Borg



Facsimile: (312) 873-7382 (Hartley)

(312) 444-9294 (Munitz)

(312) 444-11116 (Borg)

[email protected];[email protected];

[email protected]




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for this case.

• John H. Bae [email protected]

• Lawrence Jay Brenner [email protected]


• Robert W. Dremluk [email protected],[email protected],[email protected],[email protected],


• Alan E. Gamza [email protected],[email protected];[email protected]

• Jeanette M. Gilbert [email protected]• Eduardo J. Glas [email protected]

• Frederic C. Goodwill [email protected], [email protected]









• Tancred V. Schiavoni [email protected], [email protected]• Christina C. Skubic [email protected]

• Theresa Trzaskoma [email protected],


• Bruce J. Zabarauskas [email protected]

Thompson-Hayward Compilation of Briefs

Documents

Transcript of Thompson-Hayward Compilation of Briefs