Congoleum requests court approval of $16.95 million settlement and buyback agreement with Century

By Jennifer Lanning Drey

Eugene, Ore., Aug. 22 - Congoleum Corp. requested court approval of a settlement and buyback agreement with Century Indemnity Co. of North America, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of New Jersey.

The arms-length compromise would resolve the companies' dispute over the extent that certain insurance policies issued by Century to Congoleum afford coverage for asbestos and non-asbestos related claims, such as general liability claims.

According to the motion, in order to settle outstanding disputes and to purchase Congoleum's interest in the policies, Century would pay $16.95 million within three years to the plan trust established by Congoleum's plan of reorganization.

In exchange for the payment, Century would be entitled to all protections afforded to settling asbestos insurance companies in Congoleum's eighth modified plan, according to the motion.

"We believe this settlement is a major step forward. Given the very active role Century has played in opposing our reorganization efforts and litigating coverage issues, we are quite pleased to have resolved our differences. We are also pleased that the asbestos claimants committee and the future claimants' representative are supporting this agreement," said Roger S. Marcus, Congoleum's chairman of the board, in a company news release.

Congoleum has now reached more than $207 million in insurance settlements and is negotiations with other carriers, Marcus said in the release.

The company's hearing on the disclosure statement for its recently filed plan of reorganization is scheduled for Sept. 21, and Congoleum believes a positive result at the hearing could further add to the momentum of settlements, he said.

The company hopes the reorganization plan will be approved in the first quarter of 2007, according to the release.

The settlement and buyback agreement would be implemented, in part, through the sale of the policies to Century under section 363(b) of the Bankruptcy Code.

Congoleum believes the agreement provides a significant and valuable benefit to is estates and its creditors, according to the motion.

Congoleum, a Mercerville, N.J.-based flooring company, filed for bankruptcy on Dec. 31, 2003. Its Chapter 11 case number is 03-51524.

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