Congoleum future claimants' representative tweaks unsecured, intercompany claim treatments

By Caroline Salls

Pittsburgh, Jan. 28 - Congoleum Corp.'s future claimants' representative filed an amended plan of reorganization and related disclosure statement Friday with the U.S. Bankruptcy Court for the District of New Jersey that changes the proposed treatment for unsecured creditors and intercompany ABI creditors.

Under the amended plan, holders of general unsecured claims will receive the full amount of their claims in cash.

These creditors were slated to receive a share of new common stock in the reorganized company and new notes under the previous plan.

In addition, the amended plan confirms that ABI claims will be disallowed. The previous plan called for ABI claims to be disallowed if an intercompany settlement was approved. If the settlement was not approved, ABI was scheduled to receive new common stock and new senior notes.

The company and its 55% parent American Biltrite said they believe the plan will be supported by Congoleum's official bondholders committee and its official asbestos claimants committee.

As previously reported, a trust will be created to assume the liability for Congoleum's current and future asbestos claims.

The trust will be funded using the proceeds of various settlements Congoleum has reached with a number of insurance carriers and will be assigned Congoleum's rights under its remaining policies covering asbestos product liability.

The trust will also receive 50.1% of the newly issued common stock in reorganized Congoleum when the plan takes effect.

Holders of Congoleum's $100 million in 8 5/8% senior notes due in August 2008 will receive $80 million in new five-year 9¾% senior secured notes, which will be subordinated to a $30 million working capital exit facility.

In addition, Congoleum said holders of the 8 5/8% senior notes will receive their share of 49.9% of the common stock in reorganized Congoleum.

Existing class A and class B common shares will be cancelled, and the holders, including controlling shareholder American Biltrite, will not receive any distribution under the plan.

Plan creditor treatment

Treatment of creditors under the plan will include:

• Holders of administrative, priority, lender secured and priority tax claims will be paid in full;

• Holders of other secured claims will either have their claims reinstated or receive the collateral securing the claim;

• Holders of $103.59 million in senior note claims will receive new 9¾% notes and 49.9% of the new common stock in the reorganized company;

• Holders of workers' compensation claims will be paid in accordance with workers' compensation laws;

• Holders of ABI claims will have their claims disallowed;

• All asbestos personal injury claims and asbestos property damage claims will be transferred to the asbestos plan trust;

• Holders of general unsecured claims will receive cash equal to the amount of their claims;

• Congoleum interests will be cancelled and holders will receive no distribution under the plan; and

• Holders of subsidiary interests will retain their interests.

The future claimants' representative is R. Scott Williams.

A hearing on approval of the disclosure statement is scheduled for Feb. 14.

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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