Congoleum amends plan to keep pre-bankruptcy settlement, lien claimants from accepting and litigating

By Caroline Salls

Pittsburgh, March 1 - Congoleum Corp. made changes to its plan of reorganization under which creditors with pre-bankruptcy settlements and lien claims who support the plan must enter a forbearance agreement giving up their rights to litigate, according to a Wednesday filing with the Securities and Exchange Commission.

The company said it expects to file its eighth amended plan by March 17.

The modified plan eliminates the option for creditors with pre-bankruptcy settlements and lien claims to vote in favor of the plan while at the same time reserving rights to litigate their settlements and lien claims with the estate.

According to the filing, Congoleum is seeking acceptances and forbearance from at least 75% in number and at least 66 2/3% in amount of creditors voting on the plan.

Congoleum said it will also add an insurance neutrality provision to make it clear that the company's insurers are not affected by confirmation of the plan.

In addition, Congoleum said it intends to request a stay of the insurance coverage action in its Chapter 11 case in order to give plaintiff groups with pre-bankruptcy settlements a chance to forbear.

The company said it is still discussing the treatment of the claims represented by the official committee of bondholders.

Congoleum, a Mercerville, N.J.-based flooring company, filed for bankruptcy on Dec. 31, 2003 in the U.S. Bankruptcy Court for the District of New Jersey. Its Chapter 11 case number is 03-51524.

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