Federal-Mogul's disclosure statement, reorganization plan get objections

By Jeff Pines

Washington, April 2 - Federal-Mogul Global, Inc.'s disclosure statement is long on pages, but short on content, according to Longacre Master Fund, Ltd. and the Environmental Protection Agency.

"Indeed, the disclosure statement omits so much key information that it is nearly useless to general unsecured creditors," Longacre, an unsecured creditor, said in its objection filed on April 1 with the U.S. Bankruptcy Court for the District of Delaware.

One key concern is that non-noteholding general unsecured creditors are supposed to get cash in three installments over two years, but there is no estimated recovery percentage. Also, the company does not provide the estimated allowed claims, the company's liquidation value, or clearly explain the risks if the proceedings in the United Kingdom fail, it said.

Without this key information, Longacre said it cannot make an informed decision on the plan.

Like Longacre, the EPA in its objection filed on April 1 notes the lack of recovery information, but its other concerns naturally revolve around the company's environmental issues.

It wants the company to provide creditors with a separate list of contaminated properties it owns and what it will cost to remediate them.

The plan also does not give creditors a list of all known on-site environmental claims, of contaminated properties the company used to own that it may be liable for and sites where Federal-Mogul knows it arranged for disposing of hazardous materials, which creditors will need to know to make an informed decision, it said.

An April 13 hearing is scheduled.

The company, which makes auto parts, filed for bankruptcy on Oct. 1, 2001. Federal-Mogul's Chapter 11 case number is 01-10578.

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