Maremont's Plan Confirmed, Faces Final Hurdle In District Court

Mealey's(R) Asbestos Bankruptcy Report

Online ISSN: 2159-158X, Print ISSN: 1537-2065
June 2019

Copyright 2019 LexisNexis, a division of RELX Inc.

Copyright in individual articles as noted therein.

Cite: 18-11 Mealey's Asb. Bankr. Rep. 8 (2019)

Section: Volume 18, Issue #11

Length: 826 words

Dateline: WILMINGTON, Del.

Body

A Delaware federal bankruptcy court on May 28 sent the newly confirmed prepackaged plan of
reorganization for Chapter 11 debtor Maremont Corp. to federal district court for final approval (In re:
Maremont Corporation, et al., No. 19-10118, D. Del. Bkcy., 2019 Bankr. LEXIS 1742).

(Order available 48-190628-011R )

Chapter 11 Plan

With the preapproval of 100 percent of asbestos claimants, Maremont, a nonoperating subsidiary of
commercial vehicle and industrial products maker Meritor Inc., filed its prepackaged reorganization plan
Jan. 22 in the U.S. Bankruptcy Court for the District of Delaware.

Maremont affiliates Maremont Exhaust Products Inc., AVM Inc. and Former Ride Control Operating
Company Inc. (f/k/a ArvinMeritor Inc.) also filed Chapter 11 petitions, and the cases are being
administered jointly.

Under the debtors' reorganization plan, a trust will be created pursuant to Section 524(g) of the U.S.
Bankruptcy Code, 11 U.S.C. § 524(g), to pay asbestos personal injury and death claims. Maremont says
the trust's assets will be valued, "in the aggregate, in the range of $58-65 million," which will include a
cash contribution from Meritor, insurance assets and all of the equity in reorganized Maremont, which
will own and operate commercial real estate.

Before filing for bankruptcy, Maremont had appointed an ad hoc asbestos claimants' committee and
appointed James L. Patton Jr. as the future claimants' representative (FCR), then negotiated with both on
 Maremont's Plan Confirmed, Faces Final Hurdle In District Court

the reorganization plan. The debtors solicited votes on the plan from 359 law firms representing asbestos
claimants and two individual asbestos personal injury claimants, and every claimant who returned a ballot
voted to approve the plan.

The reorganization plan also includes injunctions that will permanently protect the reorganized debtors,
Meritor and its subsidiaries and certain of their representatives from current and future claims stemming
from Maremont's historical asbestos activities.

Combined Hearing

On March 4, Acting Region 3 U.S. Trustee Andrew R. Vara filed an objection to the plan, arguing that it
was unconfirmable under the U.S. Bankruptcy Code due in part to the many flaws of the proposed
asbestos trust and the trust distribution procedures (TDP).

"The plan cannot be confirmed under 11 U.S.C. § 1129(A)(3)'s good faith requirement because the TDP
contains numerous provisions with no legitimate purpose that will facilitate fraud and abuse while it lacks
safeguards to prevent fraud and abuse," Vara said.

The Bankruptcy Court held a combined hearing March 18 to consider confirmation of the plan and the
adequacy of the plan's disclosure statement. Based on Vara's objection, the Bankruptcy Court directed that
the TDP be revised to require claimants to provide certain additional information to the asbestos trust and
to allow the trust to obtain additional information from the claimants at its discretion.

The Bankruptcy Court reconvened the hearing on May 14, when the debtors filed modifications to the
TDP "to address the remaining objection of the U.S. Trustee and the statements of the Bankruptcy Court,"
the debtors said in their revised proposed findings of fact and conclusions of law.

Findings And Conclusions

Bankruptcy Judge Kevin J. Carey signed and filed the proposed findings and conclusions confirming the
plan that day. In the document, the bankruptcy judge found that the plan meets all of the requirements for
confirmation under Section 1129 of the Bankruptcy Code, 11 U.S.C. § 1129.

The bankruptcy judge recommended that the U.S. District Court for the District of Delaware adopt the
finding and conclusions and issue the plan's injunction channeling all asbestos claims to the trust.

On May 23, Bankruptcy Judge Laurie Selber Silverstein replaced Bankruptcy Judge Carey on the case.
The new judge then issued her order sending the case to the District Court.

Counsel

The debtors are represented by James F. Conlan, Andrew F. O'Neill, Allison Ross Stromberg and Blair M.
Warner of Sidley Austin in Chicago, Alex R. Rovira of Sidley Austin in New York and Norman L.
Pernick and J. Kate Stickles of Cole Schotz in Wilmington.

Vara is represented by Richard L. Schepacarter of the U.S. Department of Justice, Office of the U.S.
Trustee, in Wilmington.

(Additional documents available: Findings of fact and conclusions of law 48-190628-012X

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 Maremont's Plan Confirmed, Faces Final Hurdle In District Court

Reorganization plan 48-190125-016X

Disclosure statement 48-190125-017X )

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