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Note: G-1 Holdings, Inc. (Debtor) filed a voluntary petition under Chapter 11 (reorganization) of the Bankruptcy Code. Debtor is liable for approximately 150,000 filed but unresolved asbestos related actions associated with its predecessor, GAF, and has been named in more than 500,000 asbestos actions and additional unknown claims not yet filed.

Debtor filed and sought approval of a Joint Plan of Reorganization, which included a plan for global settlement of asbestos-related injury claims. The plan created an "asbestos trust" to which all asbestos claims against Debtor would be directed. The asbestos trust would "assume the Debtor's liability for asbestos-related personal injury claims, in exchange for cash on the effective date" of the original reorganization plan. The trust was not to exceed US$215,000,000.00 plus a note for US$560,000,000.00 issued by the reorganized Debtor and secured by an LC.

Subsequently, Debtor informed the court that "due to the lack of available credit in the market at the time," it was unlikely that it would be able to secure the LC for the asbestos trust. At a later date, Debtor disclosed that although it still did not have the LC, it was the subject of "heavy negotiation" and it believed there was an "understanding in place." When questioned by the court about the collateral that would be used to secure the LC, Debtor testified that the collateral would come from business assets and cash although the amount was uncertain.

In evaluating the overall plan for reorganization and the asbestos trust, the U.S. District Court of New Jersey, Brown, J., confirmed the plan.

[JEB/sal]

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