Bankruptcy Judge Approves Leslie Controls' Plan Of Reorganization

WILMINGTON, Del. - (Mealey's) The Delaware bankruptcy judge overseeing Leslie Control Inc.'s Chapter 11 case confirmed Leslie's plan of reorganization on Oct. 28 (In Re: Leslie Controls Inc., No. 10-12199-CSS, Del. Bkcy.).

U.S. Bankruptcy Judge Christopher S. Sontchi of the District of Delaware entered findings of fact, conclusions of law and the order affirming Leslie's first amended plan of reorganization, saying the plan complies with Bankruptcy Code rules and provides adequate and proper means for the plan's implementation.

Further, Bankruptcy Judge Sontchi said the plan was proposed in good faith and was in the best interest of the creditors.

The order requires affirmation by the U.S. District Court for the District of Delaware.

Leslie on July 12 filed a pre-negotiated petition for reorganization under Chapter 11 of the federal bankruptcy code.  On Aug. 12, Leslie filed a first amended plan of reorganization and first amended disclosure statement.

The plan contemplates establishment of a trust under Section 524(g) of the Bankruptcy Code and an injunction channeling all current asbestos-related claims and future asbestos-related demands to an Asbestos Personal Injury Trust.

The trust will be funded with a cash contribution from CIRCO International of Burlington, Mass., which holds 100 percent of the equity security in Leslie, a promissory note executed by Leslie and secured by a pledge by CIRCO of 100 percent of the outstanding voting equity interests in the reorganized Leslie, an assignment of any rights to Leslie to proceeds under existing insurance policies that provide coverage for asbestos coverage and $2,625,000 of the proceeds of an insurance settlement agreement reached between Leslie and Continental Casualty Co., plus the proceeds of any other insurance settlement received.

Multiple insurers objected to the plan, but Bankruptcy Judge Sontchi struck the insurers' objections and did not consider them in confirming the plan.

Only one class -- Class 4 or holders of asbestos personal injury claims -- was impaired and entitled to vote.  The plan received acceptances from 571 in number and between $9.1 million and $40 million in amount of creditors holding the claims who voted.

[Editor's Note:  Full coverage will be in the November issue of Mealey's Litigation Report: Asbestos Bankruptcy.  In the meantime, the order is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844.  Document #48-101110-011R.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]

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For more information, e-mail editor Cheryl Keely at cheryl.keely@lexisnexis.com.