Bankruptcy Judge Again Denies Confirmation Of Pittsburgh Corning's Reorganization Plan

PITTSBURGH - (Mealey's) Changes that Pittsburgh Corning Corp. (PCC) made to its Chapter 11 plan of reorganization following denial of plan confirmation in 2006 have not made the plan confirmable, though the plan's problems can still be fixed, a Pennsylvania federal bankruptcy judge held June 16 (In re Pittsburgh Corning Corporation, No. 00-22876, W.D. Pa. Bkcy.).

U.S. Bankruptcy Judge Judith K. Fitzgerald of the Western District of Pennsylvania ruled that although PCC's modified third amended plan of reorganization, filed in May 2010 and the subject of a confirmation hearing in June 2010, meets most U.S. Bankruptcy Code provisions, its channeling injunction is improper and the plan is not insurance neutral. 

The bankruptcy judge held that the channeling injunction under Section 524(g) of the Bankruptcy Code is too broad - the same reason she gave for denying confirmation of PCC's second amended plan five years ago. 

Bankruptcy Judge Fitzgerald said that following the ruling in In re Combustion Engineering (391 F. 3d 190 [3rd Cir. 2004]), "the scope of the Asbestos Permanent Channeling Injunction remains impermissibly broad such that the Channeling Injunction could cover independent nonderivative claims.  Thus, inasmuch as such independent, nonderivative claims exist, the Modified Third Amended Plan cannot be confirmed as drafted." 

The proposed injunction could allow the wrong claims to be channeled to a trust set up to benefit asbestos personal injury claimants, the bankruptcy judge said.  She added that PCC may want to consider adding a Section 105 injunction to the plan to supplement the Section 524(g) injunction. 

In addition to clarifying the scope of the channeling injunction in any amended plan of reorganization, PCC must modify the insurance neutrality language in the plan to remove ambiguity and make the language agree with the ruling in Combustion Engineering, Bankruptcy Judge Fitzgerald held. 

PCC filed a voluntary petition for relief under Chapter 11 in 2000.  As of its petition date, approximately 235,000 asbestos claims were pending against the company. 

In her memorandum opinion and order, the bankruptcy judge also ruled that fellow asbestos bankruptcy defendant Garlock Sealing Technologies LLC has no standing to object to PCC's reorganization plan and that, even if it did have standing, its objections have no merit. 

"Garlock has shown no immediate injury and no prospect of any future injury," Bankruptcy Judge Fitzgerald held.  "Thus . . . there is not even a scintilla of likelihood of injury that would or could be relieved by the ruling it seeks from this court." 

[Editor's Note:  Full coverage will be in the June issue of Mealey's Asbestos Bankruptcy Report.  In the meantime, the opinion is available at or by calling the Customer Support Department at 1-800-833-9844.  Document #48-110627-038Z.  For all of your legal news needs, please visit] 

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