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Bankruptcy Keyed to Levitan, 3rd Ed.
In re Armstrong World Industries, Inc.
Citation:
432 F.3d 507 (2005)Facts
Armstrong World Industries, Inc. (AWI) filed for Chapter 11 bankruptcy in December 2000 due to asbestos litigation liabilities. The United States Trustee appointed two committees to represent unsecured creditors: the Official Committee of Asbestos Personal Injury Claimants (APIC) and the Official Committee of Unsecured Creditors (UCC). AWI’s Fourth Amended Plan of Reorganization divided creditors into eleven classes, with equity interest holders in a twelfth class. Class 6 (unsecured creditors) would recover about 59.5% of their $1.651 billion in claims, while Class 7 (asbestos claimants) would receive $1.8 billion in a trust. The Plan included a provision that would issue new warrants worth $35-40 million to Class 12 (equity interest holders) through a mechanism involving Class 7, even if Class 6 rejected the Plan. Class 6 rejected the Plan, but the Bankruptcy Court still recommended confirmation. The District Court denied confirmation, finding that the Plan violated the absolute priority rule.
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