The Official Committee of Unsecured Creditors appointed in the W.R. Grace & Co. bankruptcy cases has filed a preliminary objection to the confirmation of the First Amended Joint Plan of Reorganization proposed for W.R. Grace & Co. and its affiliates. The plan has been jointly proposed by the company, the Official Committee of Asbestos Personal Injury Claimants, the Asbestos Personal Injury Future Claimants’ Representative, and the Official Committee of Equity Security Holders.
W.R. Grace’s bankruptcy cases have been pending for over seven and a half years (the cases were filed on April 2, 2001). The Joint Plan of Reorganization was first proposed on September 19, 2008 and the First Amended Plan was filed on November 10, 2008. The disclosure statement accompanying the First Amended Plan has not yet been approved by the bankruptcy court and votes on the Plan have therefore not yet been solicited.
The Creditors’ Committee’s preliminary objection offers the following objections to the proposed First Amended Plan:
- The plan cannot be confirmed because it incorrectly designates general unsecured claims (Class 9) as unimpaired.
- The plan is not fair and equitable under section 1129(b) of the Bankruptcy Code and violates the absolute priority rule.
- The plan does not provide for a sufficient post-Effective Date role for the Creditors’ Committee.
- The plan is not feasible within the meaning of section 1129(a)(11) of the Bankruptcy Code because sufficient exit financing may not be available on acceptable terms and because the plan does not provide for the creation of a sufficient cash reserve for the payment of general unsecured claims as they are allowed.
The Creditors’ Committee has also reserved the right to supplement its objection after completion of discovery. A copy of the proposed plan and disclosure statement and the Committee’s preliminary objection can be downloaded here.
