ABB's Chapter 11 Plan of Reorganisation for its subsidiary Combustion Engineering is to be reviewed again.
The Third Circuit Court of Appeals in the United States has ruled that ABB’s Chapter 11 Plan of Reorganisation for its US subsidiary Combustion Engineering should be reviewed again by the District Court. Under the Plan of Reorganisation announced in January 2003, ABB offered a $1.2 billion trust fund for asbestos related claims against CE. It consisted of the assets of CE valued at $812 million, about 30 million ABB shares, and cash contributions totalling about $350 million. The plan was accepted by an overwhelming majority of claimants, and approved by both the bankruptcy and District courts. ABB said it was considering its options and fully expects to be able to resolve the issues raised by the Appeals Court, and will move quickly to do so.
In the meantime, CE remains in Chapter 11, and it and the ABB group remain protected from asbestos litigation by the bankruptcy court’s injunction. The Third Circuit Court of Appeals decision hinged on its finding that it was not appropriate to include Lummus Global and Basic Ltd in the Combustion Engineering plan. ABB said it would look promptly at other mechanisms to deal with the insignificant asbestos exposure of these two companies.
‘Given the fact that both the Bankruptcy and District Courts have approved the Combustion Engineering Plan of Reorganisation, we are naturally surprised and disappointed at today’s decision,’ said ABB chairman and CEO Jürgen Dormann. ‘But we remain confident that we can resolve Combustion Engineering’s asbestos liability within a Plan of Reorganisation compatible with the Third Circuit’s decision within a relatively short time frame and without significant additional cost.’