The Third Circuit Court of Appeals in the US has ruled that engineering giant ABB’s bankruptcy plan of reorganisation for its US subsidiary Combustion Engineering (CE) is to be reviewed again by the US District Court in Delaware, where ABB has its headquarters.
That’s despite the fact that the so-called Chapter 11 plan was accepted by an overwhelming majority of claimants, and approved by both the US Bankruptcy Court and the District court in Delaware.
Under the plan of reorganisation announced in January 2003, ABB offered a $1.2 billion trust fund for claims against CE relating to asbestos claims against it. It consisted of the assets of CE valued at $812 million, about 30 million ABB shares, and cash contributions totalling about $350 million.
ABB said it was considering its options and fully expects to be able to resolve the issues raised by the Appeals Court. 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.
‘Given the fact that both the Bankruptcy and District Courts have approved the Combustion Engineering plan of reorganization, we are naturally surprised and disappointed at the decision,’ said JÃ¼rgen Dormann ABB chairman and CEO.
‘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.’