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12/11/2008

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12/24/2008

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01/09/2009 01/09/2009 01/12/2009

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Application for Ex Parte Relief of Certain Insurers for Entry of an Order Scheduling an Expedited Hearing to Consider Motion to Modify the Court's First Day Scheduling Order Statement Amended Statement of Volkswagen Group of America, Inc in support of the Motion of Certain Insurers to modify the Scheduling Order entered November 25, 2008 Response to Amended Statement of Volkswagen Group of America Inc. in support of Motion to Modify Scheduling Order Objection to Confirmation of Plan of Reorganization Memorandum of Law of Volkswagen Group of America, Inc. In Support of Its Standing to Appear and Be Heard in This Case Response of Legal Representative for Future Asbestos Claimants to Amended Statement of Volkswagon Group of America, Inc. In Support of Motion to Modify Scheduling Order Entered November 25, 2008 Response to Amended Statement of Volkswagne Group of America, Inc. in Support of Motion to Modify Scheduling Order Letter Appendix to Memorandum of Law Amended Response to Motion Amended Statement of Volkswagen Group of America, Inc. in Support of Motion to Modify Scheduling Order - amended to add exhibit Motion to Strike Owens-Illinois, Inc.'s Objection to the Prepackaged Plan of Reorganization for Lack of Standing Response of Legal Representative for Future Asbestos Claimants In Support of Debtor's Motion to Strike Owens-Illinois, Inc.'s Objection to the Prepackaged Plan of Reorganization for Lack of Standing Objection to Motion : Owens-Illinois, Inc.'s Objection to Debtors' Motion to Strike Owens-Illinois, Inc.'s Objection to Prepackaged Plan of Reorganization for Lack of Standing Response / Debtor's Reply to Owen-Illinois, Inc.'s Objection to Debtor's Motion to Strike Owens-Illinois, Inc.'s Objection to Prepackaged Plan of Reorganization for Lack of Standing Response in Support of Debtor's Motion to Strike Owens-Illinois, Inc.'s Objection to Prepackaged Plan of Reorganization for Lack of Standing

SONNENSCHEIN NATH & ROSENTHAL LLP Jo Christine Reed (JCR 3783) 1221 Avenue of the Americas New York, New York 10020-1089 (212) 398-5236
Counsel to Attorneys for The Travelers Indemnity Company, The Travelers Indemnity Company of Connecticut (f/k/a The Travelers Indemnity Company of Rhode Island), Travelers Property Casualty Company of America (f/k/a The Travelers Indemnity Company of Illinois) and Travelers Casualty and Surety Company (f/k/a The Aetna Casualty and Surety Company)

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------x In re: : : TH AGRICULTURE & NUTRITION, L.L.C., : : Debtors. : : ---------------------------------------------------------------x

Chapter 11 Case No. 08-14692 (REG)

EX PARTE APPLICATION OF CERTAIN INSURERS FOR ENTRY OF AN ORDER SCHEDULING AN EXPEDITED HEARING TO CONSIDER MOTION TO MODIFY THE COURTS FIRST DAY SCHEDULING ORDER The undersigned insurers (collectively the Insurers),1 by and through counsel, submit this Application for an expedited hearing to consider the Motion To Modify The Courts First Day Scheduling Order (the Motion to Modify, attached hereto as Exhibit A) and, in support, respectfully represent as follows:

The Insurers are comprised of The Travelers Indemnity Company, The Travelers Indemnity Company of Connecticut (f/k/a The Travelers Indemnity Company of Rhode Island), Travelers Property Casualty Company of America (f/k/a The Travelers Indemnity Company of Illinois) and Travelers Casualty and Surety Company (f/k/a The Aetna Casualty and Surety Company) (collectively, Travelers), Firemans Fund Insurance Company (FFIC), Continental Insurance Company and Pacific Insurance Company (collectively CNA).

JURISDICTION 1. This Court has jurisdiction to consider this Application pursuant to 28 U.S.C.

1334. Consideration of this Application is a core proceeding pursuant to 28 U.S.C. 157(b). Venue of this proceeding is proper before this Court pursuant to 28 U.S.C. 1408 and 1409. The legal predicate for this Application is Federal Rules of Bankruptcy Procedure Rule 9006(c)(1) (the Bankruptcy Rules). RELIEF REQUESTED 2. By this Application, the Insurers request entry of an order, pursuant to Bankruptcy

Rule 9006(c)(1), shortening the notice period required to be provided with respect to the hearing to consider the Motion to Modify. Specifically, the Insurers request that the Court schedule a hearing to consider the Motion to Modify on December 16, 2008, at 10:00 a.m. (Eastern Standard Time) and the deadline for service and filing of objections, if any, on December 15, 2008, at 12:00 noon (Eastern Standard Time). Contemporaneously herewith, the Insurers have filed the Declaration of Donna J. Vobornik, Esq. in support of this Application. 3. Bankruptcy Rule 9006(c)(1) authorizes the Court, for cause shown, to reduce

notice periods prior to the hearing to consider a motion. Here, there is ample cause to reduce the notice period. 4. Simultaneously with the filing of its voluntary Chapter 11 petition on November

24, 2008, T.H Agriculture & Nutrition, L.L.C. (THAN or Debtor) filed the Prepackaged Plan of Reorganization of T H Agriculture & Nutrition, L.L.C. under Chapter 11 of the Bankruptcy Code [Docket No. 20] (the Plan), the related disclosure statement [Docket No. 21] (the Disclosure Statement) and a motion to schedule, among other things, a combined hearing

to consider approval of the Disclosure Statement, THANs prepetition solicitation procedures and confirmation of the Prepackaged Plan (the Scheduling Motion).2 5. On November 25, 2008, the Court entered the First Day Scheduling Order

approving the Scheduling Motion.3 The Insurers did not receive notice of the Scheduling Motion and, therefore, were not provided an opportunity to be heard prior to its approval. 6. The schedule established by the First Day Scheduling Order does not provide

adequate time for the Insurers to obtain the discovery that they need and interpose timely objections to the Plan, if ultimately deemed necessary. It mandates that parties file objections to the Plan and accompanying Disclosure Statement a mere 42 days after the case was filed, with the confirmation hearing just 10 days thereafter, on January 15, 2009. The Insurers did not participate in the Plan negotiations, and they had not seen drafts of the Plan Documents or any of the numerous motions that THAN filed on the first day of the case. Given the complexity of the voluminous Plan Documents, the First Day Scheduling Order is manifestly unfair and prejudicial to the Insurers. 7. The Insurers seek the opportunity to initiate focused discovery on three

fundamental aspects of the Plan: (a) The intended operation of the Insurance Neutrality

THANs Scheduling Motion is entitled Debtors Motion for (I) An Order (A) Scheduling A Combined Hearing To Consider Approval of Disclosure Statement and Solicitation Procedures, and Confirmation of Prepackaged Plan of Reorganization, (B) Establishing Deadlines and Procedures for Filing Objections, and (C) Approving Form and Manner of Notice of Combined Hearing; and (II) An Order Approving Disclosure Statement and Solicitation Procedures (hereinafter, the Scheduling Motion) [Docket No. 3]. The First Day Scheduling Order means the Courts Order (A) Scheduling a Combined Hearing to Consider Approval of Disclosure Statement and Solicitation Procedures, and Confirmation of Prepackaged Plan of Reorganization, (B) Establishing Deadlines and Procedures for Filing Objections, and (C) Approving Form and Manner of Notice of Combined Hearing. [Docket No. 56].
3

language set forth in Section 10.4 of the Plan;4 (b) The impact of the $900 million in Asbestos PI Trust Contributions by THAN and its parent, PENAC, on the Insurers coverage rights and obligations (See Plan at 1.20, 1.93, 1.128, 9.4(f)); and (c) The extent to which the Plan may affect the Insurers pecuniary interests and/or their rights to receive performance under the terms of their respective policies and/or settlement agreements with THAN and/or PENAC. 8. On December 10, 2008, counsel for Travelers requested THAN to consent to a

sixty-day extension of time for the Insurers to file objections to the Plan to allow the Insurers to engage in limited discovery on an expedited basis to prepare their confirmation case. THAN did not consent to an extension of time, necessitating that the Insurers seek relief from the Court on an expedited basis. The Debtors were orally advised that if the Insurers did not obtain THANs consent, they would seek expedited relief from the Court. 9. Given the accelerated schedule set by the First Day Scheduling Order, time is of

the essence. Accordingly, the Insurers request that the Court grant expedited consideration of the Motion to Modify.

Section 10.4 of the Plan states:

Insurance Neutrality. Notwithstanding anything to the contrary in the Confirmation Order, the Plan or any of the Plan documents, nothing in the Plan, the Plan Documents, the Confirmation Order, any finding of fact and/or conclusion of law with respect to the confirmation of the Plan, or any Final Order or opinion entered on appeal from the Confirmation Order (including any other provision that purports to be preemptory or supervening) shall in any way operate to, or have the effect of, impairing: (a) any Asbestos Insurance Entitys legal, equitable or contractual rights, if any, in any respect under the Shared Asbestos Insurance Policies or any Insurance Settlement Agreement; or (b) any policyholders legal, equitable or contractual rights, if any, in any respect under the Shared Asbestos Insurance Policies or any Insurance Settlement Agreement. The rights and obligations of any Asbestos Insurance Entity shall be determined under the insurance policies, including, but not limited to the Shared Asbestos Insurance Policies, or any Insurance Settlement Agreement. Notwithstanding anything in this Article 10.4 to the contrary, nothing in this Article 10.4 shall affect or limit, or be construed as affecting or limiting: (a) the binding effect of the Plan and the Confirmation Order on THAN, Reorganized THAN, the Asbestos PI Trust and the beneficiaries of such trust; or (b) the protection afforded to any Asbestos Insurance Entity.

10.

The Insurers submit that service of the Motion to Modify by no later than

December 11, 2008 by First Class Mail or, where appropriate, electronic mail and facsimile to (i) counsel for the Debtors, (ii) the Office of the United States Trustee for the Southern District of New York, (iii) proposed counsel for the Official Creditors Committee, (iv) proposed counsel to the proposed Future Claims Representative, and (v) all parties that have filed a notice of appearance in the Debtors Chapter 11 cases pursuant to Bankruptcy Rule 2002, will be good and sufficient notice of the Motion to Modify. NOTICE 11. Pursuant to Bankruptcy Rule 9006(c)(1), the Court may shorten time without

notice. However, as mentioned above, the Debtors were orally advised that failing an agreement to extend the time for the Insurers to file objections to the Plan and conduct limited discovery, the Insurers would seek expedited relief from the Court with respect to the existing schedule. 12. No prior request for the relief sought in this Application has been made to this or

any other court. WHEREFORE, the Insurers respectfully request that the Court hear the Motion on an expedited basis. Dated: New York, New York December 11, 2008 Respectfully submitted, SONNENSCHEIN NATH & ROSENTHAL LLP /s/ Jo Christine Reed Jo Christine Reed (JCR 3783) 1221 Avenue of the Americas New York, New York 10020-1089 (212) 398-5236 - and -

Donna J. Vobornik, Esq. Robert B. Millner, Esq. Daniel E. Feinberg, Esq. 7800 Sears Tower 233 South Wacker Drive Chicago, Illinois 60606-6404 Counsel to Attorneys for The Travelers Indemnity Company, The Travelers Indemnity Company of Connecticut (f/k/a The Travelers Indemnity Company of Rhode Island), Travelers Property Casualty Company of America (f/k/a The Travelers Indemnity Company of Illinois) and Travelers Casualty and Surety Company (f/k/a The Aetna Casualty and Surety Company) STEVENS & LEE, P.C. /s/ Constantine D. Pourakis Constantine D. Pourakis 485 Madison Avenue, 20th Floor New York, New York 10022 (212) 319-8500 -andLeonard P. Goldberger Marnie E. Simon 1818 Market Street, 29th Floor Philadelphia, PA 19103 (215) 751-2864, -2885 -andJohn D. Demmy 1105 North Market Street, 7th Floor Wilmington, DE 19801 (302) 425-3308

Counsel for Firemans Fund Insurance Company SEYFARTH SHAW LLP Robert W. Dremluk Robert W. Dremluk 620 Eighth Avenue, 32nd Floor New York, New York 10018 Telephone: (212) 218-5269 Facsimile: (212) 218-5526 -andDavid C. Christian II (pending pro hac vice) 121 South Dearborn Street Suite 2100 Chicago, Illinois 60603-5577 Telephone: (312) 460-5000 Facsimile: (312) 460-7000 Counsel For Pacific Insurance Company and Continental Casualty Company /s/

Exhibit A

SONNENSCHEIN NATH & ROSENTHAL LLP Jo Christine Reed (JCR 3783) 1221 Avenue of the Americas New York, New York 10020-1089 Telephone: (212) 768-6700 Facsimile: (212) 768-6800 Attorneys for The Travelers Indemnity Company, The Travelers Indemnity Company of Connecticut (f/k/a The Travelers Indemnity Company of Rhode Island), Travelers Property Casualty Company of America (f/k/a The Travelers Indemnity Company of Illinois) and Travelers Casualty and Surety Company (f/k/a The Aetna Casualty and Surety Company) UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------x In re: : : TH AGRICULTURE & NUTRITION, L.L.C., : : Debtors. : : ---------------------------------------------------------------x

Chapter 11 Case No. 08-14692 (REG)

MOTION TO MODIFY THE COURTS FIRST DAY SCHEDULING ORDER The undersigned insurers (collectively the Insurers),1 by and through counsel, respectfully move pursuant to Rules 9014 and 7026 of the Federal Rules of Bankruptcy Procedure and Paragraph 23 of the Courts Case Management Order #1, for entry of an Order modifying the Courts November 25, 2008 Order (A) Scheduling a Combined Hearing to Consider Approval of Disclosure Statement and Solicitation Procedures, and Confirmation of Prepackaged Plan of Reorganization, (B) Establishing Deadlines and Procedures for Filing Objections, and (C) Approving Form and Manner of Notice of Combined Hearing (the First The Insurers are comprised of The Travelers Indemnity Company, The Travelers Indemnity Company of Connecticut (f/k/a The Travelers Indemnity Company of Rhode Island), Travelers Property Casualty Company of America (f/k/a The Travelers Indemnity Company of Illinois) and Travelers Casualty and Surety Company (f/k/a The Aetna Casualty and Surety Company) (collectively, Travelers), Firemans Fund Insurance Company (FFIC), and Continental Insurance Company and Pacific Insurance Company (collectively CNA).
1

Day Scheduling Order, at Docket No. 56), in order to permit a brief period of focused discovery by the Insurers and adequate time to develop their objections and prepare for a contested hearing on TH Agriculture & Nutrition, L.L.C.s Prepackaged Plan of Reorganization (the Plan). A brief adjournment of sixty (60) days of the presently scheduled January 15, 2009, confirmation hearing date is sought. In support of this Motion, the Insurers state as follows: BACKGROUND 1. TH Agriculture & Nutrition, L.L.C. (THAN or Debtor) filed its voluntary

petition for relief under Chapter 11 of the Bankruptcy Code on November 24, 2008. (See THANs Voluntary Petition (Chapter 11) at Docket No. 1). 2. The First Day Scheduling Order was entered the next day (on November 25,

2008) without notice to the Insurers and without providing them with an opportunity to be heard. By filing it as a first day motion in conjunction with its bankruptcy petition on November 24, 2008, THAN apparently created the perception that its Scheduling Motion2 was routine and thus, would not be expected to engender opposition. 3. While the Plan may be prepackaged in the sense that holders of Asbestos PI

Claims or their lawyers have accepted it, it is not prepackaged as to the Insurers. In particular, THAN is engaged in active litigation with several of the Insurers in the Circuit Court of Cook County, Illinois, in a declaratory judgment action captioned TH Agriculture & Nutrition, L.L.C. v. ACE Property and Cas. Co., et al., Case No. 02 CH 19037 (the Insurance Coverage Action), in which THAN seeks insurance coverage for asbestos bodily injury claims and lawsuits asserted against it. The insurers named as defendants in the Insurance Coverage Action include FFIC, THANs Scheduling Motion is entitled Debtors Motion for (I) An Order (A) Scheduling A Combined Hearing To Consider Approval of Disclosure Statement and Solicitation Procedures, and Confirmation of Prepackaged Plan of Reorganization, (B) Establishing Deadlines and Procedures for Filing Objections, and (C) Approving Form and Manner of Notice of Combined Hearing; and (II) An Order Approving Disclosure Statement and Solicitation Procedures (hereinafter, the Scheduling Motion). (See THANs Scheduling Motion at Docket No. 3). -22

CNA, certain AIG Companies, Centennial Insurance Company, Royal Indemnity Company, Everest Reinsurance Company, Northstar Reinsurance Company, TIG Insurance Company, United States Fire Insurance Company, Federal Insurance Company, Employers Mutual Casualty Company, Munich Reinsurance Company and ACE Property and Casualty Company. 4. Additionally, THAN has disagreements with other insurance carriers, including

Travelers with which it has an ongoing dispute as to whether THANs conduct in connection with the Plan violates the terms of a Confidential Agreement of Settlement and Release entered into on or about September 20, 2005. JURISDICTION 5. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. 157

and 1334. This matter is a core proceeding pursuant to 28 U.S.C. 157(b)(2). Venue is proper in this Court pursuant to 28 U.S.C. 1408 and 1409. RELIEF REQUESTED 6. The Insurers seek the opportunity to initiate focused discovery on three

fundamental aspects of the Plan: (a) The intended operation of the Insurance Neutrality language set forth in Section 10.4 of the Plan;3 (b) The impact of the $900 million in Asbestos PI

Section 10.4 of the Plan states:

Insurance Neutrality. Notwithstanding anything to the contrary in the Confirmation Order, the Plan or any of the Plan documents, nothing in the Plan, the Plan Documents, the Confirmation Order, any finding of fact and/or conclusion of law with respect to the confirmation of the Plan, or any Final Order or opinion entered on appeal from the Confirmation Order (including any other provision that purports to be preemptory or supervening) shall in any way operate to, or have the effect of, impairing: (a) any Asbestos Insurance Entitys legal, equitable or contractual rights, if any, in any respect under the Shared Asbestos Insurance Policies or any Insurance Settlement Agreement; or (b) any policyholders legal, equitable or contractual rights, if any, in any respect under the Shared Asbestos Insurance Policies or any Insurance Settlement Agreement. The rights and obligations of any Asbestos Insurance Entity shall be determined under the insurance policies, including, but not limited to the Shared Asbestos Insurance Policies, or any Insurance Settlement Agreement. Notwithstanding anything in this Article 10.4 to the contrary, nothing in this Article 10.4 shall affect or limit, or be -3-

Trust Contributions by THAN and its parent, PENAC, on the Insurers coverage rights and obligations (See Plan at 1.20, 1.93, 1.128, 9.4(f)); and (c) The extent to which the Plan may affect the Insurers pecuniary interests and/or their rights to receive performance under the terms of their respective policies and/or settlement agreements with THAN and/or PENAC. Thus, the Insurers are simultaneously serving interrogatories and documents requests on THAN, the Future Claimants Representative and the Official Committee of Unsecured Creditors of T H Agriculture & Nutrition, L.L.C. addressing these very issues. 7. The Insurance Neutrality language in the Plan is decidedly less robust than that

included in other recent confirmed plans in asbestos-related bankruptcy cases.4 For example, the

construed as affecting or limiting: (a) the binding effect of the Plan and the Confirmation Order on THAN, Reorganized THAN, the Asbestos PI Trust and the beneficiaries of such trust; or (b) the protection afforded to any Asbestos Insurance Entity.
4

For example, and not by way of limitation, the insurance neutrality provision in the Fourth Amended Joint Plan of Reorganization (As Modified) confirmed by the bankruptcy court on November 8, 2007 in In re Federal Mogul Global, Inc., et al, No. 01-10578 (Bankr. D. Del.) provides: 10.4 Insurance Neutrality

10.4.1. The provisions of this Section 10.4.1 shall apply to all Entities (including, without limitation, all Asbestos Insurance Companies); provided, however, that with respect to Certain Underwriters at Lloyd's, London and Certain London Market Companies (collectively, London Market Insurers) and any Asbestos Insurance Policies subscribed by London Market Insurers (or any Asbestos Insurance Settlement Agreements applicable to such Asbestos Insurance Policies), the provisions of this Section 10.4.1 shall not be applicable, and the provisions of Section 10.4.2 shall be applicable. 10.4.1.1. Nothing in the Plan, the Plan Documents, the Confirmation Order, or any finding of fact and/or conclusion of law with respect to the Confirmation of the Plan shall limit the right of any Asbestos Insurance Company to assert any Asbestos Insurer Coverage Defense. 10.4.1.2. The Plan, the Plan Documents, the Confirmation Order, and the Bankruptcy Insurance Stipulation shall be binding on the Debtors, the Reorganized Debtors, the Trust and the beneficiaries of the Trust. The obligations, if any, of the Trust to pay holders of Asbestos Personal Injury Claims and Demands shall be determined pursuant to the Plan and the Plan Documents. None of (I) the Bankruptcy Court's or District Court's approval of the Plan or -4-

the Plan Documents, (II) the Confirmation Order or any findings and conclusions entered with respect to Confirmation, nor (III) any estimation or valuation of Asbestos Personal Injury Claims, either individually or in the aggregate (including, without limitation, any agreement as to the valuation of Asbestos Personal Injury Claims) in the Reorganization Cases shall, with respect to any Asbestos Insurance Company, constitute a trial or hearing on the merits or an adjudication or judgment; or accelerate the obligations, if any, of any Asbestos Insurance Company under its Asbestos Insurance Policies; or be used as evidence in any forum to prove: (i) that any of the Debtors, the Trust, or any Asbestos Insurance Company is liable for, or otherwise obligated to pay with respect to, any individual Asbestos Personal Injury Claim or Demand;. (ii) that the procedures established by the Plan, including the Asbestos Personal Injury Trust Distribution Procedures, for evaluating and paying Asbestos Personal Injury Claims and Demands are reasonable; (iii) that the procedures established by the Plan, including the Asbestos Personal Injury Trust Distribution Procedures, for evaluating and paying Asbestos Personal Injury Claims and Demands are consistent with any procedures that were used to evaluate or settle Asbestos Personal Injury Claims against the Debtors before the Petition Date; (iv) that the settlement of, or the value assigned to, any individual Asbestos Personal Injury Claim pursuant to the Asbestos Personal Injury Trust Distribution Procedures was reasonable and/or otherwise appropriate; (v) that any of the Asbestos Insurance Companies participated in and/or consented to the negotiation of the Plan or any of the Plan Documents; (vi) that any of the Debtors or the Trust has suffered an insured loss with respect to any Asbestos Personal Injury Claim or Demand; or (vii) as to (A) the liability of the Debtors or the Trust for Asbestos Personal Injury Claims or Demands, whether such Claims or Demands are considered individually or on an aggregate basis; or (B) the value of such Asbestos Personal Injury Claims or Demands, individually or in the aggregate. 10.4.1.3. Nothing in the Plan or the Plan Documents shall affect or limit, or be construed as affecting or limiting, the protection afforded to any Settling Asbestos Insurance Company by the Supplemental Injunction, the Third Party Injunction, and/or the Asbestos Insurance Entity Injunction. 10.4.1.4. Nothing in this Section 10.4 is intended or shall be construed to preclude otherwise applicable principles of res judicata or collateral estoppel from being applied against any Asbestos Insurance Company with respect to any issue that is actually litigated by such Asbestos Insurance Company as part of its objections, if any, to Confirmation of the Plan or as part of any contested matter or adversary proceeding filed by such Asbestos Insurance Company in conjunction with or related to Confirmation of the Plan. Plan objections that are withdrawn -5-

language quoted below from the Federal Mogul plan makes clear that the confirmation of the plan and other orders and findings in that case would not accelerate the obligations, if any, of any Asbestos Insurance Company and cannot not be used as evidence in any forum to prove inter alia the reasonableness of the Trust Distribution Procedures or that any of the Debtors had suffered an insured loss with respect to any Asbestos Personal Injury Claims or Demands. (See Footnote 4 supra). 8. In contrast, the Insurance Neutrality language set forth in Section 10.4 of the

Plan contains no such express prohibitions. In fact, Section 10.4 contains language affirmatively stating that nothing in the Plan Documents or Confirmation Order will impair the policyholders rights, thereby effectively extinguishing any defense (by the Insurers) that THAN and/or PENAC have breached their respective policies or settlement agreements by propounding the Plan and including certain provisions therein. (See Plan at 10.4; see also Plan at 8.4). 9. Additionally, discovery regarding the claim estimates used in negotiating the

agreed $900 million Asbestos PI Trust Contribution undoubtedly will show that the payment is going largely towards future claims. Thus, discovery might well show that the intended effect of the Plan is to (impermissibly) accelerate the Insurers obligations such that they would be, in

prior to the conclusion of the Confirmation Hearing shall be deemed not to have been actually litigated. 10.4.1.5. Nothing in the Plan, the Plan Documents, the Confirmation Order, or any finding of fact and/or conclusion of law with respect to the Confirmation or consummation of the Plan shall limit the right, if any, of (i) any Asbestos Insurance Company, in any Asbestos Insurance Action, to assert any Asbestos Insurer Coverage Defense, including by presenting evidence and/or argument with respect to any of the matters specified in clauses (i) through (vii) of Section 10.4.1.2 of the Plan or (ii) any other party in any such Asbestos Insurance Action to assert any appropriate position. Except as provided in Section 10.4.1.4 above, none of the matters specified in clauses (i) through (vii) of Section 10.4.1.2 of the Plan shall have any res judicata or collateral estoppel effect against any Asbestos Insurance Company. (See Federal Mogul Fourth Amended Joint Plan of Reorganization (As Modified) at pp. 150-51, attached hereto as Exhibit A). -6-

effect, indemnifying THAN today for claims that PENAC and THAN have chosen to pay before they even are asserted (if ever). Discovery into the sources of the $900 million contribution may also shed light on the intended operation of the Plan. 10. To the extent (as is apparent from the Plan Documents) the Plan (a) is not

insurance neutral; (b) impairs the Insurers contractual and state law rights; and (c) provides protection for THAN and its parent, PENAC, against the consequences of their own violations of insurance policies and settlement agreements, the Plan violates 11 U.S.C. 1129(a)(1)-(3) and thus, is not confirmable. Further, there is an overriding issue of good faith (and violation of 11 U.S.C. 1129(c)(3)) in the Plan, which requests not only a discharge, but also a supplemental discharge injunction under 11 U.S.C. 524(g). In fact, there is no bonafide reorganization in this case. As reflected in the Historical Income Statements (included in Exhibit C to THANs Disclosure Statement), THAN had no revenue whatsoever in 2004, 2005, 2006 or 2007. THAN had no business. Its reorganization is based on its obtaining two revenue-generating properties and leasing those properties under a long-term triple-net lease for a total revenue of $666,000 per year for five years after Plan confirmation -- with THAN sustaining a net loss in each such year. (See Ex. C to THANs Disclosure Statement at Docket No. 21). 11. Given the pending Insurance Coverage Action, as well as its present dispute with

Travelers, THAN clearly should have anticipated that the Insurers would require adequate time and discovery to permit them to develop plan objections and prepare for a contested confirmation hearing. The experience of debtors in other asbestos-related Chapter 11 cases -- including the Mid-Valley and Congoleum prepaks, as well as the pre-negotiated plan in Quigley in this District5 -- should have counseled as much.

See In re Congoleum Corp., No. 03-51524 (Bankr. D.N.J.) (alleged prepak filed without consent of insurers, plan not confirmed after numerous unsuccessful attempts by the debtor to impair insurer rights); In re Quigley Co, Inc., No. 04-15739 (Bankr. S.D.N.Y.) (alleged pre-7-

12.

Under Paragraph 23 of the Courts Case Management Order #1 (CMO #1),

when a motion may reasonably be expected to engender opposition, the movant should confer with any expected adversaries to agree on a briefing schedule. (See CMO #1, Docket No. 56, at 23). That did not happen in connection with the First Day Scheduling Order. [I]f circumstances make that impractical, the movant may unilaterally set the schedule, but if it is unreasonable, the opposing party may apply to the Court for modifications in the schedule, and where it appears that the schedule unilaterally set was not a reasonable one, requests for modification will presumptively be granted. (See Id.). 13. The schedule delineated in the First Day Scheduling Order simply is not

reasonable. It mandates that parties file objections to the Plan and accompanying Disclosure Statement a mere 42 days after the case was filed, with the confirmation hearing just 10 days thereafter, on January 15, 2009. The Insurers did not participate in the Plan negotiations, and they had not seen drafts of the Plan Documents or any of the numerous motions that THAN filed on the first day of the case. Given the complexity of the voluminous Plan Documents, the First Day Scheduling Order is manifestly unfair and prejudicial to the Insurers. It is difficult not to conclude that the exclusion of the Insurers was a purposeful litigation strategy designed to limit the effectiveness of their ability to respond in such an artificially truncated time frame. Indeed, it undermines the good faith of the entire prepak process and is the antithesis of due process. 14. The bankruptcy courts in other asbestos-related cases have accommodated

insurers legitimate needs for similar such discovery, and have allowed more time for meaningful discovery and pretrial preparation than is requested here. (See, e.g., Order Establishing Case Management Procedures in connection with Objections to the Confirmation of the Debtors Proposed Plan entered on February 18, 2004 in In re Mid-Valley, Inc., No. 03-35592-JKF negotiated case still pending without a confirmed plan); In re Mid-Valley, Inc., No. 03-35592 (Bankr. W.D. Pa.) (debtor agreed to insurance neutrality language demanded by insurers). -8-

(Bankr. W.D. Pa.), attached as Exhibit B; Scheduling Order Regarding Hearing on Confirmation of the Third Amended Joint Plan of Reorganization entered on July 25, 2003 in In re Babcock & Wilcox Co., No. 00-10992 (Bankr. E.D. La.), attached as Exhibit C). 15. Considering that THAN effectively has been a dormant entity for years, there is

no compelling reason why this bankruptcy case must be completed in such extraordinary haste, especially at the expense of fundamental fairness and the Insurers due process. 16. Such procedural unfairness, including lack of adequate time for an objector to

develop and prepare its confirmation case, can inject reversible error into a Chapter 11 case. See, e.g., In re Armstrong World Industries, Inc., 2005 U.S. Dist. LEXIS at *18, n.17 (D. Del. 2005) (listing troubling procedural issues in the bankruptcy court that were not decided on appeal because confirmation was reversed on other grounds); affd, 432 F.3d 507 (3rd Cir. 2005). Therefore, the Insurers respectfully request: (a) That the date for objections to the Disclosure Statement, the Debtors solicitation procedures, and confirmation of the Plan (January 5, 2009), the date for Debtor to respond to any such objections (January 12, 2009), and the date for the Combined Hearing (January 15, 2009), as set forth in the First Day Scheduling Order, be vacated; (b) That the Combined Hearing be reset for March 16, 2009, with objections due on March 6, 2009 and Debtors response due on March 13, 2009; and (c) That the parties be directed to agree to expedited discovery and reasonable pretrial procedures, including disclosure of witnesses and exhibit stipulations, to effectuate this schedule. NO PRIOR APPLICATION 17. No previous application for the relief requested herein has been made to this or

any other court.

-9-

MEET AND CONFER 18. On December 10, 2008, counsel for Travelers requested THAN to consent to a

sixty (60) day extension of time for the Insurers to file objections to the Plan to allow the Insurers to engage in limited discovery on an expedited basis to prepare their confirmation case. THAN did not consent to an extension of time. (See Declaration of Donna J. Vobornik, filed in conjunction with the Insurers Ex Parte Application for Entry of an Order Scheduling a Hearing to Consider Motion to Modify the Courts First Day Scheduling Order). NOTICE 19. Notice of this Motion will be served in accordance with this Courts Order on

Insurers Ex Parte Application For Entry of An Order Scheduling An Expedited Hearing to Consider Motion to Modify the Courts First Day Scheduling Order. WHEREFORE, the Insurers respectfully request entry of an order substantially in the form attached hereto, authorizing the relief requested herein, and granting such other and further relief as is just. Dated: New York, New York December 11, 2008

Respectfully submitted, SONNENSCHEIN NATH & ROSENTHAL LLP /s/ Jo Christine Reed Jo Christine Reed (JCR 3783) 1221 Avenue of the Americas New York, New York 10020-1089 and SONNENSCHEIN NATH & ROSENTHAL LLP Donna J. Vobornik, Esq. Robert B. Millner, Esq. Daniel E. Feinberg, Esq. 7800 Sears Tower - 10 -

233 South Wacker Drive Chicago, Illinois 60606-6404 Counsel to Attorneys for The Travelers Indemnity Company, The Travelers Indemnity Company of Connecticut (f/k/a The Travelers Indemnity Company of Rhode Island), Travelers Property Casualty Company of America (f/k/a The Travelers Indemnity Company of Illinois) and Travelers Casualty and Surety Company (f/k/a The Aetna Casualty and Surety Company) STEVENS & LEE, P.C. /s/Constantine D. Pourakis Constantine D. Pourakis 485 Madison Avenue, 20th Floor New York, New York 10022 (212) 319-8500 -andLeonard P. Goldberger Marnie E. Simon 1818 Market Street, 29th Floor Philadelphia, PA 19103 (215) 751-2864, -2885 -andJohn D. Demmy 1105 North Market Street, 7th Floor Wilmington, DE 19801 (302) 425-3308 Counsel for Firemans Fund Insurance Company SEYFARTH SHAW LLP

/s/ Robert W. Dremluk Robert W. Dremluk 620 Eighth Avenue, 32nd Floor New York, New York 10018 Telephone: (212) 218-5269 Facsimile: (212) 218-5526 David C. Christian II (pending pro hac vice) - 11 -

By:

121 South Dearborn Street Suite 2100 Chicago, Illinois 60603-5577 Telephone: (312) 460-5000 Facsimile: (312) 460-7000 Counsel For Pacific Insurance Company and Continental Casualty Company

- 12 -

Exhibit A

EXCERPTS FROM THE FOURTH AMENDED JOINT PLAN OF REORGANIZATION (AS MODIFIED) FILED IN RE: FEDERAL MOGUL, ET AL.

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: FEDERAL-MOGUL GLOBAL INC., T&N LIMITED, et al.,1 Debtors. ) ) ) ) ) ) Chapter 11 Case No. 01-10578 (JKF) (Jointly Administered)

FOURTH AMENDED JOINT PLAN OF REORGANIZATION (AS MODIFIED) ARTICLE IX OF THIS PLAN AND THE ADDENDUM TO THE PLAN PROVIDE FOR THE ISSUANCE OF A CHANNELING INJUNCTION UNDER SECTION 524(g) OF THE BANKRUPTCY CODE THAT PERMANENTLY ENJOINS ALL PERSONS HOLDING ASBESTOS PERSONAL INJURY CLAIMS FROM PURSUING A REMEDY AGAINST THE PROTECTED PARTIES (AND, IN THE CASE OF THE ADDENDUM, THE PNEUMO PROTECTED PARTIES) AND CHANNELS THEM TO THE TRUST FOR RESOLUTION AND PAYMENT

1 The U.S. Debtors (collectively, the U.S. Debtors) are Carter Automotive Company, Inc., Federal-Mogul Corporation, Federal-Mogul Dutch Holdings Inc., Federal-Mogul FX, Inc., Federal-Mogul Global Inc., Federal-Mogul Global Properties, Inc., Federal-Mogul Ignition Company, Federal-Mogul Machine Tool, Inc., Federal-Mogul Mystic, Inc., Federal-Mogul Piston Rings, Inc., Federal-Mogul Powertrain, Inc., Federal-Mogul Products, Inc., Federal-Mogul Puerto Rico, Inc., Federal-Mogul U.K. Holdings, Inc., Federal-Mogul Venture Corporation, Federal-Mogul World Wide, Inc., Felt Products Manufacturing Co., FM International LLC, Ferodo America, Inc., Gasket Holdings Inc., J.W.J. Holdings, Inc., McCord Sealing, Inc., and T&N Industries Inc.

The United Kingdom Entities to which this Plan applies (collectively, the U.K. Debtors) are AE Piston Products Limited, Aeroplane & Motor Aluminium Castings Limited, Ashburton Road Services Limited, Brake Linings Limited, Duron Limited, Edmunds, Walker & Co. Limited, Federal-Mogul Aftermarket UK Limited, Federal-Mogul Bradford Limited, Federal-Mogul Bridgwater Limited, Federal-Mogul Camshaft Castings Limited, Federal-Mogul Camshafts Limited, Federal-Mogul Engineering Limited, Federal-Mogul Eurofriction Limited, Federal-Mogul Friction Products Limited, Federal-Mogul Global Growth Limited, Federal-Mogul Ignition (U.K.) Limited, Federal-Mogul Powertrain Systems International Limited, Federal-Mogul Sealing Systems (Cardiff) Limited, Federal-Mogul Sealing Systems (Rochdale) Limited, Federal-Mogul Sealing Systems (Slough) Limited, Federal-Mogul Sealing Systems Limited, Federal-Mogul Shoreham Limited, Federal Mogul Sintered Products Limited, Federal-Mogul Systems Protection Group Limited, Federal-Mogul Technology Limited, Ferodo Caernarfon Limited, Ferodo Limited, Fleetside Investments Limited, F-M UK Holding Limited, Friction Materials Limited, Greet Limited, Halls Gaskets Limited, Hepworth & Grandage Limited, J.W. Roberts Limited, Lanoth Limited, Newalls Insulation Company Limited, TAF International Limited, T&N Holdings Limited, T&N International Limited, T&N Investments Limited, T&N Limited, T&N Materials Research Limited, T&N Piston Products Group Limited, T&N Properties Limited, T&N Shelf Eighteen Limited, T&N Shelf Nineteen Limited, T&N Shelf One Limited, T&N Shelf Seven Limited, T&N Shelf Three Limited, T&N Shelf Twenty Limited, T&N Shelf Twenty-One Limited, T&N Shelf Twenty-Six Limited, TBA Belting Limited, TBA Industrial Products Limited, Telford Technology Supplies Limited, The Washington Chemical Company Limited, Turner & Newall Limited, Turner Brothers Asbestos Company Limited, and Wellworthy Limited. Unlike all the other U.K. Debtors, T&N Investments Limited is a Scottish rather than English company and commenced administration in Scotland in April 2002. Certain additional U.K. Affiliates of the U.S. Debtors and U.K. Debtors have commenced chapter 11 cases but are not subjects of this Plan.

10.4.

Insurance Neutrality.

10.4.1. The provisions of this Section 10.4.1 shall apply to all Entities (including, without limitation, all Asbestos Insurance Companies); provided, however, that with respect to Certain Underwriters at Lloyds, London and Certain London Market Companies (collectively, London Market Insurers) and any Asbestos Insurance Policies subscribed by London Market Insurers (or any Asbestos Insurance Settlement Agreements applicable to such Asbestos Insurance Policies), the provisions of this Section 10.4.1 shall not be applicable, and the provisions of Section 10.4.2 shall be applicable. 10.4.1.1. Nothing in the Plan, the Plan Documents, the Confirmation Order, or any finding of fact and/or conclusion of law with respect to the Confirmation of the Plan shall limit the right of any Asbestos Insurance Company to assert any Asbestos Insurer Coverage Defense. 10.4.1.2. The Plan, the Plan Documents, the Confirmation Order, and the Bankruptcy Insurance Stipulation shall be binding on the Debtors, the Reorganized Debtors, the Trust and the beneficiaries of the Trust. The obligations, if any, of the Trust to pay holders of Asbestos Personal Injury Claims and Demands shall be determined pursuant to the Plan and the Plan Documents. None of (I) the Bankruptcy Courts or District Courts approval of the Plan or the Plan Documents, (II) the Confirmation Order or any findings and conclusions entered with respect to Confirmation, nor (III) any estimation or valuation of Asbestos Personal Injury Claims, either individually or in the aggregate (including, without limitation, any agreement as to the valuation of Asbestos Personal Injury Claims) in the Reorganization Cases shall, with respect to any Asbestos Insurance Company, constitute a trial or hearing on the merits or an adjudication or judgment; or accelerate the obligations, if any, of any Asbestos Insurance Company under its Asbestos Insurance Policies; or be used as evidence in any forum to prove: (i) that any of the Debtors, the Trust, or any Asbestos Insurance Company is liable for, or otherwise obligated to pay with respect to, any individual Asbestos Personal Injury Claim or Demand; (ii) that the procedures established by the Plan, including the Asbestos Personal Injury Trust Distribution Procedures, for evaluating and paying Asbestos Personal Injury Claims and Demands are reasonable; (iii) that the procedures established by the Plan, including the Asbestos Personal Injury Trust Distribution Procedures, for evaluating and paying Asbestos Personal Injury Claims and Demands are consistent with any procedures that were used to evaluate or settle Asbestos Personal Injury Claims against the Debtors before the Petition Date; (iv) that the settlement of, or the value assigned to, any individual Asbestos Personal Injury Claim pursuant to the Asbestos Personal Injury Trust Distribution Procedures was reasonable and/or otherwise appropriate; (v) that any of the Asbestos Insurance Companies participated in and/or consented to the negotiation of the Plan or any of the Plan Documents; 150

(vi) that any of the Debtors or the Trust has suffered an insured loss with respect to any Asbestos Personal Injury Claim or Demand; or (vii) as to (A) the liability of the Debtors or the Trust for Asbestos Personal Injury Claims or Demands, whether such Claims or Demands are considered individually or on an aggregate basis; or (B) the value of such Asbestos Personal Injury Claims or Demands, individually or in the aggregate. 10.4.1.3. Nothing in the Plan or the Plan Documents shall affect or limit, or be construed as affecting or limiting, the protection afforded to any Settling Asbestos Insurance Company by the Supplemental Injunction, the Third Party Injunction, and/or the Asbestos Insurance Entity Injunction. 10.4.1.4. Nothing in this Section 10.4 is intended or shall be construed to preclude otherwise applicable principles of res judicata or collateral estoppel from being applied against any Asbestos Insurance Company with respect to any issue that is actually litigated by such Asbestos Insurance Company as part of its objections, if any, to Confirmation of the Plan or as part of any contested matter or adversary proceeding filed by such Asbestos Insurance Company in conjunction with or related to Confirmation of the Plan. Plan objections that are withdrawn prior to the conclusion of the Confirmation Hearing shall be deemed not to have been actually litigated. 10.4.1.5. Nothing in the Plan, the Plan Documents, the Confirmation Order, or any finding of fact and/or conclusion of law with respect to the Confirmation or consummation of the Plan shall limit the right, if any, of (i) any Asbestos Insurance Company, in any Asbestos Insurance Action, to assert any Asbestos Insurer Coverage Defense, including by presenting evidence and/or argument with respect to any of the matters specified in clauses (i) through (vii) of Section 10.4.1.2 of the Plan or (ii) any other party in any such Asbestos Insurance Action to assert any appropriate position. Except as provided in Section 10.4.1.4 above, none of the matters specified in clauses (i) through (vii) of Section 10.4.1.2 of the Plan shall have any res judicata or collateral estoppel effect against any Asbestos Insurance Company. 10.4.2. Insurance Neutrality Provisions Applicable Solely to London Market Insurers. This Section 10.4.2 shall apply solely with respect to London Market Insurers and any Asbestos Insurance Policies subscribed by London Market Insurers (or Asbestos Insurance Settlement Agreements relating to such Asbestos Insurance Policies). 10.4.2.1. Notwithstanding anything to the contrary in the Confirmation Order, the Plan or any of the Plan Documents, nothing in the Confirmation Order, the Plan or any of the Plan Documents (including any other provision that purports to be preemptory or supervening), shall in any way operate to, or have the effect of, impairing London Market Insurers legal, equitable or contractual rights, if any, in any respect. The rights of London Market Insurers shall be determined under the Asbestos Insurance Policies or Asbestos Insurance Settlement Agreements. Except as provided in Section 10.4.2.3 below, nothing in 10.4.2.2. the Plan or the Plan Documents shall affect or limit, or be construed as affecting or limiting, the

151

Exhibit B

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Exhibit C

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UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF LOUISIANA In re: THE BABCOCK & WILCOX COMPANY, DEBTOR(S) Jointly Administered with DIAMOND POWER INTERNATIONAL, INC. BABCOCK & WILCOX CONSTRUCTION CO., INC. AMERICON, INC. 00-10993 00-10994 00-10995 NUMBER 00-10992 SECTION B CHAPTER 11 REORGANIZATION

SCHEDULING ORDER REGARDING HEARING ON CONFIRMATION OF THE THIRD AMENDED JOINT PLAN OF REORGANIZATION The pre-trial schedule with respect to the Third Amended Joint Plan of Reorganization (the Plan) submitted by the Debtors, together with the Asbestos Claimants Committee, the Future Claimants Representative, and McDermott Incorporated (collectively with the Debtors, the Plan Proponents), pursuant to this Courts Pretrial Notice (Revd. Dec. 2000), shall be as follows: 1. This Scheduling Order shall govern the procedures relating to all issues relating to

Plan confirmation and shall bind all parties who intend to participate in the hearing on confirmation. 2. The hearing on confirmation in this matter will be treated as a contested matter

and is set for the period commencing September 22, 2003, before the Honorable Jerry A.

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Brown, United States Bankruptcy Judge, at the United States Bankruptcy Court, 501 Magazine Street, New Orleans, LA 70130, Courtroom 705, New Orleans, Louisiana. 3. Counsel shall meet to confer on the preparation of a Joint Pretrial Order, exchange

copies of all exhibits, and attempt to reach agreement as to the authenticity of exhibits. Counsel shall compile a joint bench book in accordance with the Pretrial Notice. The original and one copy of a Joint Pretrial Order will be filed on or before seven (7) days before trial and shall conform to this Courts Pretrial Notice. Written objections to any exhibits that are not admitted to be authentic shall be submitted on or before three (3) days before trial. All objections other than authenticity are reserved until trial. 4. The following timetable shall govern the pretrial procedure in this cause. The

parties will attempt to reach mutual agreement with respect to any modification of the following timetable, pursuant to the Local Rules including, without limitation, 7026-1(A), and adopted code of conduct. If the parties are unable to reach such agreement, then the parties shall submit any proposed modification of the following timetable to the Court for its approval. 5. Except with respect to insurance coverage issues relating to Apollo/Parks

Township Insurance Policies, on or before July 29, 2003, all parties shall furnish opposing counsel with a written list containing the names and addresses of all persons they intend to call as witnesses and which briefly describes the subject matter of the testimony for each such witness. With respect to insurance coverage issues relating to Apollo/Parks Township Insurance Policies, on or before August 5, 2003, all parties shall furnish opposing counsel with a written list containing the names and addresses of all persons they intend to call as witnesses and which

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briefly describes the subject matter of the testimony for each such witness. These deadlines shall not apply to rebuttal or impeachment witnesses whose use cannot reasonably be anticipated in advance or to witnesses called to lay foundation for admissibility of exhibits, or for good cause shown. The parties shall supplement their lists within a reasonable amount of time, but in any event by September 2, 2003 (except where necessary for rebuttal or impeachment witnesses or to lay foundation for admissibility of exhibits, or for good cause shown). Opposing counsel shall be afforded the opportunity to take discovery concerning the new information. On or before September 8, 2003, the parties shall furnish opposing counsel with a written list containing the names and addresses of all persons they intend to call as rebuttal and impeachment witnesses and which briefly describes the subject matter of the testimony for each such witness. Opposing counsel shall be afforded the opportunity to take discovery concerning these witnesses. Only those witnesses listed in the Joint Pretrial Order shall be permitted to testify at the confirmation hearing (except for those witnesses called to lay foundation for admissibility of exhibits, or for good cause shown). 6. Subject to Rule 9006, responses to all written discovery requests shall be served

within 20 days after service of such discovery requests, except for responses to written discovery served prior to entry of this Scheduling Order. The parties shall work together to expeditiously complete the production of documents and things.

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7.

Except with respect to insurance coverage issues relating to Apollo/Parks

Township Insurance Policies, on or before July 31, 2003, the parties shall furnish opposing counsel with a list of experts, pursuant to Rule 7026(a)(2)(A). On or before August 15, 2003, the parties shall furnish opposing counsel with Disclosure of Expert Testimony pursuant to Rule 7026(a)(2)(B). With respect to insurance coverage issues relating to Apollo/Parks Township Insurance Policies, on or before August 15, 2003, the parties shall furnish opposing counsel with a list of experts, pursuant to Rule 7026(a)(2)(A), and, on or before August 22, 2003, the parties shall furnish opposing counsel with Disclosure of Expert Testimony pursuant to Rule 7026(a)(2)(B). Within thirty days following this disclosure (but prior to the close of discovery), the Parties shall make their experts available for deposition. The experts depositions may be conducted without further order from the Court. 8. Except with respect to insurance coverage issues relating to Apollo/Parks

Township Insurance Policies, on or before August 29, 2003, the parties shall furnish opposing counsel with a Disclosure of Rebuttal Expert Testimony pursuant to Rule 7026(a)(2). With respect to insurance coverage issues relating to Apollo/Parks Township Insurance Policies, on or before September 5, 2003, the parties shall furnish opposing counsel with a Disclosure of Rebuttal Expert Testimony pursuant to Rule 7026(a)(2). Within twenty days following this disclosure (but prior to the close of discovery), the parties shall make their experts available for deposition. The experts depositions may be conducted without further order from the Court. 9. All discovery shall be completed by September 12, 2003, except for depositions

of rebuttal expert witnesses, which shall be completed by September 18, 2003.

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10.

Trial briefs shall be filed by September 19, 2003. Trial briefs shall not exceed

25 pages. Trial briefs may be amended or supplemented to address new issues raised in filings made on or after September 19, 2003, provided they are filed within 10 days after the filings raising those new issues. Any amending or supplemental briefs shall be limited to 15 pages. 11. 12. The hearing on confirmation shall commence on September 22, 2003. The Debtors shall serve this Scheduling Order on all parties who have requested

that they be served with all papers filed in these cases pursuant to Bankruptcy Rule 2002.

ORDERED this 25th day of July, 2003 in New Orleans, Louisiana.

Jerry A. Brown United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------x In re: : : TH AGRICULTURE & NUTRITION, L.L.C., : : Debtors. : : ---------------------------------------------------------------x

Chapter 11 Case No. 08-14692 (REG)

DECLARATION OF DONNA J. VOBORNIK IN SUPPORT OF EX PARTE APPLICATION OF CERTAIN INSURERS FOR ENTRY OF AN ORDER SCHEDULING AN EXPEDITED HEARING TO CONSIDER MOTION TO MODIFY THE COURTS FIRST DAY SCHEDULING ORDER DONNA J. VOBORNIK, under penalty of perjury, hereby declares: 1. I am an attorney with the law firm of Sonnenschein Nath & Rosenthal LLP, 7800

Sears Tower, Chicago, Illinois, 60606, counsel for The Travelers Indemnity Company, The Travelers Indemnity Company of Connecticut (f/k/a The Travelers Indemnity Company of Rhode Island), Travelers Property Casualty Company of America (f/k/a The Travelers Indemnity Company of Illinois) and Travelers Casualty and Surety Company (f/k/a The Aetna Casualty and Surety Company) (collectively Travelers) in the above-captioned case. 2. I submit this Declaration pursuant to 28 U.S.C. 1746 and Local Bankruptcy

Rule 9077-1 in support of the Ex Parte Application of Certain Insurers For Entry Of An Order Scheduling An Expedited Hearing To Consider Motion To Modify The Courts First Day Scheduling Order (the Application). This Declaration is based upon my personal knowledge. 3. Through the Application, the Insurers are requesting an Order shortening the

period for notice and a hearing - and believe there is cause for such a reduction - so that the relief requested in the Motion To Modify The Courts First Day Scheduling Order (the Motion to

Modify) may be considered and, if deemed appropriate by the Court, granted in advance of the deadlines set by the First Day Scheduling Order.1 4. the essence. 5. Simultaneously with the filing of its voluntary Chapter 11 petition on November Given the accelerated schedule set by the First Day Scheduling Order, time is of

24, 2008, T.H Agriculture & Nutrition, L.L.C. (THAN or Debtor) filed the Prepackaged Plan of Reorganization of T H Agriculture & Nutrition, L.L.C. under Chapter 11 of the Bankruptcy Code [Docket No. 20] (the Prepackaged Plan), the related disclosure statement [Docket No. 21] (the Disclosure Statement) and a motion to schedule, among other things, a combined hearing to consider approval of the Disclosure Statement, THANs prepetition solicitation procedures and confirmation of the Prepackaged Plan (the Scheduling Motion).2 6. On November 25, 2008, the Court entered the First Day Scheduling Order

approving the Scheduling Motion. The Insurers did not receive notice of the Scheduling Motion and, therefore, were not provided an opportunity to be heard prior to its approval. 7. The schedule established by the First Day Scheduling Order does not provide

adequate time for the Insurers to obtain the discovery that they need and to interpose timely objections to the Plan, if ultimately deemed necessary. It mandates that parties file objections to the Plan and accompanying Disclosure Statement a mere 42 days after the case was filed, with The First Day Scheduling Order means the Courts Order (A) Scheduling a Combined Hearing to Consider Approval of Disclosure Statement and Solicitation Procedures, and Confirmation of Prepackaged Plan of Reorganization, (B) Establishing Deadlines and Procedures for Filing Objections, and (C) Approving Form and Manner of Notice of Combined Hearing. [Docket No. 56]. 2 THANs Scheduling Motion is entitled Debtors Motion for (I) An Order (A) Scheduling A Combined Hearing To Consider Approval of Disclosure Statement and Solicitation Procedures, and Confirmation of Prepackaged Plan of Reorganization, (B) Establishing Deadlines and Procedures for Filing Objections, and (C) Approving Form and Manner of Notice of Combined Hearing; and (II) An Order Approving Disclosure Statement and Solicitation Procedures (hereinafter, the Scheduling Motion) [Docket No. 3]. -21

the confirmation hearing just 10 days thereafter, on January 15, 2009. The Insurers did not participate in the Plan negotiations, and they had not seen drafts of the Plan Documents or any of the numerous motions that THAN filed on the first day of the case. Given the complexity of the voluminous Plan Documents, the First Day Scheduling Order is manifestly unfair and prejudicial to the Insurers. 8. The Insurers seek the opportunity to initiate focused discovery on three

fundamental aspects of the Plan: (a) The intended operation of the Insurance Neutrality language set forth in Section 10.4 of the Plan; (b) The impact of the $900 million in Asbestos PI Trust Contributions by THAN and its parent, PENAC, on the Insurers coverage rights and obligations (See Plan at 1.20, 1.93, 1.128, 9.4(f)); and (c) The extent to which the Plan may affect the Insurers pecuniary interests and/or their rights to receive performance under the terms of their respective policies and/or settlement agreements with THAN and/or PENAC. 9. On December 10, 2008, I telephoned THANs counsel, Kenneth Frenchman, Esq.

of Dickstein Shapiro, to request a sixty-day extension of certain of the dates delineated in the First Day Scheduling Order. 10. I advised Mr. Frenchman that Travelers and certain other insurers needed to

conduct discovery concerning various aspects of the proposed Plan, which will enable the insurers to consider and develop any objections to that Plan. 11. In response to the requested adjournment, Mr. Frenchman advised me that he

needed to check with THANs bankruptcy counsel and THAN itself as to whether consent to an extension could be given, but that he did not anticipate THAN consenting to such an arrangement. 12. I advised Mr. Frenchman that if his client would not consent to such an

adjournment, Travelers and the other insurers would be filing a Motion to Modify the First Day -3-

Scheduling Order, and that expedited consideration of such Motion would be sought. I further advised Mr. Frenchman that Travelers and the other insurers would be requesting a schedule whereby objections, if any, to the Motion to Modify would be due on December 15, 2008 at 12:00 p.m. (Eastern Standard Time) a hearing thereon to be conducted on December 16, 2008. Mr. Frenchman disagreed with such an expedited hearing schedule. 13. day extension. 14. No prior request for the relief sought in the Application has been made to this or Mr. Frenchman subsequently advised me that THAN will not consent to a sixty-

any other Court.

I declare under penalty of perjury hat the foregoing is true and correct. Dated: Chicago, Illinois December 11, 2008

/s/

Donna J. Vobornik Donna J. Vobornik

-4-

WHITE AND WILLIAMS LLP Karel S. Karpe One Penn Plaza/250 W. 34th St. Suite 4110 New York, NY 10119 and Christian J. Singewald (DE 3542) Marc S. Casarino (DE 3613) 824 N. Market Street, Suite 902 Wilmington, DE 19801 Attorneys for Volkswagon Group of America, Inc. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------x : In re: : : TH AGRICULTURE & NUTRITION, L.L.C., : : Debtors. : : ---------------------------------------------------------------x

Chapter 11 Case No. 08-14692 (REG)

AMENDED STATEMENT OF VOLKSWAGEN GROUP OF AMERICA, INC. IN SUPPORT OF MOTION TO MODIFY SCHEDULING ORDER ENTERED NOVEMBER 25, 2008 Volkswagen Group of America, Inc. (VWGoA), a party in interest in this case, submits this Amended Statement in support of the Motion of Certain Insurers to modify the Scheduling Order entered November 25, 2008. In support of this Statement and the grant of the requested relief, VWGoA respectfully states JURISDICTION, VENUE AND PROCEDURES 1. This case was commenced by the filing of a voluntary petition under Chapter 11

of the Bankruptcy Code on November 23, 2008.

PHLDMS1 4942379v.1

2. 3. 4. 5.

Jurisdiction over this proceeding exists under 28 U.S.C. 1334(b). Venue of this proceeding is set in this Court pursuant to 28 U.S.C. 1409(a). This is a case proceeding pursuant to 28 U.S.C. 157(b)(2)(A). The legal predicate for the relief herein requested is Federal Rule of Bankruptcy

Procedure 9006(b)(1) authorizing the Court to enlarge the period for the performance of an act. VWGoA STANDING 6. VWGoA is a co-defendant with the Debtor in certain lawsuits pending in Federal

and State courts involving asbestos personal injury tort claims and/or wrongful death actions within the scope of 28 U.S.C. 157(b)(5). VWGoA knows that such cases exist, but at present does not have a complete list of all such cases. THE REQUESTED RELIEF 7. VWGoA states that the provisions of the Prepackaged Plan and Trust

Distribution Procedures to be adopted if the Plan is confirmed could materially and adversely affect substantive and procedural rights accorded VWGoA under applicable State law. Additional time is required to permit VWGoA and similarly situated co-defendants to review the relevant documents to ascertain their effect on such co-defendants rights. 8. The need for additional time to interpret the Plan involves such issues as the role

of the Future Claims Representative. Is he only the representative of individual victims of asbestos-related diseases, or does he have a larger constituency? The precise role of the appointed Future Claims Representative needs to be identified and disclosed with certainty. See generally Plevin, Epley & Elgarten, Conflicts of Interests, Strange Alliances, and Unfamiliar Duties for Burdened Bankruptcy Courts, 62 NYU Annual Survey of American Law 271 (2006). 9. In general, the Plan injunction and its TDPs deprive current corporate cross-claim

claimants of their existing state law rights by explicitly eliminating state law trial rights against

PHLDMS1 4942379v.1

THAN (and other non-bankrupt entities), and relegating some or all current contribution claim holders to pursuing administrative claims under rules not yet promulgated. 10. The Plan appears to impair the right of co-defendants in asbestos litigation to have

fault and damages apportioned among them. In Illinois, for example, a November 25, 2008 Illinois Supreme Court opinion holds that at least for some tort claims, comparative fault cannot be apportioned against an entity that is not a defendant at trial. Since the Plan injunction and TDPs block THAN or the Trust from being a defendant in a tort trial in Illinois, the remaining co-defendants are prejudiced by losing their state law right to allocate fault to THAN. See Ready v. United/Goedecke Services, Inc., 2008 WL 5046833 (Ill. 2008). The proposed Plan may also impair a co-defendants right under other applicable state laws, e.g., Ohio, barring joint and several liability in certain situations. 11. The Plan, the Trust and the TDP procedures may prejudice co-defendants by

denying them access to information regarding the allowance of claims. See, e.g., Shelley et al., The Need For Transparency Between the Tort System and Section 524(g) Asbestos Trusts, 17 Norton J. Bankr. Law & Practice 257-95. 12. The preceding examples are not exhaustive, and instead are intended only to give

the Court some insights into why there must be time for cross-claim creditors to understand the TDP and Plan terms, to take discovery if needed, and to then present confirmation hearing evidence to show the Court the variety of state law rights that would or may be taken away due to the impact of the proposed Plan injunction, the TDPs, and the terms of the Trust. CONCLUSION For the foregoing reasons, the Court is urged to manage current and future proceedings with the knowledge that the Plan proponents chose not to provide due process notice to current holders of cross-claims in underlying cases. In other asbestos Chapter 11 cases, courts have

PHLDMS1 4942379v.1

refused to issue injunctions and other expedited relief when, as here, the parties seeking them have themselves created their own problems through their own actions. See In re Federal-Mogul Global, Inc., No. 01-10578, slip op. at 129-136 (D.N.J. 1/20/06) (Hon. Raymond T. Lyons) (copy attached as Exhibit 1). Accordingly, this Court can and should extend existing deadlines to allow all creditors a reasonable opportunity to analyze the complex Plan and its numerous ramifications. The time for conducting discovery should be extended for at least 60 days.

Dated: New York, New York December 24, 2008

Respectfully submitted, WHITE AND WILLIAMS LLP __/s/Karel S. Karpe____________________ Karel S. Karpe One Penn Plaza/250 W. 34th St. Suite 4110 New York, NY 10119 Telephone: 212-244-9500 Email: karpek@whiteandwilliams.com and Christian J. Singewald (DE 3542) Marc S. Casarino (DE 3613) White and Williams LLP 824 N. Market Street, Suite 902 Wilmington, DE 19801 Telephone: 302-467-4510 Email: singewaldc@whiteandwilliams.com Attorneys for Volkswagon Group of America, Inc.

PHLDMS1 4942379v.1

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UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY - - - - - - - - - - - - - - x IN THE MATTER OF: : : CASE NO: 01-10578(RTL) FEDERAL MOGUL GLOBAL, INC., : T&N LIMITED, ET AL : January 20, 2006 Debtor : : - - - - - - - - - - - - - - x TRANSCRIPT OF MOTIONS BEFORE THE HONORABLE RAYMOND T. LYONS UNITED STATES BANKRUPTCY JUDGE A P P E A R A N C E S:

For the Debtor: 11 12 13 For the Debtor: 14 15 16 17 18 19 United States Trustee: 20 21 22 23 24 25 Counsel for Official Committee for Unsecured Creditors:

PACHULSKI STANG ZIEHL YOUNG JONES & WEINTRAUB BY: JAMES E. O'NEILL, ESQ. 919 N. Market Street Wilmington, DE 19801 SIDLEY AUSTIN BROWN & WOOD BY: KEVIN LANTRY, ESQ., JEFFREY BJORK,ESQ. Bank One Plaza 10 South Dearborn Street Chicago, ILL 60603 SONNENSCHEIN NATH & ROSENTHAL BY: TOM LABUDA, ESQ. 8000 Sears Tower Chicago, Ill 60606 RICHARD SCHEPACARTER, ESQ. 844 King Street Wilmington, DE 19801

Operator: Betty Akin -----------------------------------------------------TERRY GRIBBEN'S TRANSCRIPTION SERVICE 27 BEACH ROAD, UNIT 4 MONMOUTH BEACH, NEW JERSEY 07750 (732) 263-0044 FAX (263) 263-0075

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ADDITIONAL

APPEARANCES:

Claimant 3 For Asbestos Creditors: 4 5 6 7 8 9 10 11 For cancer claimants: 12 13 14 15 16 For claimants: 17 18 19 20 21 22 23 24 25 For claimants: For CNA Insurance: For cancer claimants: Counsel for asbestos plaintiffs law firms: Counsel for Futures Representatives:

ROBERT CLEMENTS (Telephonically) CAPLIN & DRYSDALE BY: PETER LOCKWOOD, ESQ. 399 Park Avenue New York, NY 10022 YOUNG CONAWAY STARGATE & TAYLOR BY: JAMES PATTON, JR., ESQ. 1000 West Street 17th Floor Brandywine Building Wilmington, DE 19801 SEITZ VAN OGTROP & GREEN BY: ROBERT KARL HILL, ESQ. 222 Deleware Avenue Wilmington, DE 19801 SIMMONS COOPER, LLC BY: ROBERT W. PHILLIPS, ESQ. 707 Berkshire Boulevard East Alton, IL 62024 GEBHARDT & SMITH, LLP BY: LOUIS EBERT, ESQ. 9 World Trade Center New York, NY DAVID M. LIPMAN, P.A. BY: JONATHAN RUCKDESCHOL, ESQ. 5901 S.W. 74th Street Miami, FL 33131 STANLEY LEVEY, ESQ. McDERMOTT WILL & EMERY BY: DAVID CHRISTIAN, ESQ. 227 West Monroe Chicago, IL 60606

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ADDITIONAL

APPEARANCES:

For Pepsi Americas: 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For Grover Alexander: For Cooper Industries:

MORGAN LEWIS & BOCKIUS BY: HARVEY BARTLE, ESQ. 1111 Pennsylvania Avenue Washington, DC 20004 TIMOTHY HOGAN, ESQ. SWIDLER BERLIN BY: ROGER FRANKEL, ESQ. 3000 K Street NW Washington, DC 20007

Lantry/Motion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 from the commencement of the case. What a debtor in

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possession, or what a debtor contemplating Chapter 11 filing of asbestos liability considers, among other things, is two potential assets. One of them are the contributions that a

parent or former parent that won't be going into Chapter 11 might be willing to contribute that would be fair and equitable and get 524(g) protection. So you look at the prospective parent or former parent companies, talk to them to see if they have a willingness to make such a contribution. If they do, it's

typical in probably more than 50 percent of the Chapter 11 asbestos cases that are pending to seek an injunction on the very first day because that parent or former parent that's not filing is willing to deal. And you get the injunction

so that they can be motivated to work with asbestos and futures rep to determine the amount of the fair and equitable contribution. Secondly, you look at the potential shared insurance that might exist with that former or existing parent company that's not going in, to see if the debtor's rights to that shared insurance is going to be impacted by the injunction or lack of injunction, vis-a-vis the parent company. And obviously, if the parent or former parent

that's not going in is solvent, and there's a huge plethora of insurance that's available, you may end up saying let's

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just let it be, because it will take care of the asbestos liability on its own in the tort system. But if the parent

isn't that solvent, the ex-parent perhaps isn't that solvent, or if there are problems in the insurance, you may want to stay it so that the limited asset of the insurance, the shared insurance isn't dissipated. With those things in mind, Your Honor, we turn to thinking about Pneumo and Cooper before the filing. And we

recognize that both of them were former parents that might be interested in making a contribution. And we also What we

recognize that there was some shared insurance.

knew from our experience in the tort system defending Pneumo's asbestos liability which Federal Mogul had undertaken in 1998, was that there were gaps in the insurance. And that in fact over those three years we spent

about 55 million out of insurance in defending the Federal Mogul Products lines of asbestos liability, the two lines that we described in our pleadings; the Pneumo line and the Wagner line. So we knew that it would cost Cooper, who had to step into our shoes, some money in the tort system to have to defend Pneumo Abex. We also knew that there was this When we

shared insurance that we might want to tap into.

acquired, when Federal Mogul acquired Wagner in '98 there was about 1.2 billion in insurance available. We also knew

Lantry/Motion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 something else, Your Honor.

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Cooper had been a rival in the

friction business with Federal Mogul before we acquired Wagner. And we knew that that rivalry was significant. We

also knew that -THE COURT: MR. LANTRY: THE COURT: Can I just interrupt you? Certainly. Can you point me to the pleading that

sets forth these facts you're talking about with regard to insurance and the experience of Federal Mogul. MR. LANTRY: Your Honor, the pleading that

describes it is probably best the memorandum of points and authorities in support of the preliminary injunction. And

it describes the various history of the purchase agreement. The actual recitation of the 55 million that we expended comes from the SEC filings, and we did not put that fact in those papers. THE COURT: And the insurance coverage? The 1.2

billion and so forth, where is that? MR. LANTRY: Your Honor. That's in our disclosure statement,

Let me just back up for a minute and describe a What occurred in terms of the

little bit more of the facts.

primary history of Federal Mogul Products, is it came from the origins of Wagner brake business which was created in the 1920s and put asbestos in brake linings. Wagner was

ultimately acquired by Federal Mogul Products in a stock

Lantry/Motion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 acquisition in '98 from Cooper. And so, Federal Mogul

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Products changed the name from Wagner to Federal Mogul Products and stepped directly into that liability. Before the acquisition by Federal Mogul Products in 1994 Wagner, which was at the time owned by Cooper, acquired a separate line of friction business which was Pneumo Abex, which had also been putting, for many years, asbestos in the brake linings. And so there are two streams

of asbestos liability, two streams of business operations that come into Federal Mogul Products that for many years put asbestos in the brake linings. division of Pneumo Abex. So you have the friction

At one point Pneumo Abex thus was

a predecessor in interest to what is now Federal Mogul Products. You also have Wagner, which at one point was a

predecessor of the actual debtor, who was also doing that. What occurred in '94 was that Wagner entered into a deal with Pneumo Abex that says we will indemnify you for your asbestos liability in exchange for you giving us rights to your insurance to pay for that. In addition, Wagner said

I will assume, in the contract, we will assume your liability. This was an asset purchase agreement which had

all the trappings, it was lock, stock and barrel, all the trappings of successor liability. What then happened in '98 when Federal Mogul purchased Wagner, is that again there was, this was a stock

Lantry/Motion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 purchase agreement.

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Federal Mogul Corporation guaranteed

Cooper's, rather indemnified Cooper for its asbestos liability from the brake business while it owned Wagner, and then stepped directly into the shoes of Cooper's indemnification of Pneumo Abex for that liability, but also stepped into the benefit of the shared insurance. So when

Federal Mogul stepped in in '98 to defend Pneumo Abex and to defend Cooper for these two separate lines of asbestos liability, it had rights to about 1.2 million, as we set forth in our disclosure statement, to the shared insurance. To date, at the present time rolling forward, there's about 800 million left of that shared insurance. At

any rate, going back in time now to the petition date, as we were looking at these facts we knew that we had been in quite a few disputes with Cooper over the -THE COURT: MR. LANTRY: THE COURT: Let me interrupt you. Certainly. Why don't you tell me something more How did that work? You said

about this shared insurance.

that when Wagner acquired the friction products division of Pneumo Abex it also acquired rights and its insurance. did that work? MR. LANTRY: There's a separate insurance How

contract, and we can give it to you, it's part of the proof of claim that Cooper filed. And we have here, if you'd like

Lantry/Motion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that? MR. LANTRY: a copy.

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But there's a separate insurance agreement in the

'94 asset purchase agreement that basically assigns the rights to, whenever there is this indemnification by Wagner of Pneumo Abex, it can draw on and be reimbursed from the insurers for that claim. THE COURT: And obviously Pneumo's --

Are the insurance companies part of

I don't know that they were, but I All I can say is

believe that they have not objected to it.

I know during the period of Federal Mogul indemnifying Pneumo Abex and Cooper we readily drew on and worked with the insurers and didn't find them objecting aside from, you know, the usual objections you run into on insurers paying on any asbestos claim. a fair arrangement. They were not resisting, this is not

So when we filed the petition, based on

our experience with Cooper in terms of any number of fights over the 1998 stock purchase agreement, we knew a couple of things. We knew that a deal with Cooper wasn't going to be easy to get. company. We also knew that Cooper was a very solvent

And we also knew that they were sitting out there

in the tort system with their contractual indemnity that they now had to perform, because we were stopping to perform on behalf of Pneumo Abex. So we knew that they were going

to be motivated to come back and talk to us, if they didn't

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talk to us at the beginning, about a fair and equitable contribution so that they could step into the protections of 524(g) as a former parent with liability for what is the Federal Mogul Products asbestos liability. commencement of the case -THE COURT: MR. LANTRY: Has anybody sued Cooper? Your Honor, we have two witnesses At the very

here today; Diane Schumacher, general counsel, who can undoubtedly testify. But in our discussions, they have said

that they have been sued in the tort system directly on behalf of Pneumo Abex. But we can, we'll proffer the

witnesses later on if you'd like, or any confirmation at this point. THE COURT: Ms. Schumacher. Yes.

MS. SCHUMACHER: THE COURT:

You are the general counsel for -General counsel of Cooper

MS. SCHUMACHER: Industries. THE COURT:

-- for Cooper.

Has your employer been

sued by any injured parties claiming that Cooper had some derivative liability for the asbestos products of Pneumo Abex? MS. SCHUMACHER: We have been sued under an Yes.

allegation of a successor to Pneumo Abex. THE COURT:

And do you know how many times or how

Lantry/Motion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 many of these existing claims fall into that category? MS. SCHUMACHER:

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I don't know how many times.

will tell you there have been many cases where they have named Cooper separately from Pneumo Abex under a theory that we are liable, and also under the theory that we are a guarantor, Cooper's liability as guarantor. THE COURT: As guarantor -To Pneumo Abex.

MS. SCHUMACHER: THE COURT:

-- to Pneumo Abex. Yes.

MS. SCHUMACHER: MR. PHILLIPS:

Your Honor, we would ask, if she's

going to testify as a witness could we have her sworn? THE COURT: Can I have your appearances? Robert Phillips for Simmons Cooper, We don't object to But if we're going

MR. PHILLIPS: Your Honor.

The cancer claimants.

counsel's offer of proof and discussion.

to get into actual testimony of what's been happening and what the facts are we would ask -- She has been proffered as a witness. We ask she actually be sworn. Okay. Well, I'm just taking a I don't know if we're going Thank you very much.

THE COURT:

representation at this point. to get into testimony today. MR. LANTRY:

At any rate, Your Honor, the point of

the matter in terms of background information is that we immediately, upon filing the case, knowing that Cooper and

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Pneumo Abex were potential sources of assets to contribute to the trust, and knowing that they could be dissipating our shared insurance, and that their claim would be exceeding given the gaps of the insurance, their claim would be growing every single day in the tort system because they were defending Pneumo Abex and Federal Mogul had directly indemnified them, we contacted them. And we contacted them

regularly, methodically, probably on a monthly basis, Cooper and their counsel. Do you want to make a deal, can we talk, And that happened for pretty much Little talks, but not too

what can we do on this?

the first two years of the case. much development.

When we struck our main deal, as you're aware in, you know, 2000, late 2000, early 2004 and started filing a plan, things became very active. The asbestos committee and

futures rep began to negotiate directly with Cooper. Debtors were also involved. But what was going on is what

we suspected from the very beginning, knowing our relationship with Cooper. We needed a deal with Cooper, but It

we also were very likely to be litigating with Cooper. was going to be one or the other. two tracks. As we got close to the disclosure statement,

And they progressed on

Cooper filed a very vigorous objection to the disclosure statement, raising a number of confirmation objections. Of

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the 25 or so objections you may recall, Your Honor, we gave Cooper the best objection award. to the voting procedures. On the courthouse steps a deal was struck, as you may recall, where the skeleton, the template of the deal we're here telling you about today was agreed to. And so It also filed objections

we, after the Court approved the disclosure statement on the hearing on May 13th, it took us about three weeks to incorporate that. We basically took the skeleton of this And

deal, put it into our plan and disclosure statement.

the missing piece was the amount of the fair and equitable contribution. In exchange for that, Cooper basically withdrew its objection to the disclosure statement, said it would not object to confirmation of that plan, and we negotiated. The

bad news is that the negotiations with the futures rep and the asbestos committee and Cooper fell apart, and the amount of that fair and equitable consideration for 524(g) protection did not get achieved. And we went back into

litigation mode and Cooper proceeded to file objections, or sorry, file additional proofs of claim. It originally filed a 17 million proof of claim for its indemnification obligation. That went up to 102 and You

then 132 by the time we got to the voting deadline.

will recall, Your Honor, they objected to the voting and

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asked for special permission to vote 47,000 asbestos claims that they had settled in the tort system so that they could block, essentially, confirmation of the Federal Mogul Products plan. And Your Honor ruled that they could only

have one vote rather than 47,000. They proceeded in the litigation mode, appealing that to Judge Rodriguez and then to the Third Circuit during most of 2005. And we continued to negotiate off and on

through the Asbestos Committee, futures rep and some on our own with Cooper. What finally happened once again, as we

neared the sign of a plan and they continued to take some pain in the tort system, and in the fall of 2005 the FAIR Act was fading once again, negotiations really heated up. And ultimately we achieved the deal that we have today in light of the fact that there was a deal when the administrators and Cooper realized that we were getting once again close to the finish line. As we were struggling with should we reach this deal, we were all considering, the plan proponents, what it would take to get to confirmation in light of Cooper's positions. As you may recall, they had two legal entities

where they got the rejecting votes of a class, and so we would have to cram down two debtors. We also heard the

Cooper objections to the plan which basically said that although the Cooper claims, which as of today are about 150

Lantry/Motion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 million during those four years, but as you expect the

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indemnification to continue in the tort system for the next 40 years will be multiples of that, their claim, big claim is channeled to the trust like all of their indirect asbestos claims and all of these 524(g) cases. But they observed that the plan doesn't make a provision for that payment. So, they knew and we knew that

there was going to need to be some changes in the plan in order to handle their claim, or there was going to be ferocious litigation over the nature of their claim. And we

have been, as we've talked about either the deal or the litigation with Cooper, contemplating what it would take to overcome their objections and what nuclear warheads we could shoot their way. And I'm not going to reveal our hands at

this point, but we know, the plan proponents know that it would take a lot of work, we could be successful but it would take a lot of work and a lot of expense and a lot of delay given their position with claims against many many debtors for the large amount. THE COURT: the history here. In addition --

Let me just understand one thing in

At the time of the hearing on the

disclosure statement, and the third amended joint plan, the disclosure statement described in the third amended joint claim, if I understood you correctly, you resolved, the debtor resolved the objections by Cooper and revised the

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plan to have a provision where Cooper would be one of the parties protected by the 524(g) injunction. MR. LANTRY: THE COURT: That's correct, Your Honor. But there's no funding for that. But

you also said that Cooper's claims would be treated under the plan as well. Does that -Let me divide the two. Cooper,

MR. LANTRY:

making the fair and equitable contribution addition to the plan that was part of that skeleton at the disclosure statement time, was on the premise that they would make a fair and equitable contribution and essentially reach the settlement that they have today, walking away from their claim, making a fair and equitable contribution and having our shared lines of asbestos liability channeled to the trust. And in light of their fair and equitable That didn't

contribution they would get the protection. work. THE COURT: indirect claim. MR. LANTRY: THE COURT: MR. LANTRY: Right.

So now they're back to having an

And we know that --

And how is that indirect treated? -- if that add-on of the Cooper deal

that was in the disclosure statement wasn't there and we had to treat their claim, we're going to have to redo the plan to treat that claim, or else we're going to have to disallow

Lantry/Motion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that claim. THE COURT: MR. LANTRY: Okay. I thought there was --

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And we're going to have to recut the And I can't

whole pie amongst the various constituencies.

tell you now which creditors would be hurt, but let's suppose the Cooper claim was multiples of 150 million and it had to be treated, somebody is going to have to lose because there's a finite corpus. The bottom line is the existing

creditors of Federal Mogul would be hurt, both by having to treat that claim and by the delay it would take to recut this plan. I think at this point, Your Honor, that's sufficient background in terms of why we're here and why this is a very good thing. merits of the motion. And we need to talk about the

I know Your Honor has a habit of

reading the pleadings, so I don't want to spend too much time on what undoubtedly you've already read. THE COURT: Well, don't assume. Because I got the

binders about 24 hours ago, and I think there are about two and a half binders that deal with this motion. have missed something in there. MR. LANTRY: Your Honor, I think the beginning And that's the claims that are As we talked So, I may

premise is a factual one.

being enjoined are the claims of the debtor.

about the streams of liability, Federal Mogul Products

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either by theories of successor liability or its factual contractual assumption of the liability that is through Wagner's assumption of the Pneumo Abex line, or Wagner being directly as the same legal entity that is now Federal Mogul Products, put asbestos into the stream of commerce. Both of

the two streams that we are trying to enjoin are Federal Mogul Products liabilities. We have been sued in the tort system, prepetition, unsuccessor liabilities for the Pneumo stream as well as the Wagner stream. It would be imprudent for Federal Mogul

Products to emerge as a reorganized company without having the Pneumo Abex claims channeled to the Trust. I make this

point because this is not at all like COMBUSTION ENGINEERING in which Basic and Lummus were basically trying to get their own independent stream of asbestos liability, which was not a liability of the debtor, channeled to the Trust. not what we're doing here. I think the second critical point, and this goes to subject matter jurisdiction for Your Honor to enter the injunction, is the fact that the liability of Cooper and Pneumo Abex for the asbestos liability is inextricably tied up with these Chapter 11 proceedings on account of the contractual indemnity that we stepped into, that Federal Mogul Products stepped into when it acquired Wagner, which had in turn indemnified Pneumo Abex. And so each time there That's

Lantry/Motion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is a liability that Cooper incurs in indemnifying and

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protecting Pneumo, they in turn have a claim back against Federal Mogul Products. We've seen this by their proofs of

claim filed and by their testimony now that they've incurred 150 million during the post petition period. As a result, there is an immediate outcome that is directly impacting on the size of the debtor's liabilities every time a Pneumo Abex claim goes forward. There is also

an immediate impact on the shared insurance because Cooper is going to immediately draw on that shared insurance. So

it is inextricably tied to these Chapter 11 proceedings for those claims to be going forward. As I say, we would have

sought to stay this long ago, Your Honor, save for the tactical card of the fact that we suspected, based on all that I described to you, that Cooper and Pneumo Abex would soon come to the deal that they struck, because they were going to take it in the tort system. And we were ultimately

right in terms of the deal that they have offered to put the 700 million into a trust to pay Pneumo Abex claims. What we submit, Your Honor, is that that is going to be something that could be beneficial as we have, you know, heard from the Asbestos Committee and futures rep, that could be net net beneficial for the greatest number of the Pneumo asbestos claimants who are being enjoined. like to put it to the vote and let them see. We'd

In addition,

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we will get the benefit of the waiver of the Cooper claim. That's a large claim. We would have to recut the plan, as I

described, to deal with that. In addition, there is some additional shared insurance that I haven't talked about, that comes from the history of Wagner. Wagner was ultimately owned, before

Cooper acquired Wagner it was owned by Studebaker and Worthington, and then McGraw Edison which was acquired by Cooper. And they have their own streams of insurance which

we've described again in our disclosure statement, and which is the funding vehicle under our plan in the trust distribution procedures for the Wagner stream of asbestos liability. Under Cooper's rights to that insurance and the

deal with Dresser (phonetic) that Your Honor approved back in December of 2004, Cooper and Federal Mogul Products share a split in the balance of that insurance that didn't go to Dresser. But in order to access that and make any commutation deals with insurers we have to have their agreement. Under this deal we've worked that out. And so

this is beneficial for the existing Wagner stream of asbestos liability as well in terms of how our plan will work. Again, I'm going to the related to jurisdiction why

all of this is tied up and really impacts on the debtor. Your Honor, in almost all of the other Chapter 11

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cases that are currently pending, and it's worth citing them so that you have a sense of the number, this type of relief has been sought and granted. It's in WR GRACE, it's in

BABCOCK, it's in GI HOLDINGS, PITTSBURGH CORNING, HARBORSON (phonetic) WALKER, REFRACTORY AMERICAN, sorry, NORTH AMERICAN REFRACTORY COMPANY. It has been a regular process

for the Courts to grant an injunction staying claims against a third party when there is contractual shared insurance and when it is the debtor's liability that is also being derivatively sought against these other third parties. is not unusual relief that we're asking for. What is critical to note however, is that this is unlike some of those scenarios that the Third Circuit in COMBUSTION ENGINEERING or in PACOR says is not appropriate because it is not so inextricably interrelated, such as -And which occurred at the very commencement of these cases when all the OE manufacturers tried to enjoin actions against them on contribution claims that were not contractual. And what the Third Circuit has told us in This

PACOR and in COMBUSTION ENGINEERING is that it needs to be an express contractual indemnity for which the debtor would be liable. When it's like that there is this jurisdiction

that has been rightfully granted by these other courts. So with you having jurisdiction, Your Honor, to issue this injunction, we turn to the usual requirements of

Lantry/Motion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the injunction. on the merits?

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And the first is, are we likely to succeed And the Courts looking at this, in terms of

the bankruptcy courts issuing preliminary injunctions, will look to are we likely to confirm a plan? So the real

question is, does 524(g) permit this type of relief that is the channeling injunction to these former parent companies; Cooper and Pneumo Abex and some of their related parties, in consideration for a fair and equitable contribution. And I think the critical thing is the exact language of 524(g)(4)(A)2 where it says that these obligations need to be alleged to be directly or, the third parties who are being protected, the claims against them need to be alleged to be directly or indirectly liable for the conduct, claims against or demands on the debtor. And

once again, Cooper and Pneumo Abex have been alleged to be liable, as we've described, in the tort system for these Pneumo Abex claims that are the claims of the debtor to the extent that that liability arises by reason of those third party's ownership or financial interest in the debtor or predecessor in interest of the debtor. And once again, Pneumo Abex owned the friction products division, Cooper owned Wagner. They have this

liability by virtue of their prior ownership of predecessors in interest to the debtor. THE COURT: We think --

But that's nowhere in the pleadings

Lantry/Motion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. THE COURT: No, it's not. that you filed, that I read. MR. LANTRY:

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They're in our reply briefs, Your

You talk about the

indemnity obligations of Cooper. MR. LANTRY: THE COURT: The indemnity obligations of Cooper? Indemnity obligation of Cooper, and

then the subsequent indemnity obligation of the debtor to Cooper. MR. LANTRY: Your Honor, I can point you to where Or if it would be easier, we

in the pleadings we put that.

can offer into evidence right now copies of the actual contracts or the excerpts from the contracts that show you that indemnity, that contractual indemnity. THE COURT: But I'm saying, now you're arguing

indemnity and that's not what you just said when you're referring to 524(g)(4). MR. LANTRY: of 524(g)(4) -THE COURT: This has to be by the reason of the Right. What I'm describing in terms

third party's ownership of the present or past affiliate of the debtor. MR. LANTRY: And your question is where do we have

into evidence that these, that Pneumo Abex and Cooper owned these prior divisions?

Lantry/Motion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: No.

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No, that people are suing them by

reason of their ownership of a financial interest in the debtor or a past or present affiliate of the debtor. MR. LANTRY: Your Honor, I can submit to you a

number of complaints that were filed both prepetition and post petition. THE COURT: MR. LANTRY: Well, today is the day. We have them here. We have our

general counsel who is willing to put them into evidence. They're here right now and we would like to proffer them. Complaints by which Federal Mogul Products has been sued for the obligations of Pneumo Abex for the asbestos history of Pneumo Abex under explicit successor liability theories. THE COURT: MR. LANTRY: THE COURT: MR. LANTRY: That's Federal Mogul Products. That's right, Your Honor. Right. But what about Cooper?

Your Honor, I will, you know, leave

it to Cooper's counsel to put Diane Schumacher on the stand who will also proffer that evidence. It's in her

declaration and I think she's quite willing to testify. That is the -THE COURT: MR. LANTRY: Where is it in her declaration? Your Honor, if it isn't, we have her

here and I'd like to defer to her counsel to put her on the stand --

Lantry/Motion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 now. MR. LANTRY: THE COURT: The legal -Hold on a second. I want to THE COURT: MR. LANTRY: THE COURT: That's not fair --- in terms of that liability. Well, that's not fair to the

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defendants to come up with this evidence now -MR. LANTRY: context -THE COURT: All right. I'm going to take a break Again, Your Honor, let me give a

interrupt now because I've been discourteous to Ms. Akin. Let's take a break and let her have a little time. come back at 12 o'clock. All right? We'll

(Court stands in recess) (Court resumes in session) MR. LANTRY: Thank you, Your Honor. I want to go

back to where we were when we stopped, and just make sure I clarify what Your Honor was showing a furrowed brow over. Where we were, I think, was the issue of in order to issue an injunction the Court needs to find that we're likely to succeed on the merits of a plan that could channel the liability, the Pneumo asbestos liabilities to the Trust and protect Pneumo Abex and Cooper, these third parties who at one time were owners of the business that ultimately came to be Federal Mogul Products. And the question I'm wanting --

Lantry/Motion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 there?

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This is a confirmation issue that, you know, I'm sure we will address again. succeed. Right now it's are we likely to But I wanted to understand, was

That's the issue.

Your Honor focusing on the legal issue, and would it be useful to walk carefully through the 524(g)(4) language? THE COURT: know how you -MR. LANTRY: THE COURT: Absolutely. -- how you propose to confirm a plan Yes, I think so. Because I'd like to

that has an injunction that protects Cooper under 524(g). MR. LANTRY: Your Honor, do you have the code

I made copies of 524(g) -- Perfect. THE COURT: MR. LANTRY: Disregard the red underline. You're focusing on Cooper, so let's

speak of Cooper? THE COURT: MR. LANTRY: Yes. The language, again it's (4)(A)2, is

this third party Cooper is alleged to be directly or indirectly liable for the conduct or claims against the debtor by virtue of its, now I'm going to one, third party's ownership of a financial interest in the debtor. Cooper

owned Wagner, and during the period in which it owned Wagner, Wagner incurred asbestos liability, did things that gave rise to asbestos liabilities. And it is alleged, and

all we have to find for 524(g) to apply is has Cooper been

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alleged to be directly liable or indirectly liable for what Wagner did during that period of ownership. issue. THE COURT: MR. LANTRY: By reason of its ownership. By reason of its ownership. And what That's the

typically happens in the tort system is if a parent company is managing and controlling that subsidiary that ultimately became the debtor, it is regularly and often alleged to be liable for it. And that's what they need to get the

protection from, so that they're not continued to be sued in the tort system, and why they're willing to make the fair and equitable contribution. THE COURT: See, that fact I couldn't find in the

record that was submitted in support of this motion. MR. LANTRY: THE COURT: That is the fact that Cooper has -That Cooper has been sued by reason of

its ownership of Wagner or the Pneumo friction products division. MR. LANTRY: perhaps -THE COURT: What I've been told in the record is Okay. So let me put aside then,

that Cooper has been sued because it indemnified Pneumo. And Pneumo has been sued, so they've had to pay on these indemnity claims. And I don't see, I guess, -Let me be practical --

MR. LANTRY:

Lantry/Motion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 system. THE COURT: indirect liability. MR. LANTRY: Let me be practical in the tort -- one could argue that that's

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The overwhelming majority of all of these claims The reason is because it's

have been sue Pneumo Abex.

easiest to prove that it was Pneumo Abex and because Cooper is going to contractually step up and pay for that. But

let's suppose Pneumo Abex is no longer around and they need to sue somebody else. sue it. Cooper is quite sure that they will

And again, it's this alleged liability that

motivates anybody in the chain of ownership of a division or a corporation that put asbestos in the stream of commerce that's subject to attack in the tort system, and who are motived to want to come and pay fair and equitable consideration to get the protection. So that's where it's

coming from, and I certainly hold that you need to have a little bit of evidence in that. a moment. So let's put that aside for

Do you have any concerns about Pneumo fitting Should we walk that through? Let's see. Well, Pneumo is, the Federal

into 524(g)?

THE COURT:

assets of Pneumo were acquired by Federal Mogul. Mogul Products. MR. LANTRY:

It seems to us that that is the

predecessor in interest of the debtor. THE COURT: Yes, right. I don't think I have a

Lantry/Motion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 problem with that. MR. LANTRY: Thank you, Your Honor. Again,

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focusing on the big picture, we'll certainly want to provide some evidence that can get you more comfortable with Cooper. But again, in perspective, watching what's happened in some of the other cases -THE COURT: MR. LANTRY: THE COURT: this again. Well, wait a minute. Let me just --

-- this is certain something that -Hold on a second. Let me just read

I'm not sure that Pneumo fits in the language

of 524(g)(4) either. MR. LANTRY: It goes to the issue of how we, I

think, define predecessor in interest. THE COURT: in interest. No, I understand they're a predecessor

But it's that predecessor is alleged to be

directly or indirectly liable for the conduct of, claims against, or demands on the debtor by reason of such third party's ownership in the debtor or predecessor in interest of the debtor. MR. LANTRY: The way we get there, Your Honor, is

the Pneumo Abex friction products division, just the division, put the asbestos in the stream of commerce. And So

that has migrated down to be the debtor, that division. the debtor caused that conduct that gives rise to the

liability that is shared with Pneumo Abex, because Pneumo

Lantry/Motion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Abex once owned that friction products division. THE COURT: MR. LANTRY: Yes, okay.

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There are other ways, Your Honor, we

look to section 4, the third party's involvement in a transaction changing the corporate structure. Once again,

Pneumo Abex sold that division, changed its corporate structure. Once again, Cooper could easily come into there

in terms of it was also in a transaction that was changing the corporate structure. There are a variety of other ways.

What I would point to Your Honor is there are two cases out there where injunctions have been issued in very very factual similar situations, and that's HARBORSON WALKER and NARCO (phonetic), where we had prior third party, prior owners that are third parties who once owned a division that had been then spun off, that ultimately became the debtor. And the injunction protects that parent that one time owned some of that division. So courts have looked at a very parallel structure and found, at least for purposes of the injunction, one of them has had a confirmation hearing and one the confirmation hearing is yet to happen, but the point is other courts have looked at similar factual situations. So I think there is a

basis, both in the reading of the code and the precedent for you to at least find that there is a likely chance that we could get to confirmation on this structure.

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Again, the other, the likelihood of the merits. The other thing we point to, Your Honor, is a lot of this is again the will of the people. And if the Pneumo asbestos

claimants, when the vote is put to them, when they look at this 700 million and the certainty of getting it, and what the trust distribution procedures will pay for them, they'll vote it up or down. They'll say we like it, we think this And that is the success on

is good for us, or they won't. the merits. vote.

We won't get to confirmation unless we get that

You won't even have to agonize about the 524(g)

language until we get that vote. And so there is a way where the real parties who are being enjoined can rather quickly say, we think this is good for us, or we don't. We've heard from, you know, two

percent or less of them that don't like it, which to me suggests that 98 percent of them do like it. And the

Asbestos Committee represented by Caplin and Drysdale who's been very good at predicting how the votes come in in these other Chapter 11 cases where they almost always represent the committee, thinks that we'll get the vote. So we think

that there is a likelihood that we'll get the vote that we can proceed to successful confirmation. And I think that's

what you need to think about in terms of what you need to struggle with for an injunction. Your Honor, there's been the issue of the

Lantry/Motion 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 balancing of harms.

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Certainly we've described the harm that

would come from Cooper walking away from this deal because they don't get the injunction. This deal, without this deal It will be harmful for

confirmation will be slowed down.

the larger constituency of creditors in Federal Mogul, recutting the deal, all the time it takes to figure out how to get a plan to go forward over their objection. are similarly situated asbestos claimants. But there

500,000 of them

is the current estimate in existence today in the whole Federal Mogul family who are waiting to get paid, and have been waiting for four years. And when you balance the harms, I think it suggests strongly that this is a quickly way to payment for a hugely larger number of people who have so far voted in favor or this, and who we think this additional subset, when they appreciate the 700 million that's certain to go to them, will also vote the Pneumo asbestos claimants who would be enjoined. Your Honor, there's the public interest. again, I think this is the ratable, fair efficient bankruptcy code being the only model that has yet been created in this Country to solve asbestos liability as opposed to the tort system. And undoubtedly, there are some And once

people who will roll the dice and do better in the tort system. But when you think of the greater good of the

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whole, that is all of the asbestos claimants, the best way to test that is put it to the vote. And that's why we think

the public interest would suggest giving the injunction so that we can put the disclosure together and the modified plan and get this out to a vote and see if the Pneumo asbestos claimants like this as a better treatment than what they've got. Your Honor, there is an issue that has been raised, and I'll quickly go over it, and that's a procedural issue in terms of serving the 38,000 Pneumo asbestos claimants with the summons. THE COURT: MR. LANTRY: THE COURT: You don't have to address that. Okay, Your Honor. Thank you.

I think Judge Stern addressed it in

the MORALO (phonetic) case. MR. LANTRY: Thank you, Your Honor. Beyond that,

Your Honor, I would simply note something of significant import. We have completely exempted, through what we

predicted was a deal in our reply papers, the Mallia claimant. The Mallia claimant is unique, they have won a

judgment, they have had a supersedeas bond posted by Pneumo Abex. And we think that under those unique facts that it is

appropriate for them not to be subject to the injunction. And we have shared with them a modification of the preliminary injunction order that would exempt them so that

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they can go forward to a nonappealable judgment, and if need be enforce on the supersedeas bond while reserving our right to come back to you if we want to and join the action on the bond. But we have agreed that that's the best way to deal

with their unique circumstances and some of the facts that they've presented, and we've agreed on the form of that order. Your Honor, other than that I would say again, we have John Gasparovic, our general counsel, and Diane Schumacher, Cooper's general counsel. And I think you

probably will want to briefly inquire of Diane on this legal issue in terms of some evidence you'd like to have in. But

we also are joined by the Asbestos Committee and futures rep who represent this very constituency and who are at the heart of the negotiations. heard. THE COURT: Thank you. Good morning, Your Honor. Peter And I think they should be

MR. LOCKWOOD:

Lockwood for the Asbestos Claimant's Committee. THE COURT: Good afternoon. I guess you're right. It's

MR. LOCKWOOD: afternoon. Thank you.

I have one slightly different take

on one issue that I'd like to present to the Court, which has to do with the related to jurisdiction question. I

believe actually that this is not related to jurisdiction,

Lockwood/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 it's core.

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And the reason that I would argue that it's core It's part of the Bankruptcy

is that 524(g) is a statute. Code.

And the definition of core is arising under or So a 524(g) injunction is clearly a core You can't get it outside of bankruptcy. You can't get it outside of a plan. You can't get it outside of a plan.

arising in. injunction.

THE COURT:

MR. LOCKWOOD:

However, 105 is, as we learned from the case law, an ancillary mechanism to protect the Court's jurisdiction to do things that it has core jurisdiction to do. It is not in

and of itself a jurisdictional creating device, and it doesn't create substantive rights. But it does give the

bankruptcy court the power to protect things. The evidence here today is that this injunction is needed in order to protect the plan proponents' stated intention and agreement to propose a 524(g) plan that will in fact issue the very same permanent 524(g) injunction that's sought to be entered as a preliminary injunction now. And therefore, it seems to me that the issue of whether or not the Court can issue a preliminary injunction to protect the 524(g) opportunity to issue a permanent injunction -Remember, the permanent injunction, we've been told by COMBUSTION ENGINEERING that you can only issue a 524(g) injunction at the plan stage for asbestos. a 105 injunction. You can't issue

But the courts have uniformly taken the

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position that you can issue a 105 injunction in order to protect the court's power to issue the 524(g) injunction. So I would argue that it's core. If you compare

it with the cases relied on by the objectors, PACOR and the earlier FEDERAL MOGUL decision, neither one of those cases involve protecting the plan proponents' stated intention to propose a 524(g) injunction. PACOR was before 524(g),

didn't involve it at all, and FEDERAL MOGUL you had interlopers, three automakers who came in here and said remove all our claims to the Federal Mogul bankruptcy because we'd like to talk to people about maybe having either -- What they really wanted to do was commandeer Your Honor to make DALBERT rulings that they didn't have any claims against them. It has nothing to do with 524(g). So

those cases are totally dissimilar in terms of the related to function here. With respect to the merits, I would like to -- It seems to me the issue boils down to do we have a reasonable prospect of ultimately getting a 524(g) injunction. And

Your Honor has exhibited some concern about whether there's a technical qualification here. And at the risk of perhaps

repeating something that you went through with Mr. Lantry, I would like to just emphasize a couple of points here. issue here is whether the third party is directly or indirectly liable for claims against the debtor. It doesn't The

Lockwood/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 say claims, it says indirectly. Now, let's look at Cooper and let's look at Federal Mogul Products. claims.

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We're talking about Pneumo Abex

Pneumo Abex was an unincorporated division, excuse

me, the friction division was an unincorporated division and you had an asset sale, in effect, to Wagner. Wagner,

through Moog Automotive which was a rename of Wagner through which, and Moog Automotive is the name changed to Federal Mogul Products. So the Wagner business with the Pneumo Abex Federal Mogul Product is

assets is now in Federal Mogul.

alleged, for example by Cooper, to be indirectly liable for claims against Pneumo Abex's friction division because it's indemnified. THE COURT: We don't care about what Cooper

alleges, because Cooper is the one that's seeking to be protected by the 524(g). MR. LOCKWOOD: I understand. But the

qualification here talks about how the liability arises. And what Cooper is saying in effect, is these -THE COURT: And it's not the direct or indirect

liability of Federal Mogul Products, it's the direct or indirect liability of Cooper. MR. LOCKWOOD: Well, Cooper is indirectly liable

for the Pneumo Abex claims because it indemnified Pneumo Abex when it acquired the, when Wagner acquired these

Lockwood/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 liabilities and then Cooper acquired Wagner.

90 And so its

indirectly liable for the Pneumo Abex liabilities as well. And those liabilities are created by plaintiffs. THE COURT: ownership? MR. LOCKWOOD: Its ownership. It gave the And is that by reason of its

indemnity because it became an owner.

That was -- I mean,

ask yourself why are the plaintiffs here objecting to this injunction protecting Cooper. If Cooper isn't liable for They're here

the Pneumo Abex claims why do they care?

because their position is Cooper is in fact liable for the Pneumo Abex claims because when it became an owner it indemnified Pneumo Abex for those claims. And that's a form

of indirect liability, if you will, of Cooper for those claims. And those claims are claims against the business

which is now owned by Federal Mogul Products and which Federal Mogul Products has also indemnified both Pneumo Abex and Cooper, and therefore is liable for those claims. All these entities, Pneumo, Cooper and Federal Mogul Products are either directly or indirectly or possibly even both directly and indirectly liable for the claims against the Pneumo Abex unincorporated division. And

predecessor in interest, which is where you start here, is not a corporate definition. You can have an unincorporated If somebody goes

business that's a predecessor in interest.

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out and buys an unincorporated business and puts it in a corporation, the unincorporated business is the predecessor in interest of the incorporated business. And otherwise, and successor liability, whether through an asset sale or a merger, is a common forum whereby the successor becomes liable for the claims against the predecessor in interest. So it's my submission, Your Honor,

that both Cooper and Pneumo Abex will do and will be shown to be, at confirmation, to be eligible either under Subsection 1, or as Mr. Lantry pointed out, under Subsection 4 where you talk about changing the corporate structure. Because there you had assets being sold and subsidiaries being purchased and sold, and that changes the corporate structure of the entities that own them. The final point I'd like to make has to do with why my committee is a co-plaintiff. This committee, like

the committees that we represent in many other cases, is not in the business of going out and looking to find ways to do favors to nondebtors. We're not interested in that, and we The problem we've

haven't been paid anything to do that.

got here is that the Cooper Pneumo Abex claims against Federal Mogul Products are potentially extraordinarily difficult to resolve in this bankruptcy case, absent this deal, as Mr. Lantry explained. And we believe that most of the Pneumo Abex

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claimants are not only -- Well, we believe that all of the Pneumo Abex claimants could, if they wanted to, assert a Federal Mogul claim against Federal Mogul Products. Apart

from that however, they are also, large numbers of them have claims against multiple defendants of who Pneumo Abex is only one. And included within the numerous defendants that

they frequently have claims against are Turner and Newall, Flexitalic (phonetic), Ferodo, Wagner, and the Valuemoid (phonetic) claims against Federal Mogul itself. Fel-Pro. And

There are six different sets of entities in this

Federal Mogul family that have liabilities to claimants. And they're not going to -- And you know, I agree these situations of dying claimants, it's a big problem. And it's terrible that people have to not get their compensation when they should. happens. But you know, bankruptcy

It's kind of like the adage that stuff happens. And we've got six companies, or six sets of People,

It's bad stuff.

liability streams here that are similarly situated.

sick and dying claimants, and they're not getting any money until this plan is confirmed. And while there may be a few Pneumo Abex claimants that don't have claims against anybody else, I don't know how one would go about really determining how many of them, it is the belief, and I couldn't prove it because I can't, I don't know who are all the Pneumo Abex claimants and we

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couldn't possibly bring in 38,000 of them and then cross examine them. But it is the common experience of

plaintiff's lawyers, and therefore of bankruptcy lawyers that represent their clients and these committees, that they, generally speaking, have claims against multiple defendants. And it is the belief that those people and their lawyers, when they see the plan that we're going to propose here, and they think to themselves would I rather have seven potential sets of claims paying or am I really only going to focus on one, namely Pneumo Abex and let the others go hang, that the requisite majority of the Pneumo Abex claimants who will be canvassed separately will decide to vote in favor of that plan. THE COURT: All right, thank you. Thank you, Your Honor. Jim

MR. LOCKWOOD: MR. PATTON:

Good afternoon, Your Honor.

Patton on behalf of Professor Eric Green and the future claimants representative. We too are supportive of the And we

application before Your Honor today, the complaint.

were integrally involved in the negotiations that led to the ultimate resolution with Cooper. negotiation. It was a very tough

In fact the negotiations first began years ago

in a conversation down in Florida between representatives of Cooper and Eric Green and myself. And it's been a long road

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to get us to the point where we have resolved the overall dispute with Cooper and the problems that Cooper represents in this bankruptcy case. The only thing I want to add to everything you've heard so far, is that a fundamental premise to our negotiation with Cooper with respect to resolving its disputes with Federal Mogul and creating a process for which it could get 524(g) injunction, is that at the end of this negotiation we wanted to be assured that we would put together a claims matrix using the funds that would be provided by Cooper, that would enable claimants that are processed into that matrix to receive 100 cents on the dollar as the value of their claim is established by that matrix. We felt the only way that this could be considered fair in our minds, would be if that was a reasonable prospect at the outcome of this negotiation. We can't

guarantee any percentage under these procedures over the long haul, but our goal was to assure ourselves and to be able to assure the other constituents that when we were done we had created a claims matrix and received sufficient funds that we would be able to stand before Your Honor at confirmation and say that we have the ability to pay allowed claims, 100 cents on the dollar. THE COURT: What would the --

Patton/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 -MR. PATTON: THE COURT: claims matrix? I'm sorry, I couldn't -MR. PATTON: THE COURT: And from our point of view --

95

-- Gallias (phonetic) get under that

Would would the Gallias get under that

Do you know? I don't know. I don't know enough But

MR. PATTON:

about any particular claim to be able to analyze that.

it could be relatively easily answered in the near future. The process with respect to the claims matrix though involves the presentation of a claim and, you know, evaluation of the claim under the rules of the matrix and a decision by the claims handling facility whether the claim satisfies the rules of the matrix. paid if it does. And then the claim is

So you have to do an individual claim by

claim analysis and look at the facts. THE COURT: MR. PATTON: He's a mesothelioma victim I think. You mean in terms of what the value

is for a mesothelioma claim? THE COURT: mesothelioma claim? Yes, what's the value of a You haven't come up with a matrix yet. We have not yet disclosed what the

MR. PATTON:

actual values are with respect to the matrix because it's going to become part of the disclosure statement. And Your

Honor, we probably should not, until that is something

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that's able to be shared broadly to the public as a whole. THE COURT: opposition? MR. HILL: Good afternoon, Your Honor. I'm Karl Okay, thank you. All right, in

Hill, I'm a local counsel from Wilmington, Deleware, Seitz Van Ogtrop and Green. My firm actually represents three

sets of asbestos plaintiff's law firms around the Country. And in a moment I'm going to yield the podium to Mr. Robert Phillips of the Simmons Cooper firm who will take the lead today on behalf of the objectors. quotations. I'll just put that in

But as to the other two firms, Your Honor, that

my firm is local counsel for, they are actually preparing for trial next week because one of the 737 asbestos plaintiffs represented by the Goldenburg Miller firm in Edwardsville Illinois and the Richardson Patrick firm which is a spin off from the Ness Motley firm in Charleston South Carolina, is the estate of Mr. Carey who died of meso back in, I think April or actually March 9 of 2005. That trial

is scheduled in Illinois State Court for Monday of next week. And before I yield the podium, again Mr. Phillips will be taking the lead for the objectors, my background candidly Your Honor, is in State court litigation and I appear before the Deleware Court of Chancery very often. And I know, Your Honor, that Section 105 gives you the

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traditional injunctive powers that a court of equity will have. And I've listened to the plaintiff's presentation

today very carefully, and I can tell you without fail that what I've seen today is nothing that I've ever seen before in a preliminary injunction hearing. In Deleware, and again I'm just going by my experience, Your Honor, that is a complaint is filed, it's served, it's answered, usually expedited. discovery to test facts. You have

And I underscore facts because I

don't see a presentation here that gives you enough factual record to enter a preliminary injunction. And if you

listened carefully, which I know you did, the plaintiffs in this case always say the word injunction. They don't focus

on the fact that what they're really seeking by this adversary and the motion for this preliminary injunction is a preliminary injunction. A preliminary injunction is The status quo really,

designed to maintain the status quo.

Your Honor, I submit, is to allow the State court cases, including Mr. Casey's estate's case on Monday, to proceed forward. On behalf of all of the defendants, it's hard to call them defendants, but the defendants that I represent through these three firms, we strongly object to the entry of a preliminary injunction and instead would implore Your Honor to force this side of the room, the plaintiffs, the

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debtors and plan proponents, to get on with it and to seek the channeling injunction through Section 524 in conjunction with an amended plan, so that as the plan proponents described in their reply on page 17, the "democratic process" may proceed. What they've done here is

inconsistent with due process by any stretch of proper procedure under preliminary injunction hearing. THE COURT: Thank you, Mr. Hill. Mr. Phillips?

MR. PHILLIPS:

First I'll warn you, Your Honor,

that I may indeed try to parse 524(g) again, and I apologize for the sixth time today. But I think our brief was fairly

thorough in terms of the overall objections we had, is so we could glean the request, relief being requested by the plaintiffs. But what I've heard today is really, there's One is whether a preliminary The other level, and this

two levels at work here.

injunction is proper right now.

is mostly what's been discussed, is whether down the road, we're not sure when, we're not sure what it will say, we're not sure of all the details of who's going to vote on what, we're going to have a plan that's going to issue an injunction under 524(g). And so we spent a lot of time here today, relatively speaking, trying to parse the language of 524(g) because there seems to be some concern by the Court, and certainly we have a lot of concern that Pneumo Abex and

Phillips/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 action.

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Cooper for instance don't fit within the confines of 524(g) as it's written. liabilities. At least not to the full extent of their

So, we have a problem with the plaintiff's

presentation of whether they can actually confirm a plan. But if we come back to why we're actually here today, to address whether a preliminary injunction should issue, I don't really understand what we're going forward on. The debtors in their reply, because of the objections

of our parties as well as the primary insurers, aren't going forward on the automatic stay applying. I know that the

chief counsel for the debtors made some comments in opening his presentation about the automatic stay, but they've expressly withdrawn that argument. So what we're left with is Count 3 of the complaint, which says 524(g), 105, you know, we've got this great, you know, wonderful settlement that's not been approved by anybody yet, and that will get us an injunction down the line. Therefore this Court should put on its

equity hat and issue a preliminary injunction and stay all proceedings, even though they've tried to put us under the carpet, it's four years later. The last time I checked, 524(g) wasn't a cause of I mean, 524(g), and to the extent they want to use I mean, as Mr.

105(a) to implement 524(g), is a plan issue.

Patton alluded here today, we don't even have a set of trust

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distribution procedures, we don't have an amended plan, we don't even have a definitive agreement with Cooper. Because

if you read the term sheet, the only operative provisions binding on the parties right now are the litigation state provision. They seek it, not that they get it, but that The withdrawal provisions, provisions about

they seek it.

cooperating with insurance, and a couple of other ancillary things you would expect in a preliminary term sheet. So to my knowledge we don't even have a definitive agreement that's actually going to result in this wonderful amended plan that we're all going to vote yes on. And if we

were to move ahead, and I'm just going to jump real quick because I want to get this in, earlier there was an attempt to put the counsel for Cooper on here and talk about whether Cooper and Pneumo Abex have been sued in such a way as to invoke the protections of 524(g)(4)(A). And I think while everyone who's gotten up here has looked at different language in the subsection, to me some of the key language is in the last line of IIi; demands on the debtor to the extent such alleged liability of such third party arises by reason of. No one really wanted to And this kind of goes

focus on to the extent of language.

to the whole problem we have conceptually with what's being requested here today, which is the primary liability and through all of the presentations of factual background,

Phillips/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 what's being lost is Pneumo Abex is the tort-feasor.

101

Prior, long prior to Wagner's acquisition in an asset sale of the friction products business they were the ones that produced asbestos containing products, put it out on the market, failed to warn, and are now being sued for that reason, and have been sued since, I don't know, late '70s perhaps. week. And sued all the way through, you know, last

Then Cooper, through Wagner, bought some of the They agree contractually to defend the claims, part Hey, we'll give you less money if you

assets.

of the consideration.

agree to pay these claims, because everyone knew there were gaps in coverage, I assume, by that point. And so on down

the line, we end up with debtor FM Products, which is a successor to the company that acquired the assets. THE COURT: We end up with whom? With debtor FM Products, which is That just

MR. PHILLIPS:

the debtor that they claim is primarily liable.

seems to stand all sense of what 524(g) and what these sorts of guarantor co-obligor rules in bankruptcy are actually designed to implement. The liability is Pneumo Abex. And the fact that certain parties,

They're the tort-feasor.

one of whom ended up being a debtor in this case, assumed liability long after the fact, long after the tort, can't be used as a justification to go back and wipe the slate clean with the primary tort-feasor just because they wrote a check

Phillips/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

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big enough to have everyone realize that suddenly there's jurisdiction, that the equities support doing this and so forth. THE COURT: What about if people who were injured

by Pneumo Abex Products sue Cooper because Cooper was the parent of Wagner that acquired the business line, and you have the successor interest -MR. PHILLIPS: Well, and that's my whole reason People sue

for focusing on the to the extent language. under varying theories. tort-feasor.

Pneumo Abex is the primary

Normally what would happen is, Pneumo Abex

apparently would tender the case to originally FM Products, later to Cooper, they would pay the claim, gain rights to get some of the monies paid back by insurance. If one, two,

5,000 plaintiffs chose to add account, or add Cooper as defendant and also alleged liabilities for successor liability, for alter ego, for meddling in the corporate affairs of the subsidiary, whatever, that's great. And I would agree that 524(g) can be used to enjoin those claims against Cooper and against the debtors that arise from these four Roman numeral enumerated grounds. But that's not the same thing as saying 524(g) allows you to enjoin the actual tort. If people are suing the third party

for the third party's own conduct, it's my reading of 524(g)(4)(A), Your Honor, that that's not what this statute

Phillips/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 524(g) -MR. PHILLIPS: Object to confirmation to the is talking about.

103

This statute is talking about getting rid Getting rid

of the liability for the lender to the debtor.

of the liability to an extra parent or grandparent in the chain of the debtor's corporate structure that's been alleged under, some would say, cockamamie theories of liability and what have you. But that's not the same thing as saying oh, we can also use that because they were sued by a couple of people. And I don't know how many, maybe it was 5,000, maybe it was 500. But just because certain people sued Cooper Pneumo

Abex under these extra theories that are enumerated in (4)(A), doesn't mean that that creates jurisdiction to extinguish all the liability that that third party has. that's our fundamental problem. And going back to this whole point about whether they're going to succeed on the merits, Your Honor, you know it's an argument we intend to raise. And if not us, I would And

imagine there are other people in this case who intend to raise. THE COURT: You mean object to confirmation on

extent that, you know, this is trying to be done. THE COURT: Okay. And I think that, you know, if

MR. PHILLIPS:

Phillips/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

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we're going to take everyone's representations on faith at the podium of what's going to happen, I think Your Honor has to take into account what could happen. And one of the

things that could happen is us, others, other people not here and so forth, may raise objections that could delay or completely derail the process. THE COURT: represent? All right. Mr. Phillips, who do you

Remind me please. We represent the -- We have about

MR. PHILLIPS:

100 and some-odd clients listed on addendum 1 to the complaint. We have approximately 150 mesothelioma cases

pending in State Court, either in Illinois or in Deleware. We're co-counsel with other firms on additional cases. those firms are listed as primary counsel on the list. you know, counsel for the ACC would say, I mean it's a floating target. We've said we have 26 cases set for trial 16 of those cases are of living mesos. But As,

in the next 60 days.

People who, as I say in our brief, have little chance of making it through confirmation of this plan. And we believe the balance of hardships, to go back to the other prong I was talking about, whether preliminary injunction should issue today, given that we don't have a plan, that we don't know what the votes are going to be despite the arguments that maybe some preliminary nose counting has been done. And I'll say on

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that point, my nose counting suggests that they're being unduly optimistic about whether the people are going to vote. That the balance of hardships weighs against here, in

year four, coming in here with a complaint, two counts of which they've taken back since the day of the filing only two or three weeks ago -THE COURT: Well, they haven't withdrawn them,

they just said for today's purposes they're not seeking a preliminary injunction based on 362. MR. PHILLIPS: Right. Before I sit down, Your

Honor, there's one other thing and this kind of goes to an emerging problem we have with this whole deal. Section 3AI of the term sheet itself. I focus on

That provision

provides that Cooper, on the effective date, can use $35 million of the $100 million cash contribution it makes as part of the 700 million to pay certain of the pending Pneumo asbestos claims, PAC, that were pending as of September 15th. Section 6C of the term sheet goes on to say, anyone

who is going to be paid by Cooper pursuant to that provision can't vote. And one question we have in addition to the issue I've already raised of where's the plan, where's the matrix, where's the medical evidence et cetera, is who are those people? I mean, because there's two reasons. THE COURT: One --

Why aren't they being given sub plans?

Phillips/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PHILLIPS: Your Honor, I mean, there are

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certain issues that have been addressed, in COMBUSTION ENGINEERING and elsewhere, there's also just the plain voting issue. If that 35 million is divvied up $1,000 each

to 35,000 claimants, because a lot of the 38,000 are nonmalignant claims which are worth significantly less in the system on average then the malignancies, we really have a viable voting issue. Because we represent substantially There's

more than 1,000 people, from my understanding. another counsel who will come up here.

We have perhaps not

25 percent in the courtroom, but we've got more than the debtor wants to admit we have. And if a huge number of claims are going to be extinguished, and not be able to vote because of this agreement by Cooper to pay them, then for all I know we're the only people standing. You know? And the minimum for

terms of an evidentiary perspective, for the Court to enter the injunction, we need to know who those people are. voting, who's not? Who's

And as Your Honor first seized upon, You

that does raise an issue of who's getting the money.

know, certain of us were taken surprise by the course of these negotiations, and perhaps some other people weren't taken by surprise. And you know, if we're going to count

noses, counting the clients and the members of the Committee might not be the best place to start for that reason.

Ebert/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Thank you very much.

107 Anybody else in Good

opposition who wants to say something different? afternoon. MR. EBERT: Good afternoon, Your Honor.

Louis

Ebert of the law firm of Gebhardt and Smith.

We entered our

appearance in connection with the opposition of the Mallias to the motion. And that, as you heard, has been resolved.

I also filed last night an amended motion for the pro hac vice admission of Jonathan Ruckdeschol, and attached to that was a list of approximately 700 to 750 persons who are on Exhibit I, who Mr. Ruckdeschol and his firm represent. And He

Your Honor, I would like to turn the podium over to him. has all the information about this. motion be approved. THE COURT: I would ask that my

The fee has been paid. All right. Well, the motion will be But

handled in due course through the clerk's office. you're welcome to speak to today, Mr. Ruckdeschol. MR. RUCKDESCHOL: Good afternoon. Yes.

Thank you, Your Honor. I'm a

My name is Jonathan Ruckdeschol.

trial lawyer, I'm practicing in Miami, Florida with the law offices of David Lipman. We were counsel for Joseph Mallia

in the Mallia case, and I'm pleased that we've reached a resolution with that, with the movant, with regard to the Mallia case before today's proceedings. Our firm directly or as co-counsel with the law

Ruckdeschol/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 firms of Anania Bandklayer in Miami, McKenna Keoto (phonetic) in Pittsburg, and the Colon law firm in Mississippi represent collectively approximately 1,500 claimants with tort claims filed against Pneumo Abex Corporation. And amongst those are many individuals

108

suffering from malignancies.

And I'm not sure of the exact

number, but it would be at least 60. I think that what I'd like to emphasize to Your Honor first is that these are claims against Pneumo Abex Corporation for the actions of Pneumo Abex Corporation. They're not for the actions of the unincorporated operating division of Pneumo Abex that made friction products. My

first year corporations instructor told me that if you have a company you can have a subsidiary or you can have a division. A subsidiary is a separate legal entity and a

division is not. Pneumo Abex's business was making asbestos brakes. That's why we sued them. The fact that they sold off the

assets for that portion of their business is not a transaction that affects the corporate structure. not. It does

The corporation remains a corporation, they just sold It's no different than a corporation It doesn't affect the corporate structure.

off some assets. selling a truck.

And so to the extent that there's a suggestion that any jurisdiction of this Court arises from a

Ruckdeschol/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

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transaction that affects the corporate structure of Pneumo Abex, that is incorrect. Pneumo Abex continued along as a But

corporation and it's had some name changes since then.

the corporate entity that we sue is the corporate entity that injured our clients. The conduct that we sue on all

arises prior to 1988 when Pneumo Abex Corporation stopped manufacturing brakes that contained asbestos. So the claims here do not arise from conducts of the debtor, conduct of the debtor under 524(g). not claims against the debtor. we don't sue Cooper. They are

We don't sue Federal Mogul,

We've sued Pneumo Abex Corporation. We have made no In fact, we've

And they are not demands on the debtor.

demand on any of the debtors in this case. made no demand on Cooper. Corporation.

We have sued Pneumo Abex

Now, Pneumo Abex Corporation is listed however as one of the Pneumo protected parties in this case. Pneumo

Abex Corporation is the defendant in our case, it does not fall within 524(g) as we've looked at the categories there. There is a question about, and this was raised earlier on, that the 700 million is somehow a guaranteed contribution. It is my understanding there is a significant dispute with the insurance companies regarding how much insurance is there. But if we take the representations of Cooper with

Ruckdeschol/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 system. regard to their cash reserve set aside for asbestos

110

liabilities, and we take the representation that there's at least 800 million left in the policy limits of the insurance policies, we have a pool of one billion, 52 million and the $252 million comes from the 2004 10K filed at the end of the year by Cooper regarding their cash reserves. If I've

gotten the precise document wrong, it's from one of the SEC filings recently. It is difficult for me to imagine, and since we don't have any information before us as to what the payments are going to be, I can't tell you what our recommendation to our clients would be with regard to voting. But it is

difficult for me to imagine a situation where we would recommend to our clients that they should accept a plan that divvies up a contribution of 700 million over time when there is currently a pool of assets of at least one billion, 52 million if we take the representations that are made to the Court. Right now Pneumo Abex claims are paid in the tort I don't care who pays them. I don't care if, in

the shell game of passing this truck along, that everybody down the road from the tort-feasor has said, you know, we'll pay for you if you're held liable, and I will pay for you if you're held liable. That's irrelevant to me. What's

relevant to me is that my clients right now are entitled to

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payment of their liabilities from Pneumo Abex Corporation. And the code, as it's set up, talks about indirect liability for claims on the debtor. not claims on the debtor. And again, these are

No matter how many times you pass

the truck along, if I drive my truck into Your Honor and I break your leg, I can sell the truck to whoever I want but I'm on the hook. And no matter how many people promise to And the claim, when

indemnify me, I'm still on the hook.

you sue me, is a claim against me and not against the people that have subsequently assumed the liability. There was some discussion early on about shared insurance. It is my understanding from reading the filings

of Cooper in the SEC, which were submitted in respect to some of the papers that were filed with the Court, and it's my understanding from reviewing the papers that have been filed with the Court that there is no dispute, the insurance policies are owned by Pneumo Abex. There have been various transactions along the way where in essence there have been agreements, if you honor your indemnity agreement we'll assign to you the right to receive the proceeds from the insurance policies. And it is

my understanding that that is how Federal Mogul came to be allowed to receive the proceeds from the insurance policies when it was honoring its down the road indemnification agreement. When that honoring stopped, Cooper stepped up,

Ruckdeschol/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

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started honoring the indemnification and claimed the right to receive the insurance proceeds. All of that being said, there is no shared insurance in this case. period. Pneumo Abex owns the insurance,

That they may have assigned the right to other

people that they can receive the proceeds if those other people do certain things does not create shared insurance. It's Pneumo Abex's insurance. And what happens with the

proceeds after they're paid by the insurance company, which is what these assignments do in my understanding, is irrelevant to the question of whether this is shared insurance. It is not.

Many of these points have been covered, and I'm trying to move quickly, Your Honor. I'm sorry. The last thing -- Oh,

There's this issue of, there was discussion

about there's a former parent of -- And Pneumo Abex was referred to as a parent of the business that now resides with Federal Mogul, or wherever it resides, the assets. It's not. It's not a parent, it is the company. These are

just assets, it's just a truck. The last thing I'd like to address, Your Honor, is an issue relating to the effect of any preliminary injunction on cases that are currently set for trial. supposed to begin a trial on Tuesday, the 17th of this month, four days ago in Miami against Pneumo Abex and I was

Ruckdeschol/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 General Electric.

113

When this hearing was set, the parties

agreed that we would continue the case until February 20th because we didn't want to pick a jury Tuesday, Wednesday, open on Thursday, come up here and potentially be stayed and have a mistrial. My clients in that case, that's the Modley (phonetic) case that my client is, technically is Glen and Bruno the personal representative of the estate of Mr. Modley, have already had their trial delayed repeatedly. Further delay to them in liquidating their claim and getting on with their life is of great prejudice to them. We have

other cases that are set for trial this year; the Wright case, the Hurst case where these cases all have the same concern. And it's my understanding that there's another

individual who will come up and talk to you about some of the cases that they have that are set for trial. And I know Simmons Cooper has cases set for trial, and Levy Phillips and Konigsberg who have also filed papers, have cases set for trial. If a stay is entered here the

effect on the Modley's case in State Court is uncertain. General Electric is likely to approach the Court, because Florida is a State where liability is apportioned to all people whether parties are not in the courtroom, and say we can't proceed without Pneumo Abex here. Alternatively,

General Electric can say let's proceed to trial and we're

Ruckdeschol/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

114

going to try to apportion fault to Pneumo Abex, even though they're not in the courtroom. Well, if this plan is not approved and a stay or a discharge is not granted to Pneumo Abex in the context of this proceeding, we end up in a situation where we've tried the case against General Electric, we get a verdict that apportions 15 percent of the fault to Pneumo Abex, and then we have to try the case again against Pneumo Abex once the stay is lifted. Or my clients are left in the position

where their claim is delayed yet again. Mr. Modley brought suit during the end of his life, when his condition was grave. And we were unable to His

get the case to trial in time before he passed.

children have been living with this for years, and they want to move on with their lives. And any injunction that this

Court considers entering in this case should exempt cases that are set for trial. There is no irreparable harm to

Pneumo Abex, to Cooper, to this estate, to anything else from allowing these people to liquidate their claims. fact -THE COURT: is off the table. MR. RUCKDESCHOL: Well, the deal may be off the Cooper is Well, the irreparable harm is the deal In

table, and that's something I wanted to address.

not required to withdraw if a preliminary injunction is not

Ruckdeschol/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 entered.

115

And the statement in the affidavit from counsel

for Cooper is that in her opinion she believes that Cooper will withdraw. withdraw. And that's not a statement that Cooper will

And they may well prevail in the Modley trial. It may

There are defenses in the Modley trial to our claim.

be beneficial to the estate to proceed through trial on this, because it may make a mesothelioma case go away. And Cooper doesn't have to do this. have to have this emergency. They don't

This is an emergency of the They got

creation of the drafters of the term sheet.

together and they said, well you know, it's four and a half years down the road and we've been going along. And Cooper

said over and over, we have the money to pay our liabilities on this, and there's all this insurance out there, and we think we're going to pay pretty much the same in or out of the tort system, in the bankruptcy or in the tort system. Those are public statements that have been filed by Cooper or made by Cooper in public proceedings. What the irreparable harm is, what the emergency is that requires during the holiday season, a preliminary injunction pleading to be filed that creates an arbitrary cutoff date, if we don't act by January 29 we're going to take our ball and go home. If this is a good deal, and it's

a good deal for Cooper and it's a good deal for the claimants, nobody is going home just because Your Honor

Levey/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 doesn't issue a preliminary injunction. Honor. THE COURT: MR. LEVEY: very short. THE COURT: MR. LEVEY: Mr. Levey, good afternoon. Thank you. Anyone else?

116 Thank you, Your

Your Honor, Stanley Levey, I'll be

We represent presently eight claimants

who have cases set for trial against Pneumo Abex, and only against Pneumo Abex. And all of them are based on Pneumo

Abex's manufacture and sale of the product back in the early '80s. The cases are set for trial and the disruption is The only thing

obvious, and I'm not going to repeat it.

that I do think is worth bringing to the Court's attention is what the impact of even the proceeding we're going through now that's had. times over the years. We've sued Pneumo Abex numerous

We've never gone to trial against

them because the cases always have been settled as the cases have come up for trial. What has happened in this case now, because of this proceeding, is that Pneumo Abex has suddenly said to plaintiffs we are not prepared to talk about settlement, period. We're gambling that we're going to get our

preliminary injunction and therefore we have no further interest in trying to resolve cases with you. And that's a

fact of life, and it's a fact that is significant to the

Levey/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Yes, sir. MR. CHRISTIAN: afternoon. LLP. Thank you, Your Honor. Good

117

plaintiffs because we only represent living mesothelioma and lung cancer victims. The only other comment I would make, Your Honor, is you asked what the matrix looked like. the matrix looks like. I don't know what

The only thing I know is that the

defendant's papers said there's 38,000 claims potential in the papers and about $700 million. $15,000 a claimant. I count that to be about

I can tell you, based on our

experience, that is woefully inadequate, it is woefully below what cases against Pneumo Abex have been settling for in New York. And I think Your Honor should be aware that we're being asked, you're being asked to take claims on faith. None of us know what we're talking about in terms of what the realities of the numbers are. But I do know that those

numbers are inadequate on that basis, and that the ability to resolve cases, an ability that has existed for years, has been dried up because of this proceeding. THE COURT: Thank you very much. Anyone else?

David Christian of McDermott Will and Emery,

My clients include Continental Casualty Company,

Continental Insurance Company, Columbia Casualty Company and Harbor Insurance Company. We're often referred to as CNA.

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118

We filed a response to the motion for preliminary injunction and I rise here today, Your Honor, to make the point that we disagree with the debtor's characterization and argument here today that there is shared insurance. My client issued

certain insurance policies to IC Industries, Inc., and Illinois Central Industries, Inc. We resolved issues with

respect to certain of those policies through two settlement agreements, one in 1999, one in 2003 which were subject to confidentiality restrictions. Pursuant to those agreements we have been paying Pneumo Abex for Pneumo Abex claims. There was some

suggestion in the record that payments might have gone to others, and that's certainly not the case with respect to CNA. Accordingly, we disagree with the suggestion in the

original motion and in the complaint that the automatic stay might apply to those policies or those payments. We

understand the debtor intends to resolve, and the plaintiffs I guess, intend to resolve that point by modifying the preliminary injunction order. If this Court decides to enter a preliminary injunction, we would ask to see the preliminary injunction order that they propose, to ensure ourselves that it actually does resolve our objection if this Court decides to enter a preliminary injunction. And we appreciate the

debtors and the other plaintiffs meeting us on that issue.

Christian/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

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That having been said, we do not oppose the entry of a preliminary injunction under Section 105(a) if that's the Court's desire. I don't, I'm sure that I don't

understand everything in the term sheet that's been proposed by Cooper and the other plan proponents in this case. I'm

sure that I don't know everything that will make its way into an amended plan implementing the term sheet. It has

been represented to CNA that the plan proponents intend to honor the obligations under the settlement agreements with CNA covering Pneumo Abex liabilities. assure ourselves that that's the case. And so we must of course reserve our rights to object and conduct whatever discovery may be necessary to assure ourselves of that. That having been said, we have Of course we want to

begun and intend to continue informal discussions and discovery with the plan proponents to, you know, determine the impact of the term sheet and any amended plan on our settlement agreements. THE COURT: MR. BARTLE: Thank you, Your Honor.

Thank you. Good afternoon, Your Honor. Harvey

Bartle from Morgan Lewis and Bockins, I represent Pepsi Americas, also formerly known as IC Industries. I've been

mentioned, you know, for the last speaker, Your Honor, Pepsi Americas, IC Industries is the owner and named insured under almost all the policies issued between 1971 and 1975 which

Bartle/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 have been discussed here today as shared insurance.

120 Neither

Federal Mogul Products nor Cooper is insured under those policies at all. And we disagree with the characterization We did not receive

today about that insurance being shared.

timely notice of this hearing, Your Honor, nor have we had the opportunity to fully go through the pleadings from the plaintiffs, and we'd like to have a chance to review the transcript here today. And we would just request that the

Court make no decision about the preliminary injunction until we have had the opportunity to discuss and review the characterizations about our insurance. THE COURT: MR. HOGAN: THE COURT: MR. HOGAN: Thank you. Very very briefly, Your Honor. Good afternoon. Timothy Hogan in behalf of Grover Thank you.

Alexander and the other plaintiff, defendants here noted as the Nicholl objectors. Since I filed an objection I wanted I have nothing else to add, Your

to make my presence known. Honor. THE COURT:

Thank you.

Okay. Roger

MR. FRANKEL:

Good afternoon, Your Honor.

Frankel on behalf of Cooper Industries.

Your Honor, I just

want to respond to a couple of the things that have been said this afternoon. First of all, the timing of the

preliminary injunction is provided for in the term sheet.

Frankel/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 It's not arbitrary.

121

The economics that were set forth in

the term sheet were based on Cooper no longer paying claims in the tort system. The economics are the critical element that was driving this for Cooper, obviously. And if the preliminary

injunction is not entered then Cooper has the right to terminate the term sheet. I can represent to this Court,

based on discussion with senior management, that that is what Cooper's intent is. Not because they don't want the

deal, but because the economics would no longer be the same. Any time a preliminary injunction like this is entered there's going to be trials set the following week, the week after, the week after. So there is no good time

for the plaintiffs for something like this to be entered. But it's not arbitrary. It was set because the economics

drove it to be set that way. The other thing I want to mention Your Honor, is the $35 million of the PA settled claims, as they're called in the term sheet, that is not just claims that Cooper decides to settle. That is claims that are settled with the There may not be

consent of the ACC, the FCR and Cooper. any.

But if there are any that are settled in that way, the

term sheet suggests that those claims would be unimpaired because presumably they would be paid in full on the effective date. Nothing nefarious in there, that was an

Frankel/Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 recess.

122

option that was available to the parties that did the term sheet. It may or may not be utilized, but that's why it was Thank you

put in there and it's not a Cooper only option. very much, Your Honor. THE COURT: All right, thank you.

I don't want to

hear anything further, Mr. O'Neill, other than this, is there anything else that we need to talk about on the agenda? MR. O'NEILL: THE COURT: No, Your Honor. Then let's take a short

All right.

Rather than recessing for lunch let me just gather

my notes together and I'll come back and give you a decision very shortly. phone? MR. PARSONS: Your Honor, my name is David Parsons We represent Okay? And is there anyone still on the

of the law firm of Stutzman and Bromberg.

Provost Humphrey, Brintkin (phonetic) and Associates and Herb Robin Cloud and Lubell (phonetic), they're personal injury law firms. matter. We've recently just been engaged in this There's one minor

We haven't filed any objections.

point that I wanted to bring to Your Honor's attention before he considers his decision, if I may do that. THE COURT: hearing you. further. I'm sorry, I'm having difficulty

And I don't think I will take anything I should be

You're welcome to stay on the phone.

Decision 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 right. back in about 10 minutes or so. MR. PARSONS: Okay. Thank you, Your Honor.

123

(Court stands in recess) (Court resumes in session) THE CLERK: THE COURT: All rise. Thank you. Please be seated. All

This is an adversary proceeding that was commenced

by plaintiffs, the debtor in possession, the Official Committee representing the asbestos personal injury claimants and the futures representative on behalf of parties with future personal injury claims relating to asbestos exposure. The defendants are individuals who have

sued a company by the name of Pneumo Abex, I'll refer to as Pneumo, in State Court and Federal Court outside of the Bankruptcy Court. The relief that's sought in the complaint is a declaratory judgment action that, proceeding in the State and Federal forums, would be a violation of the automatic stay of Section 362(a)1 and (a)6 having to do with claims against the debtor, and also a violation of 362(a)3 in attempting to assert control over property of the estate which is alleged to be shared insurance policies. Also the

relief sought in the complaint was a temporary injunction to enjoin suits versus parties referred to as the Pneumo protected parties pending confirmation of a plan of

Decision 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 reorganization.

124

The background behind this is that prior to 1994 the company known as Pneumo Abex had a division called a friction products division, and that division sold products that contained asbestos to persons who were injured, claiming that their injuries were caused by exposure to asbestos from products that were manufactured by the friction products division of Pneumo Abex. In 1994 there was an asset purchase agreement by a company by the name of Warner, or excuse me, Wagner that was a subsidiary of Cooper Industries. Wagner acquired the In that asset

assets of the friction products division.

purchase agreement Wagner agreed to indemnify Pneumo for asbestos claims arising out of Pneumo's operation of this friction products division. Cooper, the parent company,

agreed to guarantee Wagner's indemnity obligation to Pneumo. And it may be, although it's unclear, that Wagner also assumed Pneumo's obligation to parties who may have been injured by exposure to asbestos from these products. In addition, Wagner had its own business that manufactured products containing asbestos. In 1997 Wagner

merged into another subsidiary of Cooper by the name of Moog Automotive. And then in 1998 Federal Mogul, one of the

debtors in this bankruptcy case, bought the stock of Moog Automotive and then changed its name to Federal Mogul

Decision 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Products.

125

In connection with that stock purchase agreement,

Federal Mogul, the parent company, agreed to indemnify the seller, Cooper, for its liabilities to Pneumo regarding the claims against Pneumo, and also agreed to indemnify Cooper for any claims asserted against Wagner for its product line. I believe that's correct. From the time of the acquisition in 1998 through October of 2001 whenever Pneumo was sued by someone claiming to be injured by exposure to asbestos from their products, the defense was undertaken by Federal Mogul and any claims that weren't covered by insurance were paid for by Federal Mogul. In October of 2001 Federal Mogul filed a petition in At

this Court and got the benefit of the automatic stay.

that time it advised Cooper Industries that it would no longer honor Federal Mogul's indemnity obligation or guarantee, I guess it's an indemnity obligation. And from that point on Cooper stepped into the shoes of the party that took over the defense and paid any claims that were uninsured against Pneumo. To date Cooper

says that it is out of pocket for defense costs, and claims payment of $150 million and expects to continue to incur costs and liability in the future. In this bankruptcy case, the debtor filed a third plan of reorganization in the first part of 2004, even though it had been in bankruptcy since October of 2001. The

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disclosure statement filed in connection with that plan was approved by the Court in June 2004. As part of the

disclosure statement process, apparently Cooper objected to the disclosure statement. And then through negotiations

before the disclosure statement was approved, the debtor agreed to, or I should say the plan proponents, because it's not just the debtor, agreed to amend the plan to provide that Cooper's exposure to asbestos claimants relating to either the Pneumo line of products or the Wagner line of products would be protected by an injunction to be issued under Section 524(g) of the Bankruptcy Code. If Cooper was not granted the injunction the debtors proposed to treat Cooper's indemnification claim as an indirect asbestos claim and channel that to a trust that would protect the debtor. That deal didn't materialize in

time for balloting on this proposed plan, and the time to file objections to confirmation. Because the negotiations

remained outstanding Cooper voted to reject the plan and also filed objections to confirmation. As a result of Cooper's negative vote, certain class or classes of claimants in the plan have voted to reject the plan. And if the plan were to be confirmed it

would require confirmation over the objection of the rejecting class or classes, the so-called cram down provisions.

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Now, since the time that the disclosure statement was approved 18 months ago the debtors focused on other major problems in the case. The primary focus was on the

fact that some 130 some-odd of these debtors are English companies or UK companies that are also in solvency proceedings in the United Kingdom. The debtors attempted to

get the administrators of the UK companies to go along with their plan of reorganization and propose a companion type of plan in the proceedings in the UK. That did not happen.

But nevertheless, in this 18 month time period an accommodation was reached with the administrators of the UK plans that would allow the debtors to proceed in this Court with plans of reorganization here. That was undoubtedly a large hurdle that was overcome, if these cases are ever to reorganize. And the

parties are to be congratulated and are understandably proud of their work in reaching that resolution. Although, as

with any compromise, neither side is particularly happy with the outcome. The plan or the concept that these companies can reorganize is not only supported by the management of the debtors, it's also supported by the Official Committee of Unsecured Creditors, the Committee of Personal Injury Asbestos Claimants, the Futures Representative, the banks that were prepetition lenders to these debtors having

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substantial monetary claims, the equity holders who are not promised a lot in this proceeding, and the UK administrators as well as the trustees of the pension fund for the UK employees of the affiliate companies. Prior to the recent negotiations there were several parties that still opposed confirmation, Cooper Industries being one, the Committee representing asbestos property damage claimants, and a number of insurance carriers that are alleged to provide insurance coverage to the debtor and whose policies are the primary focus of funding to pay personal injury claimants if the plan were confirmed and the trust established under Section 524(g). Recently the debtor concluded negotiations with Cooper and its affiliates to come up with a deal that's represented in the term sheet. To put it in its most simple

terms, which is to really reduce it way beyond simplicity, but for our purposes essentially the plan calls for Cooper to put money into a trust for the benefit of personal injury asbestos claimants, also to have whatever insurance is available to cover their exposure available to the trust, and perhaps put other assets in. In exchange for that, Cooper is to be covered by the injunction issued under Section 524(g) of the Code. in addition, Cooper is promised to get a litigation injunction effective now until the time of confirmation. If And

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Cooper does not get the litigation injunction that's being sought today, Cooper has the right to back out of the deal and says that it expects to do so. In terms of the plan, it's clear that the plan that was proposed in the disclosure statement that was approved in June of 2004 will have to be modified. the plan will have to, whether a revised disclosure statement will have to be prepared is not known. Whether Whether

the disclosure statement will have to go out on notice to creditors is not known. Whether there will have to be And the time,

another round of balloting is not known.

expected time table to bring that plan to confirmation is not know. And whether the parties who so far haven't

indicated their agreement to the plan will continue to object to the modified plan is not known. The plaintiffs in this adversary proceeding filed a motion for preliminary injunction asking initially for all the relief that was sought in the complaint. After

opposition was filed the moving party withdrew any request for a preliminary injunction based upon the alleged applicability of the automatic stay to the proceedings by these personal injury claimants in State and Federal Court, because of the potential for negative consequences that were pointed out by some of the objectors, in particular some of the insurance carriers involved in the Pneumo cases.

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Nevertheless, the counts of the complaint that relate to the automatic stay are preserved by the moving parties for later treatment. In order to succeed in getting a preliminary injunction all parties agree that there's a four part test. The first part is that there must be a reasonable probability of success on the merits. Secondly, there must

be irreparable harm to the moving party if an injunction is not issued. Third, any harm that may occur to the enjoined And

party must not outweigh the harm to the moving party.

four, the injunction should be in the public interest or at least not against the public interest. In this circuit the plaintiff, the law is not But I think the law, as I've gleaned it, is that the

plaintiff need not meet all four parts of the test, but only show that certain parts have been satisfied and that the other parts that it can't meet are not sufficient to overcome the fact that it has satisfied one or more of the elements. It's clear that the burden of proof is on the

party seeking the injunction to establish that it has met one or more if not the preponderance or all of the elements of the four part test. Let me focus first of all upon irreparable harm. And one of the opponents here has characterized this as a self created irreparable harm. And this really reminds me

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sheriff played by Clevon Little is being hassled by a crowd and he's being threatened with physical violence. pulls out a gun and he holds it to his head. stand back or I'll shoot the sheriff. And he

And he says,

The debtor in this

case has agreed to a deal in which they've undertaken to get a preliminary injunction and the other party to the deal has said, if I don't get this preliminary injunction I'm going to withdraw from the deal. This to me is a totally self

created scenario for irreparable harm. As to the balance of the harm, we have injured parties who are ready to go to trial. It's represented that

up until now, up until a week before this, every injured party who successfully prosecuted a claim has been paid in full, and that many of the injured parties were able to reach settlements with Cooper Industries in which the settlement has been paid in full. Many of the injured parties are suffering from fatal diseases caused by exposure to asbestos; mesothelioma, other types of fatal diseases. That some of the claimants

have died already and their claims are being pursued by their related parties or the executor of their estate. Others are projected to die very soon. Numerous matters are

scheduled for trial in the coming days, weeks and months. The prospect that these injured parties are

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debtor can attempt to reorganize, in which case their claims would be channeled to a trust. The trust would have a

matrix for paying the claims, and it's projected that the funds in the trust would be sufficient to pay 100 percent of the matrix value of the claims. Now, what the matrix value of the claims is, nobody knows. But it is, where there's a history in the

past of injured parties recovering millions of dollars for these claims if the -- It seems unlikely to me that the matrix would be sufficient to offer millions of dollars to these claimants. And it's projected to be 38,000 claimants Some

at this point, to grow some to about 50,000 claimants.

of them may be very minor claims but others are obviously very serious claims. The harm to the debtor is that if the injunction isn't issued they're going to have a difficult problem in trying to confirm the plan over Cooper's objection. Of

course there are still other objections out there, so confirmation is hardly a forgone conclusion. The other harm

is that there are projected to be 500,000 other personal injury claimants not related to Pneumo Abex that have been delayed for four years and three months so far by this bankruptcy, and they will be delayed further in getting any payment for their claims.

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It is a continuing concern that these folks have been delayed in getting payment for their serious injuries while this claim, this case has dragged along here in Bankruptcy Court. Not to say that there haven't been many

many complex issues that needed to be resolved before anybody could get paid. As to success on the merits, in the context of a bankruptcy reorganization case where the injunction is sought so that the debtor plan proponent can attempt to reorganize, success on the merits is determined by whether or not it is likely that the debtor can propose, confirm and implement a plan. The circumstance that we have now is that

the plan that's on file can't be confirmed as is, no new plan has yet been proposed. The history of this case shows

that in four years and three months the debtor has been unable to get confirmation of a plan. There are still significant interests with opposition to a plan, not the least of which is the insurance carriers. committee. There's also the personal damage

And it's projected by counsel who have appeared

here today, that if the plan proposed is a 524(g) injunction against parties who have claims against Pneumo, that they are likely to oppose confirmation. I would note in passing that in the COMBUSTION ENGINEERING case the parties that carried the ball to the

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Third Circuit on the appeal were the insurance carriers and certain cancer claimants who were not satisfied with the plan, even though there was a requisite voting in the class put into the 524(g) trust to get approval there. Whether the debtor can propose a plan that would provide the so-called Pneumo protected parties with 524(g) protection, to me is dubious at this point. The statute,

let's see, has a lot of conditions or a description as to parties who would be entitled to 524(g) protection, other than the debtor. The statute requires that the party to be

covered by the injunction must be alleged to be directly or indirectly liable for conduct, claims against or demands on the debtor to the extent that such liability of the third party arises by reason of the third party's ownership of a financial interest in the debtor, a past or present affiliate of the debtor, or predecessor in interest to the debtor. That's the primary provision of 524(g)(4)(A)2 that's relied on by the moving party. The moving party says

that these Pneumo protected parties could also be covered under II because they were involved in the management of the debtor or a predecessor of the debtor, because some of them provided insurance to the debtor. And fourth, because these

parties were involved in a transaction that changed the corporate structure, including acquiring or selling a

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financial interest in an entity as part of such transaction. It is not clear to me that one of the Pneumo protected parties; Cooper, would fall into the category of parties protected to the extent that Cooper's liability is only on account of its indemnity or guarantee of indemnity of Pneumo at the time that Wagner acquired the friction products division. At least one of the objectors, if not

more, says that they haven't, the people that they represent haven't sued Cooper. They've sued Pneumo. And the fact

that Pneumo is indemnified by Cooper and that Pneumo has insurance doesn't impact them, and that 524(g) was not meant to cover parties who have agreed to indemnify defendants in asbestos personal liability cases. The facts presented in this application for a preliminary injunction or motion for a preliminary injunction are woefully inadequate to describe how claims are asserted against Cooper that could result in a 524(g) injunction. Now, the Court is authorized under Rule 52E to But

hear motions on affidavits without taking testimony.

the affidavits in this case all refer to the indemnity obligation of Cooper and the related indemnity obligation of Federal Mogul to Cooper. It doesn't relate to this third

party's direct or indirect liability for claims or demands against the debtor, again, that arise by reason of the ownership of a predecessor in interest of the debtor.

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And I'm confident that the plain language doctrine that the Supreme Court advocates in statutory construction and the Third Circuit's reading of 524(g) in the COMBUSTION ENGINEERING case would require that it be clear that a party is entitled to an injunction under 524(g) before a plan could be confirmed giving them that injunction. And the

Third Circuit has made clear that if 524(g) doesn't provide for an injunction the Bankruptcy Court has no power to issue an injunction outside of 524(g). So I find that the moving parties have failed to prove irreparable harm, have failed to prove that the balance of the harm to them outweighs any harm to the defendants, and have failed to prove a reasonable probability of success on the merits for the purpose of getting a preliminary injunction. Now, this is, whether we

characterize this as a preliminary injunction or a temporary restraining order, at this stage in the proceedings without discovery having been taken, it's essentially seeking a temporary restraining order. And temporary restraining orders are generally put in place to preserve the status quo. And the status quo is

that Cooper and its insurance carriers have been paying people with asbestos personal injury claims. And without So the

more, I think that status quo should be preserved.

plaintiff's motion for a preliminary injunction is denied.

137 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 TERRY GRIBBEN'S TRANSCRIPTION SERVICE _____________ _________________________________ SUSAN WALSH _____________ AOC No. All right? Thank you all. * See you again. * CERTIFICATION I, SUSAN WALSH, Certified Agency Transcriber, do hereby certify that the foregoing transcript of proceedings on copied disk is prepared in full compliance with the current Transcript Format for Judicial Proceedings and is a true and accurate transcript of the motion as recorded in the matter of FEDERAL MOGUL heard by the US Bankruptcy Court of New Jersey, on January 20, 2006. *

CADWALADER, WICKERSHAM & TAFT LLP One World Financial Center New York, New York 10281 Telephone: (212) 504-6000 Facsimile: (212) 504-6666 Bruce R. Zirinsky, Esq. John H. Bae, Esq. Attorneys for the Debtor and Debtor in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------------------------- x : In re: : T H AGRICULTURE & NUTRITION, L.L.C., : : Debtor. : --------------------------------------------------------------------------- x

Chapter 11 Case No. 08-14692 (REG)

DEBTORS RESPONSE TO AMENDED STATEMENT OF VOLKSWAGEN GROUP OF AMERICA INC. IN SUPPORT OF MOTION TO MODIFY SCHEDULING ORDER TO THE HONORABLE ROBERT E. GERBER UNITED STATES BANKRUPTCY JUDGE: T H Agriculture & Nutrition, L.L.C. (THAN or the Debtor), as debtor and debtor in possession, submits this response (the Response) to the Amended Statement in Support of Motion to Modify the Scheduling Order filed by Volkswagen Group of America (Volkswagen) on December 24, 2008 (the Statement).1 For the reasons set forth below, the Debtor respectfully submits that Volkswagen has no cognizable claim in this chapter 11 case, and the Court should disregard Volkswagens Statement and deny the relief requested.

Volkswagen filed its original Statement In Support of Motion to Modify Scheduling Order Entered November 25, 2008 (the Original Statement) on December 23, 2008. See Docket No. 171.

PRELIMINARY STATEMENT 1. On December 24, 2008, Volkswagen filed its Statement, seeking to join in

and support the relief sought by various insurance carriers in their motions to modify the Courts Scheduling Order and to adjourn the hearing to consider confirmation of the Debtors proposed plan of reorganization by 60 days. The sole stated basis for the relief sought by Volkswagen is that the Plan could affect Volkswagens substantive and procedural rights as a codefendant with the Debtor in certain lawsuits. Volkswagen, however, has failed to identify what substantive or procedural rights it has against the Debtor or its estate. 2. Volkswagen has simply failed to bear its burden to demonstrate that it

holds any cognizable interest in this chapter 11 case, or present any other basis to have standing to seek the relief sought in the Statement. Much of the Statement is based on general,

unsubstantiated assertions, relying on vague references to unidentified lawsuits and what may happen in certain situations in which Volkswagen might possibly have a cross-claim against the Debtor. What is clear is that Volkswagen has identified no cross-claim against the Debtor that it has or ever had and that it has not articulated any justification for the Court to grant its request to modify the Scheduling Order. 3. Because it has no standing in the chapter 11 case, Volkswagen should not Even if

be allowed to intervene in any motion seeking to modify the Scheduling Order.

Volkswagen could establish standing to participate in this chapter 11 case, which it cannot, Volkswagen has failed to articulate why it requires more time. As explained below, the issues it has identified, such as the treatment of cross-claims under the Plan and the role to be played by the representative of future demand holders, can be addressed by reviewing the proposed plan and related documents. Volkswagen has failed to articulate why the time period contemplated

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under the Scheduling Order is not sufficient for Volkswagen to complete its review of such documents. The relief sought by Volkswagen should be denied. BACKGROUND 4. On November 24, 2008 (the Commencement Date), the Debtor

commenced this case under chapter 11 of title 11 of the United States Code (the Bankruptcy Code). The Debtor is authorized to operate its business and manage its properties as a debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 5. Simultaneously with the filing of its chapter 11 petition, the Debtor filed

(i) the Prepackaged Plan of Reorganization of T H Agriculture & Nutrition, L.L.C. Under Chapter 11 of the Bankruptcy Code, dated October 10, 2008 [Docket No. 20] (the Plan); (ii) the disclosure statement related thereto, dated October 10, 2008 [Docket No. 21] (the Disclosure Statement), which was used in prepetition solicitation of votes on the Plan; and (iii) the vote certification of the Debtors balloting agent, describing the overwhelming acceptance of the Plan by holders of impaired claims entitled to vote. 6. On November 25, 2008 this Court entered an order (the Scheduling

Order) scheduling a hearing on January 15, 2009 for the approval of the Disclosure Statement and the confirmation of the Plan (collectively, the Confirmation Hearing). 7. On December 12 and 16, 2008, certain of the Debtors insurers filed

motions seeking to modify the Scheduling Order and requesting that the Confirmation Hearing be adjourned for 60 days. The Court has not yet ruled on the motions.

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BASIS FOR DENYING RELIEF REQUESTED I. Volkswagen Lacks Standing 8. As a threshold matter, Volkswagen has no standing to seek modification

of the Scheduling Order. A party invoking federal jurisdiction has the burden of establishing that it has standing with respect to each issue on which it wishes to be heard. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992) (party invoking federal jurisdiction bears the burden of establishing the[] elements [of standing]); In re Refco Inc., 505 F.3d 109, 119 (2d Cir. 2007). 9. In order to establish that it has standing, Volkswagen must show that it has

a legally protected interest affected by the bankruptcy proceeding. In re Quigley Co., Inc., 391 B.R. 695, 701-05 (Bankr. S.D.N.Y. 2008) (quoting In re James Wilson Assocs., 965 F.2d 160, 169 (7th Cir. 1992) (Posner, J.)); In re Martin Paint Stores, 199 B.R. 258, 263 (Bankr. S.D.N.Y. 1996) (Bernstein, J.), affd, 207 B.R. 57, 61 (S.D.N.Y. 1997) (citations omitted). Although Volkswagen has asserted that it has an interest that would be affected by this chapter 11 case, it has failed to identify what specific interest it actually holds, much less demonstrate how the Debtors Plan could impair such interest. Volkswagen merely posits that it is a codefendant with the Debtor in some unidentified case or cases, where it may perhaps have a cross-claim against the Debtor. And, based on this conjecture of a claim, Volkswagen contends that it should be granted more time to explore the effect of the Debtors Plan on such hypothetical claims.2 10. Volkswagen also alleges, baselessly, that the Debtor has intentionally

acted to deprive current cross-claim holders of their due process rights. Yet Volkswagen itself

While not relevant to the question of whether Volkswagen has standing in this chapter 11 case, the Debtor is not aware of ever having distributed asbestos to Volkswagen, and is not aware of any other connection to Volkswagen.

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is not such a party. Pointedly, Volkswagen does not aver in its Statement that it now holds or seeks to prosecute a cross-claim against the Debtor. In fact, Volkswagen has never prosecuted a cross-claim against the Debtor in any past or present asbestos action. Furthermore, no codefendant in any asbestos-related case has ever prosecuted a cross-claim against the Debtor. In other words, there simply are no current cross-claim holders whose rights need to be protected, and in any event, Volkswagen has no standing to assert the rights of others. 11. It bears noting that in the Statement, not only does Volkswagen fail to

assert that it has any actual cross-claims against the Debtor, but it even fails to identify any of the cases where it holds an enforceable cross-claim, based on the excuse that it does not have a complete list of all such cases. Statement, at 6. The Debtor submits that Volkswagens inability to identify even a single case is indicative of the degree to which its interest is attenuated. 12. The best that Volkswagen seems able to do is to express, on the basis of

certain academic articles concerning issues that have arisen in other asbestos chapter 11 cases, generalized anxiety about the Debtors case and the effects of the Plan. Volkswagen has no cognizable interest in such issues, and thus no standing to be heard. For example, Volkswagen raises a concern about the precise role of the Future Claims [sic] Representative. Statement, at 8. This purported concern relates to the integrity of the reorganization process, rather than any Volkswagen cross-claim or contribution claim against the Debtor, and as such, Volkswagen lacks standing to be heard on such matters. 13. Insofar as Volkswagen has failed to show any cognizable interest that

would be affected by this bankruptcy case, it should not be permitted to interfere in the scheduled progress of this case.

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II.

Volkswagen Has No Enforceable Right to Contribution 14. Even if Volkswagen had sought to prosecute a cross-claim against the

Debtor, such claim would not be enforceable. In many jurisdictions, a codefendant does not have a right to payment pursuant to a contribution claim unless and until judgment has been entered in the underlying lawsuit and the codefendant has paid more than its pro rata share of the judgment. See, e.g., Arnold v. Garlock Inc., 288 F. 3d 234, 237 (5th Cir. 2002) (applying Texas law and stating that the defendant did not hold a cognizable claim against the debtor where it could not fulfill the requirements for maintaining a contribution claim because there had not been a judgment or apportionment of fault in the underlying lawsuit); In re N. Am. Refractories Co., 289 B.R. 356, 358 (Bankr. W. D. Pa. 2002) (applying Mississippi law and stating that codefendant did not have a cognizable claim against the debtor because it had no right to payment or equitable remedy where final judgment had not been entered in the underlying lawsuit); Natl Mut. Ins. Co. v. Whitmer, 435 N.E.2d 1121, 1123 (Ohio, 1982) (under Ohio law, the right to contribution only becomes enforceable once a claimant makes payment extinguishing the whole of the common obligation). 15. Although some jurisdictions allow a codefendant to assert a contribution

claim prior to judgment, in the interest of judicial efficiency, the right to contribution does not become enforceable until final judgment has been entered and the obligation is discharged. See e.g. Gemco-Ware, Inc. v. Rongene Mold & Plastics Corp., 360 S.E. 2d 342, 344 (Va. 1987) (under Virginia law, a codefendant may assert a claim based on potential future liability for contribution; however, the right to recover arises only once the codefendant discharges the common obligation); Mattia v. Sears, Roebuck & Co., 531 A. 2d 789, 791 (Pa. Super. 1987) (applying Pennsylvania law and stating that while a codefendant can assert a contribution claim

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in the original proceeding, the right to contribution cannot be asserted until a tortfeasor has discharged the common liability by paying more than his pro rata share). 16. Here, Volkswagen does not even suggest that a judgment has been entered

in any case in which it is a codefendant with the Debtor and that it has actually paid more than its pro rata share for such judgment (and that the Debtor has not). Thus, Volkswagen has no present right of contribution under state law. Furthermore, any contingent claim for contribution that Volkswagen might assert in this case would be of no avail, as it would be disallowed under the Bankruptcy Code. Section 502(e)(1)(B) of the Bankruptcy Code provides in pertinent part: [T]]he court shall disallow any claim for reimbursement or contribution of an entity that is liable with the debtor on . . . the claim of a creditor, to the extent that . . . such claim for reimbursement or contribution is contingent as of the time of allowance or disallowance of such claim for reimbursement or contribution. 11 U.S.C. 502(e)(1)(B). See also In re Drexel Burnham Lambert Group, Inc., 146 B.R. 98, 95 (Bankr. S.D.N.Y. 1992) (citing In re Provincetown-Boston Airlines, Inc., 72 B.R. 307, 309 (Bankr. M.D. Fla. 1987) (holding that a claim for reimbursement must be disallowed where the claimant and debtor are co-liable in the underlying action and there was neither a determination of the debtors proportionate fault in the underlying action nor had the amount owed by the debtor been fixed, making such claims contingent)). 17. Regardless of whether or not Volkswagen asserts claims against the

Debtor, it cannot do so under state law without first obtaining a judgment. Moreover, even a contingent claim for contribution would leave Volkswagen with no cognizable interest upon which to base standing to be heard in this case. III. Adjournment of the Confirmation Hearing Is Not Necessary 18. Even if Volkswagen were able to establish standing, the Court should

deny the 60-day adjournment sought by the Statement because no additional time is necessary to -7-

interpret the Plan or otherwise ascertain the effect of the Plan on any rights that Volkswagen purportedly may hold. The terms of the Plan are plain, and the questions Volkswagen raises in its Statement are only questions of law. 19. For instance, with respect to the precise role of the Future Claimants

Representative in this case, there is no need for additional time, insofar as the Future Claimants Representatives role is clearly spelled out in the Plan and the Disclosure Statement (as well as the Debtors motion seeking appointment of the Future Claimants Representative). See Plan 9.4, 10.8; Disclosure Statement III.A.1. 20. Similarly, while Volkswagen argues that the Plan injunction and the

TDPs deprive current corporate cross-claim claimants of their existing state law rights,3 there are no current corporate cross-claimants to be deprived of state law rights. Moreover, even if Volkswagen held a cognizable cross-claim against the Debtor (which it does not), it does not need more time to review the Plan to determine whether or not its rights are being compromised by the Plan. Indeed, presumably based on its review of the Plan, Volkswagen was able to assert that contribution claimants are being deprived of rights because the Plan, the Plan injunction and the TDP block THAN or the Trust from being a defendant in a state court action. Although this assertion is factually wrong (see Plan 11.5),4 Volkswagen does not need more time to review the Plan to determine what rights it holds, if any, are being compromised by the Plan.

The Debtor presumes that Volkswagens references to the Plan injunction and the Trust, are references to the Asbestos PI Channeling Injunction and the Asbestos PI Trust, respectively (each as defined in the Plan). The Debtor also notes that the Plan contemplates only a singular set of trust distribution procedures, rather than multiple TDPs. Thus, Ready v. United/Goedecke Services Inc., No. 103474, 2008 WL 5046833, at *2 (Ill. Nov. 25, 2008), the case cited by Volkswagen for the proposition that comparative fault cannot be apportioned against an entity that is not a defendant at trial, has no relevance here.

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21.

Volkswagen has already been provided with a reasonable amount of time

to review the Plan. Bankruptcy Rule 2002(b) requires only twenty-five days notice of the deadline for filing objections to, and any hearing on, confirmation of a plan of reorganization. Likewise, Bankruptcy Rule 3017(a) requires only twenty-five days notice of a hearing to consider a disclosure statement, and any objections or modifications thereto. 22. Having failed to explain why it requires more time to review the Plan and

related documents, or what interest it holds that are being compromised by the Plan, Volkswagen has failed to establish cause to seek to modify the Scheduling Order. WHEREFORE, for all of the reasons set forth above, the Debtor respectfully requests that the Court deny the relief requested in the Statement, and grant such other and further relief as is just. Dated: New York, New York January 2, 2009

By: /s/ John H. Bae Bruce R. Zirinsky, Esq. John H. Bae, Esq. CADWALADER, WICKERSHAM & TAFT LLP One World Financial Center New York, New York 10281 Telephone: (212) 504-6000 Facsimile: (212) 504-6666 john.bae@cwt.com Attorneys for the Debtor and Debtor in Possession

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Eduardo J. Glas, Esquire (# EG7027) McCARTER & ENGLISH, LLP 245 Park Avenue 27th Floor New York, New York 10167 (212) 609-6800 - Telephone (212) 609-6921 - Facsimile Attorneys for Owens-Illinois, Inc. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK : : : : : : : : : :

Objection Date: January 5, 2009 Hearing Date: January 15, 2009

Chapter 11 Case Nos. 08-14692 (REG) RE: D.I. 20

In re: T H AGRICULTURE & NUTRITION, L.L.C.,

Debtor.

OWENS-ILLINOIS, INC.S OBJECTION TO THE PREPACKAGED PLAN OF REORGANIZATION Owens-Illinois, Inc. (Owens-Illinois), pursuant to 11 U.S.C. 1129, hereby files its Objection (the Objection) to the Prepackaged Plan of Reorganization of T H Agriculture & Nutrition, L.L.C. Under Chapter 11 of the Bankruptcy Code [D.I. #20] (hereinafter the Plan). In support of its Objection, Owens-Illinois respectfully asserts as follows: FACTUAL BACKGROUND 1. On November 24, 2008, (the Petition Date), T H Agriculture & Nutrition,

L.L.C. (the Debtor) filed for bankruptcy protection with the United States Bankruptcy Court for the Southern District of New York. The Debtor filed its petition for relief under Chapter 11 of Title 11 of the United States Code. 2. On the Petition Date, the Debtor filed the Plan.
1

ME1 7986876v.1

A.

The Trusts Powers. 3. The Plan creates an Asbestos Settlement Trust (the Trust) pursuant to Section The Plan incorporates the Asbestos PI Trust

524(g) of Title 11 of the Bankruptcy Code.

Agreement (Trust Agreement) and the Asbestos PI Trust Distribution Procedures (TDP) (jointly with the Trust Agreement, Trust Documents) as Plan Exhibits A and C, respectively. The Trust will assume liability for all Asbestos Personal Injury Claims, which by definition is intended to encompass any indemnification and contribution claims in addition to direct claims against the Debtors (including the claims of Owens-Illinois). See Plan 9.4; TDP 5.6. The Trust will administer the Trust Assets, liquidate Claims and make distributions to holders of Asbestos Personal Injury Claims in accordance with the Trust Documents. See Plan 9.4. B. The Plan Was Negotiated Without The Interests Of Owens-Illinois Or The Other Co-Defendants Being Fairly Represented. 4. The provisions of the Plan to which Owens-Illinois objects were negotiated by the

Asbestos Claimants Committee for the benefit of asbestos claimants. Owens-Illinois is included as a member of the class of asbestos claimants, but has no meaningful representation on the Asbestos Claimants Committee. C. The Plan Permits Undue Delay In Resolving Claims 5. The Plan encourages late or delayed claims filings. A claim that meets certain

tolling provisions will be treated as timely filed if it is filed with the Trust within three (3) years after the Initial Claims Filing Date. See TDP 5.1(a)(2). 6. The claimant can further delay payment from the trust by electing to defer

processing of the claim. Pursuant to TDP Section 6.3, a claimant can withdraw a claim and refile another claim, at any time, without affecting the status of the claim for statute of limitations purposes. A claimant can also elect to defer processing of the claim for three (3) years without
2

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affecting the claim for statute of limitation purposes. Adding that to the three (3) years it has to file the claim with the Trust allows claimants up to six (6) years to begin to process their claims. See TDP 5.1(a)(2), 6.3. 7. The Expedited Review Process provides qualifying claimants with a less

burdensome process for pursuing the claims and quicker payment in cash. See TDP 5.3(a). Despite the fact that many claimants can elect to pursue the Expedited Review Process, they instead elect to defer processing and payment of their claims. 8. These Plan provisions can be and are used with respect to claims that are actively

litigated pursuant to rocket dockets in the tort system. Claimants actively seek expedited resolution of their tort claims against the non-bankrupt defendants, while purposely delaying resolution of claims for the same indivisible injuries against the bankruptcy trusts -- despite the fact that compensation is available from the trusts on an expedited basis. The Trust documents not only set up an easy, no-fault process for payment of claims, but also allow the Trustees to pay claims that do not meet any minimum exposure requirements. The Trust process can and will pay money to claimants quickly. 9. The volitional delay provisions in the Plan can and will be used to delay the

payment of compensation by the Trust until after the conclusion of the tort case against the non-bankrupt defendants. This will preclude set-offs, settlement credits and allocations of

liability under state law in the tort system and will unfairly skew negotiations. The provisions create a real prospect for double recovery for a single, indivisible injury. OBJECTIONS 10. Owens-Illinois objects to confirmation of the Plan for several reasons. First, as an

alleged joint tortfeasor that has contribution and indemnity rights against the Debtors, its
3

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interests were not fairly represented in the Plan negotiations.

Owens-Illinois opposes the

volitional delay provisions in the Trust Documents. The manner in which this Court resolves the Plan will have a profound effect on the future course of asbestos litigation in this country. Confirmation of the Plan, with the TDP as written, should be denied unless and until these shortcomings are rectified. ARGUMENT A. The Trust Fails to Protect the Interests of Asbestos Co-Defendants. 11. The debtors and the committees appointed in a chapter 11 case have a continuing

fiduciary duty to act in the best interest of all creditors and to ensure that a fair and confirmable plan of reorganization is proposed. Likewise, bankruptcy courts have a responsibility to

administer bankruptcy cases in a fair and equitable manner, to ensure that the assets of the debtor will be allocated in a manner consistent with the valid claims and interests of all creditors and shareholders and to oversee the treatment or abuse of the bankruptcy process by parties. 12. Despite these ongoing obligations, none of the entities that negotiated the TDP or

Trust Agreement adequately represented the interests of the co-defendants, with the result being that the rights of the co-defendants to fair set-offs and/or credits for Trust payments are impaired. It is a fundamental principle that the interests of the asbestos plaintiffs are profoundly and directly adverse to that of the co-defendants. In re Joint Eastern and Southern District Asbestos Litigation, 982 F.2d 721, 739 (2d Cir. 1992) (The health claimants and the co-defendant manufacturers have been adversaries for many years in thousands of lawsuits in courts throughout the country.). The Second Circuit recognized that the interests of the asbestos plaintiffs and co-defendants are profoundly adverse to each other [as] the class of health claimants cannot possibly represent the class of co-defendant manufacturers in determining what
4

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rights the latter will have against the Trust by way of contribution or setoff, a determination that directly affects the value of the health claimants claims against the manufacturers. Id. at 739-40. 13. To the extent Plan Proponents argue that indirect claimants voted in favor of the

Plan, that is incorrect. The Debtor unilaterally put indirect claimants in the same class as the thousands of claims submitted by the asbestos claimants and then negotiated a deal for those claimants to support the Plan. The acceptance by that class in no way negates the validity of Owens-Illinoiss objection. Further, as the Second Circuit recognized, the Asbestos Claimants Committee cannot purport to settle any rights or claims of the co-defendants. See In re Joint Eastern and Southern District Asbestos Litigation, 982 F.2d 721, 739-740 (2d Cir. 1992); see also In re ACandS, Inc., 311 B.R. 36, 43 (Bankr. D. Del. 2004) (found that a plan was not proposed in good faith where the plan was largely drafted by and for the benefit of the prepetition committee.). B. The TDP Encourages Volitional Delays and Facilitates Duplicative Recoveries for the Same Injuries. 14. The TDP treats claims as timely filed if the claim is filed within three (3) years

after the Initial Claims Filing Date, after meeting certain tolling provisions. See TDP 5.1(a)(2). Most states only provide a two (2) year limitations period. The claimant can also elect to defer processing of the claim or withdraw a claim and re-file another claim, at any time, without affecting the status of the claim for statute of limitations purposes. In fact, a claimant can elect to defer processing of the claim for three (3) years without affecting the claim for statute of limitation purposes. See TDP 6.3. Together, these provisions can defer claims processing for six (6) years or more. See TDP 5.1(a)(2), 6.3.

ME1 7986876v.1

15.

While the delays are taking place, the plaintiffs are moving forward with litigation

against the co-defendants in the tort system, often receiving expedited resolution of the tort claims of in extremis plaintiffs based on arguments that compensation and justice must be provided in the plaintiffs waning lifetime. There is no plausible argument for allowing these same claimants purposely to delay seeking compensation and justice from the Trust. Such delay merely distorts the process under state law whereby settlement credits, verdict off-sets and liability allocations are made in the tort system. 16. The plaintiffs have a single, indivisible injury. Joint and several liability in the

tort system cannot operate fairly if Trust compensation is intentionally delayed until after the tort case for the same injury is resolved. The prospect for double recovery is clear and raises serious questions of public policy. 17. The no-fault compensation system created by the Trust and the tort system should

not function blind to each other. These two systems are providing compensation for indivisible injuries allegedly caused by bankrupt and non-bankrupt defendants. To allow plaintiffs to postpone their bankruptcy trust recovery while seeking expedited recovery in the tort system is fundamentally unfair. It allows the plaintiffs to deprive the co-defendants of their right to a credit in the tort system for amounts paid by the Trust and deprives the co-defendants right to discover the basis for the plaintiffs claims in order to have the jury allocate a share of responsibility to the bankrupt party under state law. Accordingly, the Plan and the Trust

documents incorporated therein cannot be approved as drafted.

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C.

The Plan Does Not Comply With 11 U.S.C. 1129. 18. Pursuant to Section 1129(a)(3), the court shall confirm a plan only if the plan has

been proposed in good faith and not by any means forbidden by law. See 11 U.S.C. 1129(a)(3). The determination of whether a proposed plan complies with Section 1129(a)(3) is a two part test -- the plan must be proposed in good faith and not by any means forbidden by law. See, e.g., Matter of Cajun Elec. Power Co-Op Inc., 150 F.3d 503, 519 (5th Cir. 1998) (performing both a good faith analysis and a legality analysis pursuant to Section 1129(a)(3)). 19. The "good faith" requirement of Section 1129(a)(3) has been held to alternatively

require either "(1) the plan be consistent with the objectives of the Bankruptcy Code; (2) the plan be proposed with honesty and good intentions and with a basis for expecting that reorganization can be achieved; or (3) there was fundamental fairness in dealing with the creditors." Stonington Partners, Inc. v. Official Committee of Unsecured Creditors (In re Lernout & Hauspie Speech Products N.V.), 308 B.R. 672, 675 (D. Del. 2004) (internal citations omitted). However, courts have emphasized that when considering "good faith" of a plan, the most important feature is an inquiry into the fundamental fairness of the plan. See, e.g., In re Coram Healthcare Corp., 271 B.R. 228, 234 (Bankr. D. Del. 2001). 20. As discussed above, the Plan is not fair to asbestos co-defendants, nor does it

comply with 11 U.S.C. 1129, a pre-requisite for Plan confirmation. For this reason, as well as the other reasons stated herein, the Plan cannot be confirmed in its current form. D. Reservation of Rights With Regard to Section 6.5 of the TDP. 21. Owens Illinois does not object to Section 6.5 of the TDP to the extent that the

Debtors acknowledge and confirm that Section 6.5 permits any interested party to obtain a subpoena from any Court having personal jurisdiction over the Trust and subpoena records from
7

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the Trust pursuant to that subpoena. To the extent the Debtors or any Plan Proponents assert a more restrictive interpretation of Section 6.5 of the TDP, Owens Illinois expressly reserves the right to supplement this Objection to address Section 6.5 of the TDP. CONCLUSION WHEREFORE, for the reasons stated above, the Plan, and the Trust documents incorporated into the Plan, fail to satisfy the legal requirements necessary for Plan confirmation. For all of these reasons, Owens-Illinois respectfully urges the Court to deny confirmation of the Plan, and grant such other and further relief as deemed just and proper.

/s/ Eduardo J. Glas Eduardo J. Glas, Esquire (# EG7027) McCARTER & ENGLISH, LLP 245 Park Avenue 27th Floor New York, New York 10167 (212) 609-6800 - Telephone (212) 609-6921 - Facsimile eglas@mccarter.com and Katharine L. Mayer, Esquire Daniel M. Silver, Esquire McCarter & English, LLP Renaissance Centre 405 N. King Street, 8th Floor Wilmington, DE 19899 (302) 984-6300 - Telephone (302) 984-6399 - Facsimile kmayer@mccarter.com Attorneys for Owens-Illinois, Inc. Dated: January 5, 2009

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Hearing Date & Time: January 12, 2009 at 4:00 p.m. EST Objection Deadline: January 9, 2009 at 12:00 p.m. EST BRUNE & RICHARD LLP Susan Brune Theresa Trzaskoma 80 Broad Street New York, New York 10004 Telephone: (212) 668-1900 Facsimile: (212) 668-0315 -andSTUTZMAN, BROMBERG, ESSERMAN & PLIFKA, A PROFESSIONAL CORPORATION Sander L. Esserman (Admitted Pro Hac Vice) Andrea L. Niedermeyer (Admitted Pro Hac Vice) 2323 Bryan Street, Suite 2200 Dallas, Texas 75201 Telephone: (214) 969-4900 Facsimile: (214) 969-4999 Counsel for Samuel Issacharoff in his Capacity as the Proposed Legal Representative for Future Claimants

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------------X ) In re ) ) T H AGRICULTURE & NUTRITION, L.L.C. ) ) Debtor. ) --------------------------------------------------------------X

Chapter 11 Case No. 08-14692 (REG)

RESPONSE OF LEGAL REPRESENTATIVE FOR FUTURE ASBESTOS CLAIMANTS TO AMENDED STATEMENT OF VOLKSWAGEN GROUP OF AMERICA, INC. IN SUPPORT OF MOTION TO MODIFY SCHEDULING ORDER ENTERED NOVEMBER 25, 2008

TABLE OF CONTENTS I. INTRODUCTION .................................................................................................................. 1 II. RESPONSE ........................................................................................................................... 4 A. B. C. Volkswagen Lacks Standing to Be Heard in THANs Reorganization Case. ..................................................................................................................... 4 Volkswagen Need Only Consult 11 U.S.C. 524(g) to Fully Comprehend the Role of the FCR in the Plan Process. .......................... 10 Even if Volkswagen Were a Co-Defendant with THAN in Certain Lawsuits Involving Asbestos Personal Injury, Volkswagen Could Not Complain of the Plan. ..................................................................................... 12

III. CONCLUSION.................................................................................................................. 15 TABLE OF AUTHORITIES Cases

Aetna Cas. & Surety Co. v. Georgia Tubing Co., No. 93 Civ. 3659 (LAP), 1995 WL 429018 (S.D.N.Y. Jul 20, 1995), affd, 93 F.3d 56 (2d Cir. 1996)........................... 15 Ex parte Levitt, 302 U.S. 633 (1937) ............................................................................ 6 Gillespie v. City of Indianapolis, 185 F.3d 693 (7th Cir. 1999), cert. denied, 528 U.S.
1116 (2000) ................................................................................................................. 5

In re Amatex Corp., 110 B.R. 168 (Bankr. E.D. Pa. 1990)......................................... 15 In re APCO Liquidating Trust, 370 B.R. 625 (Bankr. D. Del. 2007) ......................... 14 In re B. Cohen & Sons Caterers, Inc., 124 B.R. 642 (E.D. Pa. 1991)........................... 9 In re Drexel Burnham Lambert Group, Inc., 146 B.R. 98 (Bankr. S.D.N.Y. 1992) .. 14 In re GCO Servs., LLC, 324 B.R. 459 (Bankr. S.D.N.Y. 2005) .................................. 14 In re Ionosphere Clubs, Inc., 101 B.R. 844 (Bankr. S.D.N.Y. 1989) .......................... 16 In re James Wilson Assocs., 965 F.2d 160 (7th Cir. 1992)........................................... 4 In re Johns-Manville Corp., 68 B.R. 618 (Bankr. S.D.N.Y. 1986), affd, 78 B.R. 407 (S.D.N.Y. 1987), affd sub nom, Kane v. Johns-Manville Corp., 843 F.2d 636 (2d

Cir. 1988) .................................................................................................................... 9

In re Keck, Mahin & Cate, 241 B.R. 583 (Bankr. N.D. Ill. 1999) ................................ 9 In re Newcare Health Corp., 244 B.R. 167 (B.A.P. 1st Cir. 2000) ............................... 9
ii

In re Pub. Serv. Co. of N.H., 88 B.R. 546 (Bankr. D.N.H. 1988) ................................. 3 In re Quigley Co., Inc., 391 B.R. 695 (Bankr. S.D.N.Y. 2008).................. 1, 3, 4, 5, 8, 9 In re Wonder Corp. of America, 70 B.R. 1018 (Bankr. D. Conn. 1987) ....................... 9 Kane v. Johns-Manville Corp. (In re Johns-Manville Corp.), 843 F.2d 636 (2d Cir.
1988) ........................................................................................................................... 7 (D. Minn. May 25, 2006) ............................................................................................ 8

OneBeacon America Ins. Co. v. A.P.I., Inc., No. Civ. 06-167(JNE), 2006 WL 1473004

Schlesinger v. Reservists Comm. to Stop the War, 418 U.S. 208 (1974)................. 6, 7 United States ex rel. Chapman v. Fed. Power Commn, 345 U.S. 153 (1953)............. 4 United States v. Richardson, 418 U.S. 166 (1974) ....................................................... 6 Warth v. Seldin, 422 U.S. 490 (1975)................................................................ 4, 5, 6, 7 Williamsport Natl Bank v. Caringi (In re Caringi), 19 B.R. 12 (Bankr. M.D. Pa.
Statutes 11 U.S.C. 101(41) ...................................................................................................... 11 11 U.S.C. 1109(b) ........................................................................................................ 8 11 U.S.C. 1124(1) ........................................................................................................ 4 11 U.S.C. 1126(f) ......................................................................................................... 4 11 U.S.C. 502(e)(1)(B) ........................................................................................... 2, 14 11 U.S.C. 509............................................................................................................... 2 11 U.S.C. 524(g)(2)(B)(ii)(V) ................................................................................. 3, 11 11 U.S.C. 524(g)(4)(B) ........................................................................................... 3, 11 U.S. CONST. art. I, 6, cl. 2 ........................................................................................... 6 U.S. CONST. art. III, 2. ................................................................................................ 2 1982) ......................................................................................................................... 16

iii

RESPONSE OF LEGAL REPRESENTATIVE FOR FUTURE ASBESTOS CLAIMANTS TO AMENDED STATEMENT OF VOLKSWAGEN GROUP OF AMERICA, INC. IN SUPPORT OF MOTION TO MODIFY SCHEDULING ORDER ENTERED NOVEMBER 25, 2008 Professor Samuel Issacharoff, as the Court-appointed legal representative for future claimants (the FCR), submits this response to the Amended Statement of Volkswagen Group of America, Inc. in Support of Motion to Modify Scheduling Order Entered November 25, 2008 (Volkswagens Statement) (Dkt. No. 175) and respectfully states as follows: I. INTRODUCTION Volkswagens Statement that purports to be in support of the Certain Insurers motion to modify the November 25, 2008, Scheduling Order, provides a perfect example of what the law of standing is designed to foreclose. Strangers lacking a stake in a debtors reorganization cannot just wander into court and insinuate themselves into a chapter 11 proceeding. That is precisely what Volkswagen is attempting to do. The threshold question with respect to standing is constitutional: whether someone seeking to be heard has a sufficiently concrete, personalized stake in the outcome a tangible injury in fact. See, e.g., In re Quigley Co., Inc., 391 B.R. 695, 70102 (Bankr. S.D.N.Y. 2008). Without supporting details, Volkswagen alleges that it is a co-defendant with [THAN] in certain [pending] lawsuits involving asbestos personal

injury tort claims and/or wrongful death actions .1 That is hardly sufficient to establish Volkswagens standing to be heard in THANs chapter 11 case. Some hypothetical claim that may possibly arise under certain circumstances at some time cannot demonstrate that Volkswagen has a concrete, personalized stake in THANs reorganization the hallmark of Article IIIs case or controversy requirement.2 Volkswagens reliance on some remote contingency also runs head-on into the Bankruptcy Codes mandate that contingent claims are disallowed under 11 U.S.C. 502(e)(1)(B) and the parallel provision of 11 U.S.C. 509 that hypothetical subrogation claims are not recognized in bankruptcy. Reorganization cases deal with serious issues among parties with real issues. They do not have time to sort out the hypothetical inquiries of unaggrieved parties. Volkswagen raises rhetorical questions about the FCRs role in THANs reorganization case and yet betrays a fundamental misunderstanding of the important statutory role assigned by Congress to the FCR. It also, intentionally or unintentionally, sidesteps a critical factual point. Both the Plan and the implementing Asbestos PI Trust Distribution Procedures (TDPs) provide for asbestos demands (i.e., future claims) that may be founded upon contribution or indemnity claims of codefendants. If Volkswagen or anyone else should ever establish a real, concrete, cognizable claim for contribution arising from THANs asbestos liabilities founded on
1 Volkswagens Statement, 6. identifies no such lawsuit. 2 U.S. CONST. art. III, 2.

Despite the allegation, Volkswagens Statement

state law, the TDPs provide a mechanism for satisfying such a claim. As will be demonstrated below, it is not the role of the FCR to represent individual future demand holders or specific corporate demand holders who may later bring a concrete claim against the section 524(g) Trust. Professor Issacharoffs role is to assure that the Trust is fair and equitable to all future claimants and that the Trust will be in a financial position to pay, present [asbestos] claims and future [asbestos] demands in substantially the same manner. 11 U.S.C. 524(g)(4)(B) and 524(g)(2)(B)(ii)(V). Whatever Volkswagens agenda may be, it is plainly improper. Unaggrieved bystanders may not disrupt chapter 11 proceedings. The Courts patience is not a license to an intermeddler to work mischief in bankruptcy proceedings. Courts must take care not to be so liberal in granting applications [to be heard] as to over-burden the reorganization process by allowing numerous parties to interject themselves into the case on every issue, to the extent that the goal of a speedy and efficient reorganization is hampered. In re Pub. Serv. Co. of N.H., 88 B.R. 546, 554 (Bankr. D.N.H. 1988). As the Quigley court cogently noted, [p]roceedings would quickly grind to a halt if the court had to hear every party on every issue. In re Quiqley Co., Inc., 391 B.R. at 703 (citations omitted).

II. RESPONSE A. Volkswagen Lacks Standing to Be Heard in THANs Reorganization Case. Asbestos claimants have standing to be heard in THANs chapter 11 case. They are the principal creditor constituency whose rights stand to be impaired3 by the Plan.4 They have voted on the Plan and have overwhelmingly approved it. Other creditors whose rights the Plan would leave unimpaired are statutorily deemed to have accepted the Plan. 11 U.S.C. 1126(f). And this is as it should be; creditors whose claims a plan would not impair lack standing to complain about the plan. As the FCR has previously noted, the Supreme Court describes the law of standing as a complicated specialty of federal jurisdiction . United States ex rel.

Chapman v. Fed. Power Commn, 345 U.S. 153, 156 (1953). In essence the question of
standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues. Warth v. Seldin, 422 U.S. 490, 498 (1975). In the specific context of an asbestos reorganization case, Chief Judge Bernstein has stated that only one who has a legally protected interest that could be affected by a bankruptcy proceeding is entitled to assert that interest, and even then, only with respect to those issues to which its interest pertains. In re Quigley Co., Inc., 391 B.R. at 703 (quoting In re James Wilson Assocs., 965 F.2d 160, 169 (7th Cir. 1992)). Even a
3 Generally, under the Code a claim is impaired unless a plan leaves unaltered the legal, equitable, and contractual rights to which such claim entitles the holder . 11 U.S.C. 1124(1). 4 Prepackaged Plan of Reorganization of T H Agriculture & Nutrition, L.L.C. Under Chapter 11 of the Bankruptcy Code (Dkt. No. 20).

party in interest cannot challenge portions of a plan that do not affect its direct interests. In re Quigley Co., Inc., 391 B.R. at 703 (citations omitted). In Gillespie v. City of Indianapolis, 185 F.3d 693, 701 (7th Cir. 1999), cert.

denied, 528 U.S. 1116 (2000), the Seventh Circuit distilled the standing inquiry to its
earthy, rhetorical essence: whose ox is being gored? There are, of course, two parts to the inquiry. For ones ox to be gored requires that one have an ox in the first instance. Volkswagen has yet to show that it has an ox in THANs reorganization, and the burden of alleging facts establishing standing always lies with the party seeking to invoke the jurisdiction of the court. Warth, 422 U.S. at 518. Standing jurisprudence is replete with decisions where the complaining party lacked an ox at all, let alone one with actual or prospective wounds, and was accordingly sent packing.

Warth v. Seldin, a decision widely cited for its standing pronouncements,


involved a municipal zoning ordinance allocating 98% of a towns vacant land to singlefamily, detached housing subject to additional requirements (lot size, setback, floor area, and habitable space). Warth, 422 U.S. at 495. Certain low and moderate income plaintiffs alleged that the ordinance and its pattern of enforcement excluded them from living in the town in violation of constitutional and statutory rights. Id. at 502. The Court noted the plaintiffs failure to allege facts from which it reasonably could be inferred that, absent the respondents restrictive zoning practices, there is a substantial probability that they would have been able to purchase or lease in [the town] ... and concluded that they lacked standing. Id. at 504-08. Put more succinctly,

the plaintiffs could not be heard to complain for want of a reasonable inference that they had oxen of their own. Nor is there standing where everyones ox is gored. [W]hen the asserted harm is a generalized grievance shared in substantially equal measure by all or a large class of citizens, that harm alone normally does not warrant exercise of jurisdiction. Warth, 422 U.S. at 499 (citing Schlesinger v. Reservists Comm. to Stop the War, 418 U.S. 208, 220-21 (1974); United States v. Richardson, 418 U.S. 166 (1974); Ex parte Levitt, 302 U.S. 633, 634 (1937)). Schlesinger, for example, was a class action against the Secretary of Defense on behalf of all U.S. citizens and taxpayers. Schlesinger, 418 U.S. at 211. The suit challenged the membership of Members of Congress in the Armed Forces Reserve as an alleged violation of the Incompatibility Clause.5 Schlesinger, 418 U.S. at 209-211. The Court held that the plaintiffs status as citizens or taxpayers did not confer standing on them to challenge the statute in question. Id. at 209.6

5 The Incompatibility Clause provides that No Senator or Representative shall, during the Time for which he was elected, be appointed to any civil Office under the Authority of the United States, which shall have been created, or the Emoluments whereof shall have been encreased during such time; and no Person holding any Office under the United States, shall be a Member of either House during his Continuance in Office. U.S. CONST. art. I, 6, cl. 2. At the time the Schlesinger suit was filed, 130 members of the 91st Congress were also members of the military reserves. Schlesinger, 418 U.S. at 211, n.2. 6 Much of the Courts reasoning was based on constitutional standing infirmities, particularly the abstract nature of the plaintiffs claimed injuries (i.e., that the claimed nonobservance of the Incompatibility Clause would deprive citizens of the faithful discharge of legislative duties by Reservist Members of Congress). Schlesinger, 418 U.S. at 217. To permit a complainant who has no concrete injury to require a court to rule on important constitutional issues in the abstract would create the potential for abuse of the judicial process, distort the role of the Judiciary in its relationship to the Executive and the

[Footnote continued on next page] 6

Finally, it is well-settled that one may be heard only with respect to injuries to ones own ox. [T]he plaintiff generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties.

Warth, 422 U.S. at 499 (citations omitted). The leading decision applying this principle
in bankruptcy context is, of course, Kane v. Johns-Manville Corp. (In re Johns-Manville

Corp.), 843 F.2d 636 (2d Cir. 1988). There, the court declined to permit Kane, a person
with a current asbestos disease, to champion the rights of third partiesfuture asbestos claimantsin addition to his own. It was the court-appointed Legal Representative for Future Claimantsthe one with the oxwho successfully challenged Kanes standing to assert the rights of a constituency to which Kane did not belong. Kane, 843 F.2d at 641. Here Volkswagen appears to be championing neither its own rights nor those of anyone else, except to the extent that it allows itself to be a cats paw for the Certain Insurers, supportive of their efforts at delay. Volkswagen lacks an ox altogether or, alternatively, its conjectural grievances are so generalized as to be shared, in the most abstract sense, by most of the world at large. As noted above, Volkswagen declares itself to be a co-defendant with THAN in certain lawsuits, but does not identify any such lawsuit. Volkswagen complains of the Plans alleged deprivations and impairment of rights of corporate cross-claim [Footnote continued from previous page]
Legislature and open the Judiciary to an arguable charge of providing government by injunction. Id. at 222.

claimants7 without explaining why such alleged deprivations and impairment are relevant to Volkswagen. Indeed, in OneBeacon America Ins. Co. v. A.P.I., Inc., No. Civ. 06-167(JNE), 2006 WL 1473004, at *6, n.1 (D. Minn. May 25, 2006)an unreported asbestos decision cited in Quigley8the court rejected an assertion of standing grounded in a hypothetical cross-claim: Having failed to offer any support for a contribution claim, OneBeacon cannot demonstrate that the injunctive relief contemplated by the Modified Plan directly and adversely affects its pecuniary interests.

OneBeacon Am. Ins. Co., 2006 WL 1473004, at *6, n.1 (citations omitted).
And if dissatisfaction with the generalized effects of Section 524(g) is what prompts Volkswagen to attempt to involve itself in this case, that would be a generalized grievance insufficient to confer standing. Volkswagens Statement, without more, does not establish Volkswagens bona fides as a party in interest, though it contrives to cast itself as one.9 As in Quigley, only one who has a legally protected interest that could be affected by a bankruptcy

7 8 9

Volkswagens Statement, 9-10. 391 B.R. at 704-05. Section 1109(b) provides that [a] party in interest, including the debtor, the trustee, a creditors committee, an equity security holders committee, a creditor, an equity security holder, or any indenture trustee, may raise and may appear and be heard on any issue in a case under this chapter.

11 U.S.C. 1109(b).

proceeding is entitled to assert that interest, and even then, only with respect to those issues to which its interest pertains. In re Quigley Co., Inc., 391 B.R. at 703. Volkswagen does not come close to making the cut. The banks in In re Wonder Corp. of America, 70 B.R. 1018 (Bankr. D. Conn. 1987) came somewhat closer to the threshold for standing than Volkswagen, but still were barred from intermeddling. They had liens and security interests in virtually all of the debtors assets, but lacked standing to object to confirmation of the debtors plan because it left them unimpaired.10 Id. at 1019. The bankruptcy court focused on the practical importance of standing limitations: The doctrine of standing serves to protect the adversarial system which constitutes the cornerstone of American judicial process. Pursuant to this system, courts generally will only hear the arguments of parties who have a direct stake in the consequences of a proceeding.

Id. at 1023 (quoting In re Johns-Manville Corp., 68 B.R. 618, 624 (Bankr. S.D.N.Y.
1986), affd, 78 B.R. 407 (S.D.N.Y. 1987), affd sub nom, Kane v. Johns-Manville

Corp., 843 F.2d 636 (2d Cir. 1988)).


Thus, in chapter 11 a party may have standing for some matters and not others. In re Newcare Health Corp., 244 B.R. 167, 172 (B.A.P. 1st Cir. 2000). Here, Volkswagen has no stake at all in THANs reorganization. It is not a question of

10 See In re Keck, Mahin & Cate, 241 B.R. 583, 596 (Bankr. N.D. Ill. 1999) (creditors do not have standing to challenge portions of a reorganization plan that do not affect their direct interest); In re B. Cohen & Sons Caterers, Inc., 124 B.R. 642, 647 (E.D. Pa. 1991) (creditor unimpaired by those portions of the [p]lan deemed objectionable held to lack standing to challenge plans confirmation).

THANs Plan leaving Volkswagen unimpaired; the Plan does not even affect Volkswagen. THAN is entirely correct when it asserts that [h]aving failed to explain what interest it holds that are [sic] being compromised by the Plan, Volkswagen has failed to establish cause to seek to modify the Scheduling Order.11 B. Volkswagen Need Only Consult 11 U.S.C. 524(g) to Fully Comprehend the Role of the FCR in the Plan Process. Curiously, Volkswagen claims that it needs additional time to interpret the Plan so that it can investigate the precise role of the appointed Future Claims Representative. Volkswagen Statement, 8. The FCRs role in THANs reorganization case, however, is not defined in the Plan but prescribed by Congress. Section 524(g)(4)(B) provides as follows: (B) Subject to subsection (h), if, under a plan of reorganization, a kind of demand described in such plan is to be paid in whole or in part by a trust described in paragraph (2)(B)(i) in connection with which an injunction described in paragraph (1) is to be implemented, then such injunction shall be valid and enforceable with respect to a demand of such kind made, after such plan is confirmed, against the debtor or debtors involved, or against a third party described in subparagraph (A)(ii), if (i) as part of the proceedings leading to issuance of such injunction, the court appoints a legal

representative for the purpose of protecting the rights of persons that might subsequently assert demands of such kind, and

11 Debtors Response to Amended Statement of Volkswagen Group of America Inc. in Support of Motion to Modify Scheduling Order (Dkt. No. 193), 22.

10

(ii)

the court determines, before entering the order confirming such plan, that identifying such debtor or debtors, or such third party (by name or as part of an identifiable group), in such injunction with respect to such demands for purposes of this subparagraph is fair and equitable with respect to the persons that might subsequently assert such demands, in light of the benefits provided, or to be provided, to such trust on behalf of such debtor or debtors or such third party.

11 U.S.C. 524(g)(4)(B) (emphasis added). Future claimants representatives generally, and the FCR specifically, are congressionally-mandated, court-appointed fiduciaries charged not only with protecting the rights of all persons (including individuals, partnerships, and corporations)12 that might subsequently assert asbestos demands against a particular debtor, but also with ensuring that any channeling injunction entered pursuant to section 524(g)(1) is fair and equitable with respect to all persons that might assert asbestos demands in the future. 11 U.S.C. 524(g)(4)(B)(i-ii). A future claimants representative is also charged with ensuring that the asbestos trust will operate through mechanisms that provide reasonable assurance that the trust will value, and be in a financial position to pay, present [asbestos] claims and future [asbestos] demands in substantially the same manner. 11 U.S.C. 524(g)(2)(B)(ii)(V).

12 Pursuant to 11 U.S.C. 101(41), the term person includes individuals, partnerships, and corporations.

11

Volkswagens insinuations notwithstanding, the FCR is actively protecting the interests of all holders of asbestos demands (i.e., future asbestos claims).13 The FCR has conducted analyses of THANs assets and liabilities, including pending asbestos-related claims against THAN, investigated THANs insurance available to satisfy pending and future asbestos-related claims and demands, participated in prepetition negotiations leading up to the commencement of this case, and negotiated the global settlement of the potential asbestos-related liabilities of THAN and certain related parties, making certain that the terms and provisions of the Plan, the Trust and the TDPs are fair and equitable to the holders of asbestos demands and that such provisions are designed to treat current and future asbestos claims in substantially the same manner. In sum, the FCR has done, and will continue to do, exactly what Congress mandated. C. Even if Volkswagen Were a Co-Defendant with THAN in Certain Lawsuits Involving Asbestos Personal Injury, Volkswagen Could Not Complain of the Plan. Under the Plan, Asbestos PI Claims, which include a subset of Indirect Asbestos PI Claims, are to be channeled to and assumed by the Asbestos PI Trust and determined and paid in accordance with the terms, provisions and procedures of the TDPs. Plan, Art. 4.4. Indirect Asbestos PI Claims include any cross-claims and contribution demands (i.e., future claims) derivative of THANs own asbestos

13 It must be borne in mind that anyone who currently has an Asbestos PI Claim is not part of the FCRs constituency.

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liability that might arise.14 Such demands include the hypothetical scenario that Volkswagen describes in its unsupported allegation of being a co-defendant with THAN in pending asbestos litigation. Volkswagens Statement, 6. Under the TDPs, Indirect Asbestos PI Claims are subject to the same categorization, evaluation, and payment provisions of the TDP as all other Asbestos PI Claims. TDPs, Sec. 2.6. Indirect Asbestos PI Claims are to be treated as presumptively valid and paid by the Asbestos PI Trust subject to the applicable Payment Percentage if certain requirements are met.15 To establish a presumptively valid Indirect Asbestos PI Claim, the Indirect Claimants aggregate liability for the Direct Claimants claim must have been fixed, liquidated and paid fully by the Indirect Claimant by settlement (with an appropriate full release in

14 Indirect Asbestos PI Claims is defined broadly, including, inter alia, cross-claims, contribution claims, subrogation claims, reimbursement claims, indemnity claims and other similar derivative Claims and Demands, whether in the nature of or sounding in tort, or under contract, warranty, guarantee, contribution, joint and several liability, subrogation, reimbursement, or indemnity, or any other theory of law for, arising out of, resulting from, or relating to death or personal injury caused, or allegedly caused, by the presence of, or exposure to, asbestos in any way used by THAN or any Entity for whose products or operations THAN has liability or is alleged to have liability to the extent arising from acts, omissions, business or operations of THAN. Plan, Art. 1.78. 15 The requirements are that (a) such claim satisfied the requirements of the Bar Date for such claims established by the Bankruptcy Court, if applicable, and is not otherwise disallowed by Section 502(e) of the Bankruptcy Code or subordinated under Section 509(c) of the Bankruptcy Code, and (b) the holder of such claim (the Indirect Claimant) establishes to the satisfaction of the Asbestos PI Trustees that (i) the Indirect Claimant has paid in full the liability of the Asbestos PI Trust to the individual claimant to whom the Asbestos PI Trust would otherwise have had a liability under the TDP (the Direct Claimant), (ii) the Direct Claimant and the Indirect Claimant have forever and fully released the Asbestos PI Trust and the Asbestos Protected Parties from all liability to the Direct Claimant and the Indirect Claimant, and (iii) the claim is not otherwise barred by a statute of limitations or repose or by other applicable law. TDP, Sec. 5.6.

13

favor of the Asbestos PI Trust and the Asbestos Protected Parties) or a Final Order provided that such claim is valid under the applicable state law. TDPs, Sec. 5.6. But even if an Indirect Claimant cannot meet the presumptive requirements, such claimant may request that the Asbestos PI Trust review the claim individually. Id. If the Indirect Claimant can show that it has paid all or a portion of such a liability, the Asbestos PI Trust is obliged to reimburse the Indirect Claimant the amount of the liability so paid, times the then applicable Payment Percentage; provided, however, that in no event is such reimbursement to exceed the amount to which the Direct Claimant would have otherwise been entitled under the TDP. Id. It is useful to examine what would happen to hypothetical cross-claims and contribution claims in the absence of the Plan. Section 524(g) is unique in the Bankruptcy Code in affording protection to demands as opposed merely to claims. Without a plan predicated on section 524(g), contingent claims for reimbursement or contribution would face congressionally-mandated disallowance under 11 U.S.C. 502(e)(1)(B), which provides: [T]he court shall disallow any claim for reimbursement or contribution of an entity that is liable with the debtor on the claim of a creditor, to the extent that such claim for reimbursement or contribution is contingent as of the time of allowance or disallowance of such claim for reimbursement or contribution. 11 U.S.C. 502(e)(1)(B); see also In re APCO Liquidating Trust, 370 B.R. 625, 631 (Bankr. D. Del. 2007); In re GCO Servs., LLC, 324 B.R. 459, 465 (Bankr. S.D.N.Y. 2005); In re Drexel Burnham Lambert Group, Inc., 146 B.R. 98, 100-01 (Bankr. S.D.N.Y. 1992). Application of section 502(e) is mandatory; a court has no

14

discretion to allow a reasonable estimation of a co-liable entitys contingent claim for reimbursement or contribution. Similarly, section 509 implements this same congressional policy against consideration of contingent, hypothetical claims, requiring actual payment by a party seeking to be subrogated to the rights of a creditor before he may participate in an estate. In re Amatex Corp., 110 B.R. 168, 168 (Bankr. E.D. Pa. 1990) (holding that the scope of 502(e)(1)(B), in conjunction with 11 U.S.C. 509(a), operates to disallow any contingent co-liability, even if that co-liability has not been judicially established, unless the co-obligor pays the liability and becomes subrogated to the rights of the underlying creditor therefor), cited with approval by, Aetna Cas. &

Surety Co. v. Georgia Tubing Co., No. 93 Civ. 3659 (LAP), 1995 WL 429018, at *4
(S.D.N.Y. Jul 20, 1995), affd, 93 F.3d 56 (2d Cir. 1996). Volkswagen, alleging at best a hypothetical, contingent claim, is a mere trespasser in THANs bankruptcy case. THANs asbestos creditors, as has been noted, overwhelmingly voted in favor of the Plan. Volkswagen is not a creditor of THANs, asbestos or otherwise. Volkswagen must not be allowed to delay recoveries to actual asbestos creditors or to frustrate Congress intent to provide for the payment of future asbestos demands through the creation of a section 524(g) trust. III. CONCLUSION Standing rules exist for a reason and form a large part of federal jurisprudence. No one can be heard in court without a sufficiently discernible stake

15

in the outcome. Volkswagen bills itself as the Peoples Car, but it is not the peoples ombudsman in this or any chapter 11 proceeding. The notion that anyone with anything to say may be heard on any issue in a chapter 11 case is irreconcilable with chapter 11s fundamental purpose, which is reorganization. See,

e.g., Williamsport Natl Bank v. Caringi (In re Caringi), 19 B.R. 12, 14 (Bankr. M.D.
Pa. 1982). If anyone could be heard on any issue, the proceedings could be disrupted or filibustered to the point of torpor. Only those parties sufficiently affected by a Chapter 11 proceeding should be able to appear before it and be heard. In re Ionosphere Clubs, Inc., 101 B.R. 844, 849 (Bankr. S.D.N.Y. 1989). Oddly enough, potential demand holders, as Volkswagen seems to regard itself, actually benefit from the type of plan envisioned by section 524(g) and the important role played by a specially charged fiduciary, such as the FCR here, in bringing such a plan to fruition. That is beside the point, however. Lacking an ox in harms way, Volkswagen cannot be heard in this case. WHEREFORE, for the reasons set forth, the FCR respectfully asks that the Court disregard and, if deemed appropriate, overrule the Amended Statement of Volkswagen Group of America, Inc. in Support of Motion to Modify Scheduling Order Entered November 25, 2008.

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Dated: New York, New York, January 9, 2008

Respectfully submitted, BRUNE & RICHARD LLP By: /s/ Theresa Trzaskoma Theresa Trzaskoma Susan Brune 80 Broad Street New York, New York 10004 Telephone: (212) 668-1900 Facsimile: (212) 668-0315 -andSTUTZMAN, BROMBERG, ESSERMAN & PLIFKA, A PROFESSIONAL CORPORATION Sander L. Esserman (Admitted Pro Hac Vice) Texas Bar No. 06671500 Andrea L. Niedermeyer (Admitted Pro Hac Vice) Texas Bar No. 24032790 2323 Bryan Street, Suite 2200 Dallas, Texas 75201 Counsel for Samuel Issacharoff in his Capacity as the Legal Representative for Future Claimants

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FRANK/GECKER LLP Frances Gecker Joseph D. Frank 325 North LaSalle Street, Suite 625 Chicago, Illinois 60654 (312) 276-1400 telephone (312) 276-0035 facsimile Proposed Counsel to Official Committee of Unsecured Creditors of T H Agriculture & Nutrition, L.L.C.

Hearing Date and Time: January 12, 2009 4:00 p.m.

IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK ) Chapter 11 ) ) Case No. 08-14692 (REG) ) )

In re: T H AGRICULTURE & NUTRITION, L.L.C., Debtor.

RESPONSE OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF T H AGRICULTURE & NUTRITION, L.L.C. TO AMENDED STATEMENT OF VOLKSWAGEN GROUP OF AMERICA, INC. IN SUPPORT OF MOTION TO MODIFY SCHEDULING ORDER The Official Committee of Unsecured Creditors (the Committee) of T H Agriculture & Nutrition, L.L.C. (THAN or the Debtor), by its counsel, Frank/Gecker LLP, hereby responds to the Amended Statement of Volkswagen Group of America, Inc. (Volkswagen) in support of Motion to Modify the Courts First Day Scheduling Order (the Amended Statement). 1. Corporate co-defendants in tort actions arising from exposure to asbestos are not

strangers to asbestos bankruptcy cases. But unlike creditors who look to the bankruptcy process as a means to get paid, opportunistic corporate co-defendants often look to the bankruptcy process as a means to gain an advantage in tort suits being litigated far from the bankruptcy court. Volkswagen has engaged in this opportunistic conduct in the past and appears to be doing so again.

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2.

In the Chapter 11 case of Federal-Mogul Global, Inc., Volkswagen and the other

major automobile manufacturers sought to remove thousands of state-court personal injury and wrongful death claims related to the manufacture and distribution of asbestos-containing automotive friction products to the federal district court in Delaware, where the Federal-Mogul bankruptcy case was pending. See In re Federal-Mogul Global, Inc., 300 F.3d 368 (3d Cir. 2002). The primary reason offered by Volkswagen and the other car manufacturers for the transfer was to have the district court overseeing the bankruptcy case conduct a global Daubert hearing to determine whether the evidence that brakes and other automotive parts cause asbestos disease is based on reliable scientific methodology. Id. at 374. The automakers argued that the promise of the global Daubert hearing is to excise [the Friction Product Claims] from the American judicial system in one fell swoop and [lift] a substantial cloud from over Federal Mogul. Id. quoting Brief of Big Three Automakers at 2. 3. The Federal-Mogul court declined Volkswagens invitation. The district court

held that it lacked subject matter jurisdiction because the state-law friction product suits were not related to the Federal-Mogul bankruptcy and remanded all of the cases. In doing so, the district court recognized, A judgment against [the Friction Product Defendants] will not bind the debtors. No asset of the estate is threatened nor is any re-ordering of creditors in the offing. It is true that recovery by asbestos claimants against movants may give rise to claims, indeed very substantial claims, against the debtors in the future. It is at that time, when the movants appear as creditors of the estate and the facts underlying the liability are adjudicated in the context of the bankruptcy, that the Friction Product Claims will affect the estate. Id. at 376 (quoting District Court slip opinion dated February 15, 2002). Here, just as in Federal-Mogul, Volkswagen does

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not appear as a creditor, but as a corporate defendant in numerous tort suits trying to use this bankruptcy case to gain advantage in state court tort litigation. I. VOLKSWAGEN HAS NO LEGALLY PROTECTED INTEREST THAT COULD BE ADVERSELY AFFECTED BY THIS BANKRUPTCY CASE 4. In ruling on the standing of the insurers, this Court followed In re Quigley Co.,

Inc., 391 B.R. 695 (Bankr. S.D.N.Y. 2008) and recognized that only those with a legally protected interest that could be affected by the bankruptcy case are entitled to assert that interest with respect to any issue to which it pertains. Transcript of Motion Before The Honorable Robert E. Gerber, United States Bankruptcy Judge, December 17, 2008 at p.86. 5. Volkswagen is not a creditor of THAN and has no contractual right of indemnity

against THAN. Indeed, Volkswagen has not even identified a single case where it has been named as a co-defendant with THAN. This is not surprising because there is no evidence that THAN ever did business with Volkswagen. 6. According to THANs own Disclosure Statement, THAN primarily distributed

bulk shipments of chrysotile asbestos fiber. THAN also distributed laundry products and vermiculite that may have contained asbestos, but THAN has never been sued for exposure to laundry products, vermiculite or any other asbestos-containing product. Every case in which THAN has been sued has alleged exposure to a third-party manufacturers product that contained asbestos fiber distributed in bulk by THAN to the manufacturer. More than 80% of the asbestos personal injury cases have alleged exposure to joint compound and joint cement products manufactured by Bondex International and Kelly-Moore Paint Company. The remaining cases allege exposure to products manufactured by a handful of companies that purchased fiber from THAN including Ruco, Inc., DAP, Inc., Flintkote Co., Welco, Certainteed Corp., Kaiser Gypsum Co., Inc., Proko Industries, Inc., W.R.Grace Co., Weyerhauser Co., and United States Gypsum

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Co. See Disclosure Statement with Respect to a Prepackaged Plan of Reorganization of T H Agriculture & Nutrition, L.L.C. Under Chapter 11 of the Bankruptcy Code at pp. 3-4 [Docket No. 21]. None of these companies manufactures automobiles. 7. Despite having no prior business relationship with THAN, Volkswagen claims

that it may assert cross-claims for contribution against THAN if, in the future, Volkswagen is found liable in suits where THAN also has been named as a defendant. If Volkswagen is correct and if this unlikely event were to occur, THANs Plan of Reorganization explicitly provides procedures for Volkswagen to assert its claim and, if the claim is valid, get paid. 8. The Plan defines Indirect Asbestos PI Claims to include cross-claims,

contribution claims, reimbursement claims, indemnity claims and other similar derivative claims. See Prepackaged Plan of Reorganization of T H Agriculture & Nutrition, L.L.C. Under Chapter 11 of the Bankruptcy Code (Plan) at 1.78, p. 10 [Docket No. 20]. Indirect Asbestos PI Claims are included in the definition of Asbestos PI Claim. Plan at 1.13, p. 3. All Asbestos PI Claims, including the Indirect Asbestos PI Claims, are channeled to the Asbestos PI Trust to be paid in accordance with the Asbestos PI Trust Distribution Procedures. Plan at 4.4, p. 19. 9. The Asbestos PI Trust Distribution Procedures (Exhibit C to the Disclosure

Statement) explicitly address Indirect Asbestos PI Claims in Section 5.6. The Indirect Claimant is paid on an expedited basis if the Indirect Claimant meets certain presumptive criteria, such as payment to an individual asbestos claimant to whom THAN would have had a liability. If the Indirect Claimant cannot meet the presumptive requirements, the Indirect Claimant may request individualized review by the Asbestos PI Trust. If the Indirect Claimant is not satisfied with the determination of the Asbestos PI Trust, the Indirect Claimant may mediate or arbitrate its claim under the Alternative Dispute Resolution Procedures adopted by the Asbestos PI Trust. If the

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Indirect Claimant is not satisfied through mediation or arbitration, the Indirect Claimant may bring an action against the Asbestos PI Trust in the tort system. See Asbestos PI Trust Distribution Procedures (Exhibit C to Disclosure Statement) at 5.6, pp. 35-38. The procedures set forth in Section 5.6 are clear and unambiguous. II. VOLKSWAGEN SEEKS DELAY FOR REASONS UNRELATED TO THIS BANKRUPTCY CASE 10. At best, Volkswagen has limited standing to object to the proposed treatment of

its contingent, future claim under Section 5.6 of the Asbestos PI Trust Distribution Procedures. Not surprisingly, Volkswagen never even addresses Section 5.6 because Volkswagen seeks much more. Volkswagen seeks to delay this bankruptcy case in order to gain future advantage in tort cases where it is a named defendant. This ulterior purpose is underscored by the nonsubstantive issues Volkswagen raises. 11. First, Volkswagen states, The need for additional time to interpret the Plan

involves such issues as the role of the Future Claims Representative. Amended Statement at 8. The role of the Future Claimants Representative is created and defined by the Bankruptcy Code. The court must appoint a legal representative for the purpose of protecting the rights of persons that might subsequently assert demands against the debtor. 11 U.S.C. 524(g)(4)(B)(i). Demands are defined by the Bankruptcy Code to include a present or future demand for payment that was not a claim prior to confirmation, arises out of the same or similar conduct that gave rise to the asbestos channeling injunction, and pursuant to the plan is to be paid by the asbestos trust. 11 U.S.C. 524(g)(5). The Bankruptcy Code is unambiguous as to whose interests are represented by the Future Claimants Representative all future claimants who have valid claims assertable against the Asbestos PI Trust, including all future Indirect Asbestos PI Claims. Discovery on this issue is purposeless.

{ THAN / 001 / 00016271.DOC /}

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12.

Next, Volkswagen asserts that the Plan injunction and its TDPs deprive current

corporate cross-claim claimants of their existing state law rights by explicitly eliminating state law trial rights against THAN (and other non-bankrupt entities), and relegating some or all current contribution claim holders to pursuing administrative claims under rules not yet promulgated. Amended Statement at 9. Volkswagen appears to be objecting to the Bankruptcy Code itself. The automatic stay of pending litigation is one of the fundamental purposes of a chapter 11 filing and the channeling of present and future asbestos claims, including indirect claims (see 11 U.S.C. 524(g)(4)(A)(ii)), to a trust is the reason Congress enacted section 524(g) of the Bankruptcy Code. This bankruptcy case is not the forum to protest the Bankruptcy Code. 13. Volkswagen then claims that, The Plan appears to impair the rights of co-

defendants in asbestos litigation to have fault and damages apportioned among them. To amplify this contention, Volkswagen points to the decision of the Illinois Supreme Court in Ready v. United/GoedeckeServices, Inc., 2008 WL 50446833 (Ill. 2008). Volkswagen contends that Ready stands for the proposition that in Illinois comparative fault cannot be apportioned against an entity that is not a defendant at trial. Amended Statement at 10. In fact, in Ready, the Illinois Supreme Court held that the Illinois joint liability statute in effect required that settling defendants not be included on the verdict form for purposes of apportioning liability. Neither this Plan nor this Court can change state law. If Volkswagen is suggesting that the Plan cannot impair Volkswagens state-law rights, Volkswagen is mistaken. A bankruptcy plan of reorganization invariably alters creditors state-law rights by re-negotiating or discharging debts. If Volkswagen is suggesting that this Plan is unconfirmable because the Asbestos PI Trust does not consent to being sued by asbestos plaintiffs, Volkswagen once again misunderstands section

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524(g) of the Bankruptcy Code. The purpose of section 524(g) is to channel present and future claims away from the courts and to a trust that will provide mechanisms to pay present claims and future demands. 11 U.S.C. 524(g)(2)(B). 14. Lastly, Volkswagen contends that, The Plan, the Trust and the TDP procedures

may prejudice co-defendants by denying them access to information regarding the allowance of claims. Amended Statement at 11. Section 6.5 of the Trust Distribution Procedures addresses the disclosure of the claimant materials submitted to the Asbestos PI Trust: The Asbestos PI Trust shall preserve the confidentiality of such claimant submissions, and shall disclose the contents thereof only with the permission of the holder, or in response to a valid subpoena. In other words, Volkswagen can pursue discovery by requesting information from the claimant or by serving a valid subpoena on the Asbestos PI Trust. It is hard to conceive how Volkswagen is prejudiced when it had no greater access to information before the bankruptcy. CONCLUSION 15. On January 6, 2009, counsel to the Committee, the Debtor, the Future Claimants

Representative and Volkswagen held a telephonic meeting. During that meeting, Volkswagen was unable to articulate the nature of its claim against THAN or even identify a single suit where both THAN and Volkswagen are named defendants. However, during that meeting, Volkswagen did articulate what it wants from this bankruptcy case: an order or agreement that will give Volkswagen certain advantages in pending and future asbestos litigation. Volkswagen wants the consent of Reorganized THAN and the Asbestos PI Trust to name them in tort cases so that damages can be apportioned, and Volkswagen wants access to the claimant information submitted to the Asbestos PI Trust. Volkswagen only has standing to object to those provisions

{ THAN / 001 / 00016271.DOC /}

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of the Plan that affect its legal rights. Volkswagen has no standing to take advantage of this Court and this bankruptcy case to advance its interests in far-removed asbestos litigation. For all of the foregoing reasons, the Official Committee of Unsecured Creditors respectfully requests that this Court not delay confirmation or otherwise allow Volkswagen to disrupt these proceedings.

Dated: New York, New York January 9, 2009

OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF T H AGRICULTURE & NUTRITION, L.L.C. By: /s/ Joseph D. Frank

Frances Gecker (IL ARDC # 6198450) Joseph D. Frank (IL ARDC # 6216085) FRANK/GECKER LLP 325 North LaSalle Street, Suite 625 Chicago, Illinois 60654 Phone.: (312) 276-1400 Fax: (312) 276-0035 Counsel to Official Committee of Unsecured Creditors of T H Agriculture & Nutrition, L.L.C.

{ THAN / 001 / 00016271.DOC /}

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CERTIFICATE OF SERVICE I, Joseph D. Frank, hereby certify that on January 9, 2009, a true and correct copy of the foregoing Response of the Official Committee of Unsecured Creditors of T H Agriculture & Nutrition, L.L.C to Amended Statement of Volkswagen Group of America, Inc. In Support of Motion to Modify Scheduling Order was filed electronically. Notice of the filing will be sent to all parties who are currently on the Courts Electronic Mail Notice List, a copy of which is attached hereto, by operation of the Electronic Filing System. In addition, a copy was sent to the parties listed below via electronic transmission on January 9, 2009. Counsel to the Debtor John H. Bae Bruce R. Zirinsky CADWALADER, WICKERSHAM & FAFT LLP One World Financial Center New York, New York 10281 Facsimile: (212) 504-6666 john.bae@cwt.com; bruce.zirinsky@cwt.com OFFICE OF THE UNITED STATES TRUSTEE FOR THE SOUTHERN DISTRICT OF NEW YORK Attn: Serene Nakano 33 Whitehall Street, 21st Floor New York, New York 10004 Facsimile: (214) 767-8967 serene.nakano@usdoj.gov Jo Christine Reed SONNENSCHEIN NATH & ROSENTHAL LLP 1221 Avenue of the Americas New York, New York 10020-1089 Facsimile: (212) 768-6800 jcreed@sonnenschein.com Counsel to the Future Claimants Representative Sander L. Esserman STUTZMAN, BROMBERG, ESSERMAN & PLIFKA 2323 Bryan Street, Suite 2200 Dallas, Texas 75201 Facsimile: (214) 969-4999 esserman@sbep-law.com Counsel to the Future Claimants Representative Susan Brune BRUNE & RICHARD, LLP 80 Broad Street New York, New York 10004 Facsimile: (212) 668-0315 sbrune@bruneandrichard.com Robert B. Millner SONNENSCHEIN NATH & ROSENTHAL LLP 7800 Sears Tower 233 South Wacker Drive Chicago, Illinois 60606-6404 Facsimile: (312) 876-7934 rmillner@sonnenschein.com

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Constantine D. Pourakis STEVENS & LEE, P.C. 485 Madison Avenue, 20th Floor New York, New York 10022 Facsimile: (610) 371-1237 cp@stevenslee.com John D. Demmy STEVENS & LEE, P.C. 485 Madison Avenue, 20th Floor New York, New York 10022 Facsimile: (610) 371-8515 jdd@stevenslee.com David C. Christian II STEVENS & LEE, P.C. 131 South Dearborn Street, Suite 2400 Chicago, Illinois 60603-5577 Facsimile: (312) 460-7833 dchristiand@seyfarth.com Marc S. Casarino WHITE AND WHITE LLP 824 Market Street, Suite 902 Wilmington, Delaware 19801 Facsimile: (302 ) 467-4550 casarinom@whiteandwilliams.com

Leonard P. Goldberger STEVENS & LEE, P.C. 485 Madison Avenue, 20th Floor New York, New York 10022 Facsimile: (610) 371-7376 lpg@stevenslee.com Robert W. Dremluk SEYFARTH SHAW LLP 620 Eighth Avenue New York, New York 10018-1405 Facsimile: (212) 218-5526 rdremluk@seyfarth.com Karel S. Karpe WHITE AND WHITE LLP One Penn Plaza, Suite 4110 New York, New York 10119 Facsimile: (212) 631-4431 karpek@whiteandwilliams.com Kirk T. Hartley Gerald F. Munitz Karen M. Borg BUTLER RUBIN SALTARETTI & BOYD LLP 70 West Madison Street, Suite 1800 Chicago, Illinois 60602 Facsimile: (312) 873-7382 (Hartley) (312) 444-9294 (Munitz) (312) 444-11116 (Borg) dkhartley@butlerrubin.com; jmunitz@butlerrubin.com; kborg@butlerrubin.com

By:

/s/ Joseph D. Frank

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Mailing Information for Case 08-14692-reg


Electronic Mail Notice List
The following is the list of parties who are currently on the list to receive e-mail notice/service for this case.

John H. Bae john.bae@cwt.com, doreen.cusumano@cwt.com;betty.comerro@cwt.com Jacob C. Cohn jcohn@cozen.com Robert W. Dremluk rdremluk@seyfarth.com, pbaisier@seyfarth.com,lravnikar@seyfarth.com,dchristian@seyfarth.com, Joseph D. Frank jfrank@fgllp.com, ccarpenter@fgllp.com;rheiligman@fgllp.com Alan E. Gamza Agamza@mosessinger.com, dkick@mosessinger.com;dbutvick@mosessinger.com Jeanette M. Gilbert jgilbert@motleyrice.com Eduardo J. Glas eglas@mccarter.com Frederic C. Goodwill fgoodwill@salawus.com, dsalinas@salawus.com Karel S. Karpe karpek@whiteandwilliams.com, yoderj@whiteandwilliams.com David P. McClain dmcclain@wwmlawyers.com, sphillips@wwmlawyers.com;falvarez@wwmlawyers.com Serene K. Nakano serene.nakano@usdoj.gov Constantine Pourakis cp@stevenslee.com Jo Christine Reed jcreed@sonnenschein.com, rmillner@sonnenschein.com Ira A. Reid ira.a.reid@bakernet.com Joseph F Rice jrice@motleyrice.com Tancred V. Schiavoni tschiavoni@omm.com Christina C. Skubic bankruptcy@braytonlaw.com Theresa Trzaskoma ttrzaskoma@bruneandrichard.com, anoda@bruneandrichard.com;igugan@bruneandrichard.com Bruce R. Zirinsky doreen.cusumano@cwt.com;agnes.wysoczanski@cwt.com;samuel.cavior@cwt.com;josh ua.brant@cwt.com;burke.dunphy@cwt.com;jill.kaylor@cwt.com;allison.dipasqua@cwt. com

{ THAN / 001 / 00016271.DOC /}

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------: In re: : : TH AGRICULTURE & NUTRITION, L.L.C., : : Debtors. : ---------------------------------------------------------------:

Chapter 11 Case No. 08-14692 (REG)

APPENDIX TO MEMORANDUM OF LAW OF VOLKWAGEN GROUP OF AMERICA, INC. IN SUPPORT OF ITS STANDING TO APPEAR AND BE HEARD IN THIS CASE
Date: January 9, 2009 WHITE AND WILLIAMS LLP Karel S. Karpe One Penn Plaza, Suite 4110 New York, New York 10119 Tel: 212-244-9500 and Marc S. Casarino (admitted in Delaware) 824 N. Market Street, Suite 902 Wilmington, DE 19801 Tel: 302-467-4510 and BUTLER RUBIN SALTARELLI & BOYD LLP Kirk T. Hartley (pro hac vice admission pending) Gerald F. Munitz (pro hac vice admission pending) Karen M. Borg (pro hac vice admission pending) 70 West Madison Street, Suite 1800 Chicago, Illinois 60602-4257 Tel: 312-444-9660 Attorneys for Volkswagen Group of America, Inc.

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APPENDIX TABLE OF CONTENTS


Exhibit 1 Massachusetts Asbestos Complaint Naming TH Agriculture & Nutrition, L.L.C., Volkswagen Group of America, Inc. and Phillips Electronics North America Corporation as Defendants Data Table Declarations of Robert H. Shultz, Somers S. Price, Jr. and Christian J. Singewald Case Management Orders Regarding Cross - Claims Automatically Deemed Filed in Underlying Asbestos Cases in the Jurisdiction (Rhode Island CMOs 5-7; Delaware CMO Standing Order No. 1, 24) September 30, 2008 Opinion - In Re Federal-Mogul Global Inc. T. Lynn Walden & Angela Kneeland, Spreading the Wealth by Sharing the Responsibility (Defense Research Institute 2007) Bates & Mullen, Having Your Tort And Eating It Too

Exhibit 2 Exhibit 3 Exhibit 4

Exhibit 5 Exhibit 6 Exhibit 7

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FRANK/GECKER LLP Frances Gecker Joseph D. Frank 325 North LaSalle Street, Suite 625 Chicago, Illinois 60654 (312) 276-1400 telephone (312) 276-0035 facsimile Proposed Counsel to Official Committee of Unsecured Creditors of T H Agriculture & Nutrition, L.L.C.

Hearing Date and Time: January 12, 2009 4:00 p.m.

IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK ) Chapter 11 ) ) Case No. 08-14692 (REG) ) )

In re: T H AGRICULTURE & NUTRITION, L.L.C., Debtor.

RESPONSE OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF T H AGRICULTURE & NUTRITION, L.L.C. TO AMENDED STATEMENT OF VOLKSWAGEN GROUP OF AMERICA, INC. IN SUPPORT OF MOTION TO MODIFY SCHEDULING ORDER The Official Committee of Unsecured Creditors (the Committee) of T H Agriculture & Nutrition, L.L.C. (THAN or the Debtor), by its counsel, Frank/Gecker LLP, hereby responds to the Amended Statement of Volkswagen Group of America, Inc. (Volkswagen) in support of Motion to Modify the Courts First Day Scheduling Order (the Amended Statement). 1. Corporate co-defendants in tort actions arising from exposure to asbestos are not

strangers to asbestos bankruptcy cases. But unlike creditors who look to the bankruptcy process as a means to get paid, opportunistic corporate co-defendants often look to the bankruptcy process as a means to gain an advantage in tort suits being litigated far from the bankruptcy court. Volkswagen has engaged in this opportunistic conduct in the past and appears to be doing so again.

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2.

In the Chapter 11 case of Federal-Mogul Global, Inc., Volkswagen and the other

major automobile manufacturers sought to remove thousands of state-court personal injury and wrongful death claims related to the manufacture and distribution of asbestos-containing automotive friction products to the federal district court in Delaware, where the Federal-Mogul bankruptcy case was pending. See In re Federal-Mogul Global, Inc., 300 F.3d 368 (3d Cir. 2002). The primary reason offered by Volkswagen and the other car manufacturers for the transfer was to have the district court overseeing the bankruptcy case conduct a global Daubert hearing to determine whether the evidence that brakes and other automotive parts cause asbestos disease is based on reliable scientific methodology. Id. at 374. The automakers argued that the promise of the global Daubert hearing is to excise [the Friction Product Claims] from the American judicial system in one fell swoop and [lift] a substantial cloud from over Federal Mogul. Id. quoting Brief of Big Three Automakers at 2. 3. The Federal-Mogul court declined Volkswagens invitation. The district court

held that it lacked subject matter jurisdiction because the state-law friction product suits were not related to the Federal-Mogul bankruptcy and remanded all of the cases. In doing so, the district court recognized, A judgment against [the Friction Product Defendants] will not bind the debtors. No asset of the estate is threatened nor is any re-ordering of creditors in the offing. It is true that recovery by asbestos claimants against movants may give rise to claims, indeed very substantial claims, against the debtors in the future. It is at that time, when the movants appear as creditors of the estate and the facts underlying the liability are adjudicated in the context of the bankruptcy, that the Friction Product Claims will affect the estate. Id. at 376 (quoting District Court slip opinion dated February 15, 2002). Here, just as in Federal-Mogul, Volkswagen does

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not appear as a creditor, but as a corporate defendant in numerous tort suits trying to use this bankruptcy case to gain advantage in state court tort litigation. I. VOLKSWAGEN HAS NO LEGALLY PROTECTED INTEREST THAT COULD BE ADVERSELY AFFECTED BY THIS BANKRUPTCY CASE 4. In ruling on the standing of the insurers, this Court followed In re Quigley Co.,

Inc., 391 B.R. 695 (Bankr. S.D.N.Y. 2008) and recognized that only those with a legally protected interest that could be affected by the bankruptcy case are entitled to assert that interest with respect to any issue to which it pertains. Transcript of Motion Before The Honorable Robert E. Gerber, United States Bankruptcy Judge, December 17, 2008 at p.86. 5. Volkswagen is not a creditor of THAN and has no contractual right of indemnity

against THAN. Indeed, Volkswagen has not even identified a single case where it has been named as a co-defendant with THAN. This is not surprising because there is no evidence that THAN ever did business with Volkswagen. 6. According to THANs own Disclosure Statement, THAN primarily distributed

bulk shipments of chrysotile asbestos fiber. THAN also distributed laundry products and vermiculite that may have contained asbestos, but THAN has never been sued for exposure to laundry products, vermiculite or any other asbestos-containing product. Every case in which THAN has been sued has alleged exposure to a third-party manufacturers product that contained asbestos fiber distributed in bulk by THAN to the manufacturer. More than 80% of the asbestos personal injury cases have alleged exposure to joint compound and joint cement products manufactured by Bondex International and Kelly-Moore Paint Company. The remaining cases allege exposure to products manufactured by a handful of companies that purchased fiber from THAN including Ruco, Inc., DAP, Inc., Flintkote Co., Welco, Certainteed Corp., Kaiser Gypsum Co., Inc., Proko Industries, Inc., W.R.Grace Co., Weyerhauser Co., and United States Gypsum

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Co. See Disclosure Statement with Respect to a Prepackaged Plan of Reorganization of T H Agriculture & Nutrition, L.L.C. Under Chapter 11 of the Bankruptcy Code at pp. 3-4 [Docket No. 21]. None of these companies manufactures automobiles. 7. Despite having no prior business relationship with THAN, Volkswagen claims

that it may assert cross-claims for contribution against THAN if, in the future, Volkswagen is found liable in suits where THAN also has been named as a defendant. If Volkswagen is correct and if this unlikely event were to occur, THANs Plan of Reorganization explicitly provides procedures for Volkswagen to assert its claim and, if the claim is valid, get paid. 8. The Plan defines Indirect Asbestos PI Claims to include cross-claims,

contribution claims, reimbursement claims, indemnity claims and other similar derivative claims. See Prepackaged Plan of Reorganization of T H Agriculture & Nutrition, L.L.C. Under Chapter 11 of the Bankruptcy Code (Plan) at 1.78, p. 10 [Docket No. 20]. Indirect Asbestos PI Claims are included in the definition of Asbestos PI Claim. Plan at 1.13, p. 3. All Asbestos PI Claims, including the Indirect Asbestos PI Claims, are channeled to the Asbestos PI Trust to be paid in accordance with the Asbestos PI Trust Distribution Procedures. Plan at 4.4, p. 19. 9. The Asbestos PI Trust Distribution Procedures (Exhibit C to the Disclosure

Statement) explicitly address Indirect Asbestos PI Claims in Section 5.6. The Indirect Claimant is paid on an expedited basis if the Indirect Claimant meets certain presumptive criteria, such as payment to an individual asbestos claimant to whom THAN would have had a liability. If the Indirect Claimant cannot meet the presumptive requirements, the Indirect Claimant may request individualized review by the Asbestos PI Trust. If the Indirect Claimant is not satisfied with the determination of the Asbestos PI Trust, the Indirect Claimant may mediate or arbitrate its claim under the Alternative Dispute Resolution Procedures adopted by the Asbestos PI Trust. If the

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Indirect Claimant is not satisfied through mediation or arbitration, the Indirect Claimant may bring an action against the Asbestos PI Trust in the tort system. See Asbestos PI Trust Distribution Procedures (Exhibit C to Disclosure Statement) at 5.6, pp. 35-38. The procedures set forth in Section 5.6 are clear and unambiguous. II. VOLKSWAGEN SEEKS DELAY FOR REASONS UNRELATED TO THIS BANKRUPTCY CASE 10. At best, Volkswagen has limited standing to object to the proposed treatment of

its contingent, future claim under Section 5.6 of the Asbestos PI Trust Distribution Procedures. Not surprisingly, Volkswagen never even addresses Section 5.6 because Volkswagen seeks much more. Volkswagen seeks to delay this bankruptcy case in order to gain future advantage in tort cases where it is a named defendant. This ulterior purpose is underscored by the nonsubstantive issues Volkswagen raises. 11. First, Volkswagen states, The need for additional time to interpret the Plan

involves such issues as the role of the Future Claims Representative. Amended Statement at 8. The role of the Future Claimants Representative is created and defined by the Bankruptcy Code. The court must appoint a legal representative for the purpose of protecting the rights of persons that might subsequently assert demands against the debtor. 11 U.S.C. 524(g)(4)(B)(i). Demands are defined by the Bankruptcy Code to include a present or future demand for payment that was not a claim prior to confirmation, arises out of the same or similar conduct that gave rise to the asbestos channeling injunction, and pursuant to the plan is to be paid by the asbestos trust. 11 U.S.C. 524(g)(5). The Bankruptcy Code is unambiguous as to whose interests are represented by the Future Claimants Representative all future claimants who have valid claims assertable against the Asbestos PI Trust, including all future Indirect Asbestos PI Claims. Discovery on this issue is purposeless.

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12.

Next, Volkswagen asserts that the Plan injunction and its TDPs deprive current

corporate cross-claim claimants of their existing state law rights by explicitly eliminating state law trial rights against THAN (and other non-bankrupt entities), and relegating some or all current contribution claim holders to pursuing administrative claims under rules not yet promulgated. Amended Statement at 9. Volkswagen appears to be objecting to the Bankruptcy Code itself. The automatic stay of pending litigation is one of the fundamental purposes of a chapter 11 filing and the channeling of present and future asbestos claims, including indirect claims (see 11 U.S.C. 524(g)(4)(A)(ii)), to a trust is the reason Congress enacted section 524(g) of the Bankruptcy Code. This bankruptcy case is not the forum to protest the Bankruptcy Code. 13. Volkswagen then claims that, The Plan appears to impair the rights of co-

defendants in asbestos litigation to have fault and damages apportioned among them. To amplify this contention, Volkswagen points to the decision of the Illinois Supreme Court in Ready v. United/GoedeckeServices, Inc., 2008 WL 50446833 (Ill. 2008). Volkswagen contends that Ready stands for the proposition that in Illinois comparative fault cannot be apportioned against an entity that is not a defendant at trial. Amended Statement at 10. In fact, in Ready, the Illinois Supreme Court held that the Illinois joint liability statute in effect required that settling defendants not be included on the verdict form for purposes of apportioning liability. Neither this Plan nor this Court can change state law. If Volkswagen is suggesting that the Plan cannot impair Volkswagens state-law rights, Volkswagen is mistaken. A bankruptcy plan of reorganization invariably alters creditors state-law rights by re-negotiating or discharging debts. If Volkswagen is suggesting that this Plan is unconfirmable because the Asbestos PI Trust does not consent to being sued by asbestos plaintiffs, Volkswagen once again misunderstands section

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524(g) of the Bankruptcy Code. The purpose of section 524(g) is to channel present and future claims away from the courts and to a trust that will provide mechanisms to pay present claims and future demands. 11 U.S.C. 524(g)(2)(B). 14. Lastly, Volkswagen contends that, The Plan, the Trust and the TDP procedures

may prejudice co-defendants by denying them access to information regarding the allowance of claims. Amended Statement at 11. Section 6.5 of the Trust Distribution Procedures addresses the disclosure of the claimant materials submitted to the Asbestos PI Trust: The Asbestos PI Trust shall preserve the confidentiality of such claimant submissions, and shall disclose the contents thereof only with the permission of the holder, or in response to a valid subpoena. In other words, Volkswagen can pursue discovery by requesting information from the claimant or by serving a valid subpoena on the Asbestos PI Trust. It is hard to conceive how Volkswagen is prejudiced when it had no greater access to information before the bankruptcy. CONCLUSION 15. On January 6, 2009, counsel to the Committee, the Debtor, the Future Claimants

Representative and Volkswagen held a telephonic meeting. During that meeting, Volkswagen was unable to articulate the nature of its claim against THAN or even identify a single suit where both THAN and Volkswagen are named defendants. However, during that meeting, Volkswagen did articulate what it wants from this bankruptcy case: an order or agreement that will give Volkswagen certain advantages in pending and future asbestos litigation. Volkswagen wants the consent of Reorganized THAN and the Asbestos PI Trust to name them in tort cases so that damages can be apportioned, and Volkswagen wants access to the claimant information submitted to the Asbestos PI Trust. Volkswagen only has standing to object to those provisions

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of the Plan that affect its legal rights. Volkswagen has no standing to take advantage of this Court and this bankruptcy case to advance its interests in far-removed asbestos litigation. For all of the foregoing reasons, the Official Committee of Unsecured Creditors respectfully requests that this Court not delay confirmation or otherwise allow Volkswagen to disrupt these proceedings.

Dated: New York, New York January 9, 2009

OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF T H AGRICULTURE & NUTRITION, L.L.C. By: /s/ Joseph D. Frank

Frances Gecker (IL ARDC # 6198450) Joseph D. Frank (IL ARDC # 6216085) FRANK/GECKER LLP 325 North LaSalle Street, Suite 625 Chicago, Illinois 60654 Phone.: (312) 276-1400 Fax: (312) 276-0035 Counsel to Official Committee of Unsecured Creditors of T H Agriculture & Nutrition, L.L.C.

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CERTIFICATE OF SERVICE I, Joseph D. Frank, hereby certify that on January 9, 2009, a true and correct copy of the foregoing Response of the Official Committee of Unsecured Creditors of T H Agriculture & Nutrition, L.L.C to Amended Statement of Volkswagen Group of America, Inc. In Support of Motion to Modify Scheduling Order was filed electronically. Notice of the filing will be sent to all parties who are currently on the Courts Electronic Mail Notice List, a copy of which is attached hereto, by operation of the Electronic Filing System. In addition, a copy was sent to the parties listed below via electronic transmission on January 9, 2009. Counsel to the Debtor John H. Bae Bruce R. Zirinsky CADWALADER, WICKERSHAM & FAFT LLP One World Financial Center New York, New York 10281 Facsimile: (212) 504-6666 john.bae@cwt.com; bruce.zirinsky@cwt.com OFFICE OF THE UNITED STATES TRUSTEE FOR THE SOUTHERN DISTRICT OF NEW YORK Attn: Serene Nakano 33 Whitehall Street, 21st Floor New York, New York 10004 Facsimile: (214) 767-8967 serene.nakano@usdoj.gov Jo Christine Reed SONNENSCHEIN NATH & ROSENTHAL LLP 1221 Avenue of the Americas New York, New York 10020-1089 Facsimile: (212) 768-6800 jcreed@sonnenschein.com Counsel to the Future Claimants Representative Sander L. Esserman STUTZMAN, BROMBERG, ESSERMAN & PLIFKA 2323 Bryan Street, Suite 2200 Dallas, Texas 75201 Facsimile: (214) 969-4999 esserman@sbep-law.com Counsel to the Future Claimants Representative Susan Brune BRUNE & RICHARD, LLP 80 Broad Street New York, New York 10004 Facsimile: (212) 668-0315 sbrune@bruneandrichard.com Robert B. Millner SONNENSCHEIN NATH & ROSENTHAL LLP 7800 Sears Tower 233 South Wacker Drive Chicago, Illinois 60606-6404 Facsimile: (312) 876-7934 rmillner@sonnenschein.com

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Constantine D. Pourakis STEVENS & LEE, P.C. 485 Madison Avenue, 20th Floor New York, New York 10022 Facsimile: (610) 371-1237 cp@stevenslee.com John D. Demmy STEVENS & LEE, P.C. 485 Madison Avenue, 20th Floor New York, New York 10022 Facsimile: (610) 371-8515 jdd@stevenslee.com David C. Christian II STEVENS & LEE, P.C. 131 South Dearborn Street, Suite 2400 Chicago, Illinois 60603-5577 Facsimile: (312) 460-7833 dchristiand@seyfarth.com Marc S. Casarino WHITE AND WHITE LLP 824 Market Street, Suite 902 Wilmington, Delaware 19801 Facsimile: (302 ) 467-4550 casarinom@whiteandwilliams.com

Leonard P. Goldberger STEVENS & LEE, P.C. 485 Madison Avenue, 20th Floor New York, New York 10022 Facsimile: (610) 371-7376 lpg@stevenslee.com Robert W. Dremluk SEYFARTH SHAW LLP 620 Eighth Avenue New York, New York 10018-1405 Facsimile: (212) 218-5526 rdremluk@seyfarth.com Karel S. Karpe WHITE AND WHITE LLP One Penn Plaza, Suite 4110 New York, New York 10119 Facsimile: (212) 631-4431 karpek@whiteandwilliams.com Kirk T. Hartley Gerald F. Munitz Karen M. Borg BUTLER RUBIN SALTARETTI & BOYD LLP 70 West Madison Street, Suite 1800 Chicago, Illinois 60602 Facsimile: (312) 873-7382 (Hartley) (312) 444-9294 (Munitz) (312) 444-11116 (Borg) dkhartley@butlerrubin.com; jmunitz@butlerrubin.com; kborg@butlerrubin.com

By:

/s/ Joseph D. Frank

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Mailing Information for Case 08-14692-reg


Electronic Mail Notice List
The following is the list of parties who are currently on the list to receive e-mail notice/service for this case.

John H. Bae john.bae@cwt.com, doreen.cusumano@cwt.com;betty.comerro@cwt.com Jacob C. Cohn jcohn@cozen.com Robert W. Dremluk rdremluk@seyfarth.com, pbaisier@seyfarth.com,lravnikar@seyfarth.com,dchristian@seyfarth.com, Joseph D. Frank jfrank@fgllp.com, ccarpenter@fgllp.com;rheiligman@fgllp.com Alan E. Gamza Agamza@mosessinger.com, dkick@mosessinger.com;dbutvick@mosessinger.com Jeanette M. Gilbert jgilbert@motleyrice.com Eduardo J. Glas eglas@mccarter.com Frederic C. Goodwill fgoodwill@salawus.com, dsalinas@salawus.com Karel S. Karpe karpek@whiteandwilliams.com, yoderj@whiteandwilliams.com David P. McClain dmcclain@wwmlawyers.com, sphillips@wwmlawyers.com;falvarez@wwmlawyers.com Serene K. Nakano serene.nakano@usdoj.gov Constantine Pourakis cp@stevenslee.com Jo Christine Reed jcreed@sonnenschein.com, rmillner@sonnenschein.com Ira A. Reid ira.a.reid@bakernet.com Joseph F Rice jrice@motleyrice.com Tancred V. Schiavoni tschiavoni@omm.com Christina C. Skubic bankruptcy@braytonlaw.com Theresa Trzaskoma ttrzaskoma@bruneandrichard.com, anoda@bruneandrichard.com;igugan@bruneandrichard.com Bruce R. Zirinsky doreen.cusumano@cwt.com;agnes.wysoczanski@cwt.com;samuel.cavior@cwt.com;josh ua.brant@cwt.com;burke.dunphy@cwt.com;jill.kaylor@cwt.com;allison.dipasqua@cwt. com

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Hearing Date And Time: February 17, 2009 at 9:45 a.m. (prevailing Eastern Time) Objection Deadline: February 11, 2009 at 5:00 p.m. (prevailing Eastern Time) GREENBERG TRAURIG, LLP 200 Park Avenue New York, New York 10166 Telephone: (212) 801-9200 Facsimile: (212) 801-6400 Bruce R. Zirinsky, Esq. John H. Bae, Esq. Proposed Counsel for the Debtor and Debtor in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------In re: T H AGRICULTURE & NUTRITION, L.L.C., Debtor. ----------------------------------------------------------

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Chapter 11 Case No. 08-14692 (REG)

DEBTORS MOTION TO STRIKE OWENS-ILLINOIS, INC.S OBJECTION TO THE PREPACKAGED PLAN OF REORGANIZATION FOR LACK OF STANDING

TABLE OF CONTENTS Page PRELIMINARY STATEMENT .................................................................................................... 1 BACKGROUND ............................................................................................................................ 2 JURISDICTION AND VENUE ..................................................................................................... 3 BASIS FOR RELIEF REQUESTED ............................................................................................. 4 I. Owens-Illinois Lacks Standing ........................................................................................... 4 II. Owens-Illinois Specific Objections Are Without Merit .................................................... 6 III. Owens-Illinois Has No Enforceable Right to Contribution................................................ 7 NOTICE.......................................................................................................................................... 9 NO PRIOR REQUEST ................................................................................................................. 10

TABLE OF AUTHORITIES Page Federal Cases Arnold v. Garlock Inc., 288 F.3d 234 (5th Cir. 2002) .................................................................... 8 In re Drexel Burnham Lambert Group, Inc., 146 B.R. 98 (Bankr. S.D.N.Y. 1992) ...................... 9 In re Martin Paint Stores, 199 B.R. 258, 263 (Bankr. S.D.N.Y. 1996) (Bernstein, J.), aff'd, 207 B.R. 57 (S.D.N.Y. 1997)............................................................................................................. 4 In re N. Am. Refractories Co., 280 B.R. 356 (Bankr. W. D. Pa. 2002) .......................................... 8 In re Provincetown-Boston Airlines, Inc., 72 B.R. 307 (Bankr. M.D. Fla. 1987) .......................... 9 In re Quigley Co., Inc., 391 B.R. 695 (Bankr. S.D.N.Y. 2008)...................................................... 4 In re Refco Inc., 505 F.3d 109 (2d Cir. 2007)............................................................................. 4, 5 Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) ..................................................................... 4 State Cases Gemco-Ware, Inc. v. Rongene Mold & Plastics Corp., 360 S.E. 2d 342 (Va. 1987)..................... 8 Mattia v. Sears, Roebuck & Co., 531 A. 2d 789 (Pa. Super. 1987)................................................ 8 Nat'Mut. Ins. Co. v. Whitmer, 435 N.E.2d 1121 (Ohio, 1982) ....................................................... 8 Federal Statutes 11 U.S.C. 1129(a)(3).................................................................................................................... 7 11 U.S.C. 502(e)(1)(B) ................................................................................................................ 9 28 U.S.C. 157(b)(2) ..................................................................................................................... 3 28 U.S.C. 1408, 1409................................................................................................................. 3 28 U.S.C. 157, 1334................................................................................................................... 3

TO THE HONORABLE ROBERT E. GERBER UNITED STATES BANKRUPTCY JUDGE: T H Agriculture & Nutrition, L.L.C. (THAN or the Debtor), as debtor and debtor in possession, submits this motion (the Motion) to strike Owens-Ilinois, Inc.s Objection to the Prepackaged Plan of Reorganization (the Objection) filed on January 5, 2009. For the reasons set forth below, the Debtor respectfully submits that Owens-Illinois, Inc. (Owens-Illinois) has no standing or cognizable claim in this chapter 11 case. The Court should strike Owens-Illinois Objection in its entirety and reject Owens-Illinois efforts to participate in this chapter 11 case, including its efforts to obtain discovery from the Debtor. PRELIMINARY STATEMENT 1. On January 5, 2009, Owens-Illinois filed its Objection, raising objections

to the Debtors proposed prepackaged plan of reorganization virtually identical to those previously raised by Volkswagen Group of America, Inc. (Volkswagen) in its joinder to the motion of certain insurers to modify the scheduling order. The Court rejected Volkswagens efforts to modify the scheduling order based on the Courts finding that Volkswagen lacks standing to participate in this chapter 11 case. In every way, Owens-Illinois Objection and its efforts to participate in this chapter 11 case suffer from the same defects the Court found prevented Volkswagen from having standing to participate in this case. 2. Like Volkswagen, Owens-Illinois has no present claim against the Debtor,

has never prosecuted a claim against the Debtor, and has offered no factual basis to assert a claim against the Debtor in the future. Owens-Illinois has never engaged in business with the Debtor, and Owens-Illinois has alleged no facts in its Objection to demonstrate that it has any basis to assert a claim against the Debtor. Like Volkswagen, the only basis upon which Owens-Illinois purports to have a connection with the Debtor is that it is a codefendant with the Debtor in

certain pending state court actions. Against the exact same set of facts, the Court previously ruled that Volkswagen lacks standing to participate in this chapter 11 case. Insofar as OwensIllinois has offered no facts to distinguish itself from Volkswagen, the Court should likewise rule that Owens-Illinois has no standing to participate in this chapter 11 case. The Court should strike Owens-Illinois Objection, and deny it the right to participate in this case, including the right to take discovery. BACKGROUND 3. On November 24, 2008 (the Commencement Date), the Debtor

commenced this case under chapter 11 of title 11 of the United States Code 101, et seq. (the Bankruptcy Code). The Debtor is authorized to operate its business and manage its properties as a debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 4. On December 1, 2008, the United Stated Trustee for the Southern District

of New York appointed an Official Committee of Unsecured Creditors. 5. Simultaneously with the filing of its chapter 11 petition, the Debtor filed

(i) the Prepackaged Plan of Reorganization of T H Agriculture & Nutrition, L.L.C. Under Chapter 11 of the Bankruptcy Code, dated October 10, 2008 [Docket No. 20] (the Plan); the (ii) disclosure statement related thereto, dated October 10, 2008 [Docket No. 21] (the Disclosure Statement), which was used in the prepetition solicitation of votes on the Plan; and (iii) the vote certification of the Debtors balloting agent, describing the overwhelming acceptance of the Plan by holders of impaired claims entitled to vote. The Asbestos PI Trust Distribution Procedures are Exhibit C to the Plan. 6. On November 25, 2008, this Court entered an order (the Scheduling

Order) scheduling a hearing on January 15, 2009 for approval of the Disclosure Statement and confirmation of the Plan (collectively, the Confirmation Hearing).
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7.

On December 12 and 16, 2008, certain of the Debtors insurers filed

motions seeking to modify the Scheduling Order and requesting that the Confirmation Hearing be adjourned for 60 days. 8. On December 24, 2008, Volkswagen filed its motion to modify the

Scheduling Order based on the same alleged injury (as a codefendant in unrelated tort cases) that Owens-Illinois asserts in its Objection. On January 12, 2009, this Court held a hearing to address Volkswagens assertions (the Volkswagen Hearing). After full briefing and lengthy

oral argument, the Court ruled that Volkswagen lacked standing to modify the Scheduling Order because it did not have standing to participate in this chapter 11 case. The Court concluded that Volkswagen had not demonstrated in any respect that it had a legal interest in THANs bankruptcy. See Transcript of Telephonic Conference Before the Honorable Robert E. Gerber United States Bankruptcy Judge at p. 58-59, hereinafter cited as Tr. at p. , attached hereto as Exhibit A ( Volkswagen only has standing to object to those provisions that affect its legal rights. It may someday have the latter, to the extent I acknowledged earlier in this decision, but it doesn't have any such rights now . . . .) 9. On January 5, 2009, Owens-Illinois filed its Objection, asserting the same

objections previously raised by Volkswagen in its efforts to modify the Scheduling Order. JURISDICTION AND VENUE 10. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C.

157 and 1334. This matter is a core proceeding pursuant to 28 U.S.C. 157(b)(2). Venue is proper in this Court pursuant to 28 U.S.C. 1408 and 1409.

BASIS FOR RELIEF REQUESTED I. Owens-Illinois Lacks Standing 11. Owens-Illinois does not have standing to object to the Plan or any related

document. A party invoking federal jurisdiction has the burden of establishing that it has standing with respect to each issue on which it wishes to be heard. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992) (party invoking federal jurisdiction bears the burden of establishing the[] elements [of standing]); In re Refco Inc., 505 F.3d 109, 119 (2d Cir. 2007). 12. This Court has stated on more than one occasion that it is going to follow

the thoughtful authority from the Chief Judge of this district, Tr. at p. 55, provided in In re Quigley Co., Inc., 391 B.R. 695, 701-05 (Bankr. S.D.N.Y. 2008), which teaches us Standing must be evaluated in light of the legally cognizable issues that the party seeks standing to be heard on. Tr. at p. 55 (citing generally In re Quigley Co., Inc., 391 B.R. 695, 701-05 (Bankr. S.D.N.Y. 2008)). In order to establish that Owens-Illinois has standing, it must show that it has a legally protected interest affected by the bankruptcy proceeding. In re Quigley Co., Inc., 391 B.R. at 701-05 (quoting In re James Wilson Assocs., 965 F.2d 160, 169 (7th Cir. 1992) (Posner, J.)); In re Martin Paint Stores, 199 B.R. 258, 263 (Bankr. S.D.N.Y. 1996) (Bernstein, J.), affd, 207 B.R. 57, 61 (S.D.N.Y. 1997) (citations omitted). In ruling that Volkswagen lacked standing to participate in this chapter 11 case, this Court explained: As the Second Circuit observed in the Refco case, it is important that a bankruptcy court is not too facile in granting applications for standing. Overly lenient standards . . . potentially overburden the reorganization process by allowing numerous parties to interject themselves into the case on every issue, thereby thwarting the goal of a speedy and efficient reorganization. Granting peripheral parties status as parties-in-interest thwarts the traditional purpose of bankruptcy laws, which is to provide reasonably expeditious rehabilitation of financially distressed debtors with a consequent distribution to creditors who have acted diligently.
4

Tr. at pp. 55-56 (citing Refco, 505 F.3d at 118-119). 13. Like Volkswagen, the sole stated basis for which Owens-Illinois has

asserted that it has an interest in this chapter 11 case is that it is a codefendant with the Debtor in certain asbestos actions and that it may have a cross-claim against the Debtor. In rejecting Volkswagens assertion of standing, this Court found that the pendency of cross-claims as a result of state court procedural rules -- as distinct from cross-claims arising out of facts that would support any such claim -- cannot be a basis to confer standing. The fact that parties are named as codefendants, of course, doesnt mean by itself that one has claims against the other, especially in the absence of any evidence that they had any dealings with each other, or that one paid an obligation for which the other is liable. Tr. at p. 53. Furthermore, Owens-Illinois does not have a claim against the Debtor by virtue of the automatic operating of case management orders that deem cross-claims to have been filed. . . . that [is] a pure procedural mechanism. . . . A case management order presumably can provide procedural in the action in which it was entered, but it cant confer substantive rights. Tr. at p. 53. To find a right to payment under the code, and to inflict upon all of the other parties in the case the burdens that standing requirements are intended to protect them against, there must be something more than happenstance that dozens of entities are named as defendants in the same case, and that an administrative orders says that theyre deemed to have cross-claimed against each other. Id at 54. Owens-Illinois does not aver in its Objection that it now holds or seeks to prosecute a cross-claim against the Debtor and, in fact, has never prosecuted a cross-claim against the Debtor in any past or present asbestos action. Indeed, no codefendant in any asbestos-related case has ever prosecuted a cross-claim against the Debtor. Thus, there simply are no current holders of

cross-claims whose rights need to be protected, and in any event, Owens-Illinois has no standing to assert the rights of others. 14. It bears noting that in the Objection not only does Owens-Illinois fail to

assert that it has any actual cross-claims against the Debtor, but it even fails to identify any of the cases where it holds an enforceable cross-claim. The Debtor submits that Owens-Illinois

inability to identify even a single case is indicative of the degree to which its interest is attenuated and does not have standing to object to the Plan or any related documents or agreements. II. Owens-Illinois Specific Objections Are Without Merit 15. The Court should overrule Owens-Illinois specific objections, because

they are without merit. Owens-Illinois assertions that the treatment of its purported claim is not fair or equitable and that a third party may not settle its claim are baseless, because OwensIllinois holds no claim against the Debtor. Having no cognizable claim against the Debtor, Owens-Illinois cannot stand to complain about any provision of the Plan regarding the treatment of its fictional claim. 16. The Court should also disregard Owens-Illinois assertion that the

procedures set forth in the Asbestos PI Trust Distribution Procedures encourage the Debtors creditors to delay their recovery from the asbestos trust, which could lead to allowing creditors to obtain duplicative recoveries from Owens-Illinois. This Court recently addressed this issue at the Volkswagen Hearing, stating: Volkswagen [was] looking for one or more means to achieve a leg up in litigation against those suing it elsewhere, such as by substantive reductions in its possible liability to tort claimant plaintiffs by means of judgment reductions, if Volkswagen is found liable by the tort plaintiffs, or to achieve some kinds of benefits or credits in negotiations.
6

Tr. at 54. The Court reasoned that permitting Volkswagen to participate in this chapter 11 case based on this argument would bring down the entire Bankruptcy Code scheme for dealing with mass torts, and/or the Codes express scheme for dealing with asbestos litigation. Id. at 55. Congress could not have intended such a perverse result. 17. Owens-Illinois conclusory and baseless assertion that the Plan does not

comply with section 1129(a)(3) of the Bankruptcy Code and is not fair to asbestos codefendants should be rejected. Objection at p. 7. Section 1129(a)(3) provides that the Court shall confirm a plan if [t]he plan has been proposed in good faith and not by any means prohibited by law. 11 U.S.C. 1129(a)(3). 18. As stated, Owens-Illinois has no standing to question whether the Debtor

has complied with section 1129(a)(3). Moreover, Owens-Illinois has failed to allege any facts to demonstrate that the Plan was not proposed in good faith. That the confirmation of the Plan may somehow alter Owens-Illinois rights in some pending state court action does not rise to an act of bad faith. In addition, the Plan is fair and equitable in its treatment of cross claims against the Debtor. Section 5.6 of the Asbestos PI Trust Distribution Procedures provides that any Indirect Claimant (as defined in the Asbestos PI Trust Distribution Procedures), which includes holders of cross-claims, may file a claim for contribution or other similar derivative claim if such claim resulted from an injury for which THAN is liable. This provision specifically addresses

enforceable cross-claims against the Debtor. Owens-Illinois has offered no facts to explain how this provision is unfair or inequitable to holders of cross-claims against the estate. III. Owens-Illinois Has No Enforceable Right to Contribution 19. Even if Owens-Illinois had sought to prosecute a cross-claim against the

Debtor, such claim would not be enforceable. In many jurisdictions, a codefendant does not have a right to payment pursuant to a contribution claim unless and until judgment has been
7

entered in the underlying lawsuit and the codefendant has paid more than its pro rata share of the judgment. See, e.g., Arnold v. Garlock Inc., 288 F.3d 234, 237 (5th Cir. 2002) (applying Texas law and stating that the defendant did not hold a cognizable claim against the debtor where it could not fulfill the requirements for maintaining a contribution claim because there had not been a judgment or apportionment of fault in the underlying lawsuit); In re N. Am. Refractories Co., 280 B.R. 356, 358 (Bankr. W. D. Pa. 2002) (applying Mississippi law and stating that codefendant did not have a cognizable claim against the debtor because it had no right to payment or equitable remedy where final judgment had not been entered in the underlying lawsuit); Natl Mut. Ins. Co. v. Whitmer, 435 N.E.2d 1121, 1123 (Ohio, 1982) (under Ohio law, the right to contribution only becomes enforceable once a claimant makes payment extinguishing the whole of the common obligation). 20. Although some jurisdictions allow a codefendant to assert a contribution

claim prior to judgment, in the interest of judicial efficiency, the right to contribution does not become enforceable until final judgment has been entered and the obligation is discharged. See e.g. Gemco-Ware, Inc. v. Rongene Mold & Plastics Corp., 360 S.E. 2d 342, 344 (Va. 1987) (under Virginia law, a codefendant may assert a claim based on potential future liability for contribution; however, the right to recover arises only once the codefendant discharges the common obligation); Mattia v. Sears, Roebuck & Co., 531 A. 2d 789, 791 (Pa. Super. 1987) (applying Pennsylvania law and stating that while a codefendant can assert a contribution claim in the original proceeding, the right to contribution cannot be asserted until a tortfeasor has discharged the common liability by paying more than his pro rata share), appl dend 546 A.2d 622 (Pa. Super. 1988).

21.

Here, Owens-Illinois does not even suggest that a judgment has been

entered in any case in which it is a codefendant with the Debtor and that it has actually paid more than its pro rata share for such judgment (and that the Debtor has not). Thus, Owens-Illinois has no present right of contribution under state law. Furthermore, any contingent claim for

contribution that Owens-Illinois might assert in this case would be of no avail, as it would be disallowed under the Bankruptcy Code. Section 502(e)(1)(B) of the Bankruptcy Code provides in pertinent part: [T]he court shall disallow any claim for reimbursement or contribution of an entity that is liable with the debtor on . . . the claim of a creditor, to the extent that . . . such claim for reimbursement or contribution is contingent as of the time of allowance or disallowance of such claim for reimbursement or contribution. 11 U.S.C. 502(e)(1)(B). See also In re Drexel Burnham Lambert Group, Inc., 146 B.R. 98, 95 (Bankr. S.D.N.Y. 1992) (citing In re Provincetown-Boston Airlines, Inc., 72 B.R. 307, 309 (Bankr. M.D. Fla. 1987) (holding that a claim for reimbursement must be disallowed where the claimant and debtor are co-liable in the underlying action and there was neither a determination of the debtors proportionate fault in the underlying action nor had the amount owed by the debtor been fixed, making such claims contingent)). 22. Regardless of whether or not Owens-Illinois asserts a claim against the

Debtor, it cannot do so under state law without first obtaining a judgment. Moreover, even a contingent claim for contribution would leave Owens-Illinois with no cognizable interest upon which to base standing to be heard in this case. NOTICE 23. Notice of this Motion has been provided to (i) the parties on the Master

Service List, as defined in the Courts Order (I) Establishing Notice Procedures And (II)
9

Authorizing Preparation Of A Consolidated List Of Creditors In Lieu Of A Matrix, dated November 25, 2008; and (ii) Owens-Illinois. In light of the nature of the relief requested in this motion, the Debtor submits that no other or further notice is required. NO PRIOR REQUEST 24. any other court. No previous request for the relief sought herein has been made to this or

10

WHEREFORE, for all of the reasons set forth above, the Debtor respectfully requests that the Court grant the Motion, strike Owens-Illinois Objection in all respects, and hold that Owens-Illinois lacks standing to participate in this chapter 11 case, including the right to obtain discovery from the Debtor, and grant to the Debtor such other and further relief as is just and proper Dated: New York, New York February 2, 2009 By: /s/ John H. Bae Bruce R. Zirinsky, Esq. John H. Bae, Esq. GREENBERG TRAURIG, LLP 200 Park Avenue New York, New York 10166 Telephone: (212) 801-9200 Facsimile: (212) 801-6400 zirinskyb@gtlaw.com baej@gtlaw.com Proposed Counsel for the Debtor and Debtor in Possession

11

EXHIBIT A

1 2 3 4 5 6 7 8 9 APPEARANCES: 10 For the Debtors: 11 12 13 14 15 16 17 18 19 20 21

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK . . . . T H AGRICULTURE & NUTRITION, . L.L.C., . . Debtor. . . . . . . . . . . . . . . . . . IN RE: Chapter 11 Case No. 08-14692 (REG)

New York, New York Monday, January 12, 2009 4:06 p.m.

TRANSCRIPT OF TELEPHONIC CONFERENCE BEFORE THE HONORABLE ROBERT E. GERBER UNITED STATES BANKRUPTCY JUDGE (Via telephone - On the Record) John H. Bae, Esq. CADWALADER, WICKERSHAM & TAFT, LLP One World Financial Center New York, New York 10281 Kenneth H. Frenchman, Esq. DICKSTEIN SHAPIRO, LLP 1177 Avenue of the Americas New York, New York 10036 For the Punitive Legal Representative:

Sander L. Esserman, Esq. STUTZMAN, BROMBERG, ESSERMAN & PLIFKA, P.C. 2323 Bryan Street, Suite 2200 Dallas, Texas 75201

(Appearances Continued) Audio Operator: Electronically Recorded by Kendra Harris, ECRO Rand Reporting & Transcription, LLC 80 Broad Street, Fifth Floor New York, New York 10004 (212) 504-2919 www.randreporting.com

Transcription Company: 22 23 24 25

Proceedings recorded by electronic sound recording, transcript produced by transcription service.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

APPEARANCES: For PENAC:

(Continued) Garrard R. Beeney, Esq. SULLIVAN & CROMWELL, LLP 125 Broad Street New York, New York 10004

For related Travelers entities:

Robert B. Millner, Esq. SONNENSCHEIN, NATH & ROSENTHAL, LLP 1221 Avenue of the Americas New York, New York 10020

For Continental Casualty Company:

David C. Christian, Esq. SEYFARTH SHAW, LLP 131 South Dearborn Street Suite 2400 Chicago, Illinois 60603

For Volkswagen Group of America:

Kirk T. Hartley, Esq. Gerald Munitz, Esq. BUTLER, RUBIN, SALFARELLI & BOYD, LLP Joseph Frank, Esq. FRANK GECKER, LLP 325 N. LaSalle, Suite 625 Chicago, Illinois 60610 Katherine L. Mayer, Esq. MC CARTER & ENGLISH Joseph Rice, Esq. MOTLEY RICE, LLC Dennis Valenza, Esq. MORGAN & LEWIS

For Creditors' Committee:

For Owens Illinois: 17 18 19 Also Appearing: 20 21 22 23 24 25 For Larson, et al:

3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Chicago. said. First of all, I'm Judge Gerber. As I understand it, we're here in THAN for two separate things: One, to get an update on the dialogue with Valenza. else. THE OPERATOR: THE COURT: (Indiscernible.) Then let me repeat what I (Proceedings commence at 4:06 p.m.) THE COURT: We're here on THAN. And as I understand

it, we're going to get an update on the status of the dialogue on the insurers' issues, and we're going to deal with the issues raised by Volkswagen. Who's going to take the lead? (No verbal response.) THE COURT: Can anybody hear me? (Indiscernible.) You're breaking up. This is Dennis

UNIDENTIFIED: THE COURT: MR. VALENZA:

I'm sorry.

I can hear you, Judge.

I can't (indiscernible) hear the operator, but nobody

All right.

the insurers, and second to deal with the issues raised by Volkswagen and by the various responses to the Volkswagen submission. Who is going to take the lead? MR. MUNITZ: Your Honor, this is Gerald Munitz in

Kirk Hartley and I, we take the lead on the standing

4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 issue on behalf of Volkswagen. THE COURT: All right, Mr. Munitz, but I want to deal

with the insurers' issues first. MR. RICE: Your Honor, this is Joe Rice; I'm calling

on behalf of individual objectors that have filed objections to the claim, but I don't know if that's on the -- anything today, but I'm on behalf of Larson (indiscernible) and (indiscernible). THE COURT: again, sir? MR. RICE: THE COURT: MR. RICE: THE COURT: Joseph Rice, R-i-c-e. Rice? Yes, sir. Well, I didn't even understand that to be Well, I didn't -- can I get your name

a purpose of today's call, Mr. Rice. MR. RICE: THE COURT: MR. RICE: THE COURT: initially -MR. MILLNER: THE COURT: MR. MILLNER: THE COURT: MR. MILLNER: Yes, Your Honor? Yes, go ahead. It's Robert Millner for Travelers. Okay, Mr. Millner. Good afternoon. And I will be pleased It may not be, Your Honor. All right. I'll just put it on the record that -Okay. Well, I thought I was going to hear

5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to give a report if somebody from the debtor is not. MR. BAE: Your Honor, this is John Bae from -- as an

aside, Your Honor, I no longer (indiscernible) with Greenberg Traurig as of today, but I have been retained by the debtor. I was hoping that Mr. Frenchman would have been on the phone to provide the Court with a report of the status of the discussions with the insurers. on. MR. FRENCHMAN: that, Your Honor. I am on the phone. I'm sorry about I don't think Mr. Frenchman is

I will be taking the lead for the insurance

issues; and, to the extent that there are other issues, including the Volkswagen issue, I believe Mr. Bae will be taking the lead on behalf of the debtor. THE COURT: with you, please. MR. FRENCHMAN: Yes, Your Honor. All right. Mr. Frenchman, let's start

The status is that the -- we provided plan language and a draft stipulation to the insurers last week. meet-and-confer last Thursday. We had a

I think at that meet-and-confer

we narrowed some of the issues and crystallized other issues; yet, we still certainly have some work to do and know that there were other carriers who were unavailable for the meetand-confer. And although they sent representatives, they

certainly voiced a concern that they needed to be heard. We have -- well, we are supposed to be receiving new

6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 language, plan language and a new stipulation, from the insurance carriers on Wednesday. We have scheduled a meet-and-

confer to occur at one o'clock Thursday, and we have all agreed to block off Friday for an all-day meet-and-confer, should that become necessary. We are hopeful that, at the end of this week, at the end of the meet-and-confer Friday, if that becomes necessary, we will have reached an agreement. THE COURT: perspective, please. MR. MILLNER: My perspective is as follows: Okay. Mr. Millner, can I get your

We did receive plan language last Tuesday, and then some additional significant part of the plan language last Wednesday night, and we met Thursday. We did as best we could

with the language, and we still have some significant issues remaining, and we are continuing in our work. And Mr.

Frenchman is correct that he will receive back from the insurers this Wednesday a further draft, which will address several major issues, which, as he said, were crystallized at our last meeting. And the one point that I would make is that, when we finish this week, while everybody is always hopeful about reaching agreements, we of course will have to go back to our clients; Mr. Frenchman may have to confer with his client. we're hopeful is -- what I'm hopeful of is of the lawyers So

7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 please. MR. FRENCHMAN: Well, I think in terms of the followreaching at least their own consensus that they can go back to their own clients with, but I -- so that's point one. Point two, just so that we understand, we are continuing on this stipulation path, as the debtor wants, and we have not received any discovery. And we're certainly not

waiving any rights on that part, Your Honor, if this does not work. I just want to make that clear. We're working on it. All right. Anybody else on the insurers' And with that, that's

my perspective.

THE COURT: side want to comment?

(No verbal response.) THE COURT: All right. All right. I hear no response.

Well, gentlemen -- ladies and gentlemen, I

think that this dialogue should continue, and I'm going to allow it to continue and encourage it to continue; and of course, it can without prejudice to anyone's rights. And as a consequence, I would like recommendations from the plan proponents on the one hand and the insurers on the other as to what a useful time would be for a follow-up conference call, to see how you're doing and/or to respond in any other way to the outcome of your efforts to resolve this. Mr. Frenchman, let me get your perspective first,

up conference call, I take Mr. Millner's point that there may

8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 be some conferring with the clients, although I would say from the debtors' perspective, knowing full well, I think, the state of mind of the insurers, we intend to have those communications with the client in advance of the meet-and-confer, and our client will be available to confer with at any point in time during the meet-and-confer, so we'll be able to straighten out those authority issues. Nevertheless, I think giving until

Monday for that would be fair, and that the conference call should be scheduled for a week for today, if the Court is available. THE COURT: objection? MR. MILLNER: I don't, for two reasons: Mr. Millner, do you concur or have an

This is a process, which if the Court were not here at all, is underway. We are talking and negotiating. And if we

finish Friday with something useful, hopefully, we will go back to our clients -- we have several insurers, as you know -Perhaps Monday, which would be the earliest next business day; maybe for some it will end up being Tuesday. And to the extent

we still have some issues, my thinking is we would call Mr. Frenchman back on the phone. I think that the best status is a

week from Friday, but I certainly think that a week from today is too soon, is too soon. THE COURT: And that's my perspective on that.

Mr. Millner, I assume you're keeping your

client or clients in the loop on this, aren't you?

9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. MILLNER: We do. We do. But if we leave Friday,

we would certainly need to speak to our clients the following Monday, and I assume the other insurers would also. And

depending on what happens then, my thinking is we may have to come back and talk further with Mr. Frenchman. is you give a little time for that to play. the Monday is too soon, for sure. THE COURT: Uh-huh. Has everybody had a chance to So my thinking

So I think that

speak their piece on this? MR. CHRISTIAN: THE COURT: Your Honor, may I be heard?

Who is speaking, please? This is David Christian on behalf of

MR. CHRISTIAN:

Continental Casualty Company and Pacific Casualty Company. THE COURT: Yes, Mr. Christian. Thank you, Judge.

MR. CHRISTIAN:

I agree with Mr. Millner, and I guess I'd add a further clause on that point. I heard Mr. Frenchman say that

he would doing his conferring with the debtor in advance of the meeting, and so I guess the implication is that he'll come in with all of the authority he needs and all of the information from his client that he needs. response to that: One is that, given the complexity and the number of issues involved here, I'm not sure that Mr. Frenchman can anticipate every issue and everything we might ask for, or I guess I have two thoughts in

10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 everything that might be asked for of the client, just as I'm not sure I can anticipate everything he might ask of me and my client. And number two, perhaps more importantly, many of the issues we're dealing with are things on which Phillips, the debtor-parent, is the final word. In particular, this plan

contemplates that it will be Phillips pursuing any insurance coverage after confirmation, because it's Phillips making the contribution in the first instance that it wants to indemnify. And so, while Mr. Frenchman may be able to speak to the debtor, it may be that some of the issues addressed by the stipulation or changes in the plan language affect more than just the debtor, and Phillips may need to be consulted, as well, so I -THE COURT: Pause, please, Mr. Christian. Sure.

MR. CHRISTIAN: THE COURT:

Has Mr. Beeney or some attorney from

Phillips been excluded from the meet-and-confers? MR. CHRISTIAN: I wouldn't say, Your Honor, that

Phillips has been excluded (indiscernible) they have been invited, but they have not come. THE COURT: MR. BEENEY: for Phillips. THE COURT: MR. BEENEY: Yes, go ahead. We are in touch more than daily with I see. Your Honor, if I may, it's Garrard Beeney

11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 counsel for the debtor, and in fact, we have been advised every step of the way on the proposals that the debtor is going to make. We get a complete report of the insurers' position There is no delay that needs to be built into

(indiscernible).

the schedule because of needing approval and needing time to do that. The debtor's counsel certainly knows where to find me

(indiscernible) in regular contact with my client and they're right on top of it. THE COURT: All right. Back to you, Mr. Christian.

Do you want to finish up any further observations you want to make, please. MR. CHRISTIAN: Thank you, Your Honor. Just by way of

response to your question, I would say we've not only invited, but we would actually encourage Phillips' direct participation. I don't know one way or another, and I take Mr. Beeney at his word, with respect to their level of contact with the debtor as intermediary. THE COURT: MR. FRANK: All right. Anybody else want to be heard?

Your Honor, this is Joseph Frank; I

represent the creditors' committee. I just want to encourage the Court to set an earlier date, rather than a later date, because it may become clear next Monday that there isn't going to be a deal, in which case we want to set a confirmation hearing for a contested confirmation hearing; or it may become clear that we need more

12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 time. But I really do think it's important to keep the pressure here. As I think Your Honor knows, I'm very much

desirous of getting this case confirmed sooner, rather than later. And I think leaving us to two weeks, given that we're

going to meet by phone, so there isn't a great deal of inconvenience or expense for the parties -- I can't speak as to the Court -- I think a Monday date makes more sense than a Friday day, and there is no harm if there isn't a whole lot to report on Monday, Your Honor. THE COURT: speak their piece? MR. RICE: the plaintiffs. THE COURT: Pause, please, Mr. Rice. Tell me who your Your Honor, this is Joe Rice on behalf of All right. Everybody had a chance to

claimant is and, more importantly, not his name, but his attitude about it. the plan? MR. RICE: This plaintiff did vote against the plan. Is this a tort claimant who voted against

There are three separate claimants -THE COURT: MR. RICE: I need you to speak up, Mr. Rice. I'm sorry. There are three separate

claimants that have filed objections; we represent all three of them. Their objections have been set out, but it deals with

provisions of the trust distribution process for the most part,

13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 and in the voting procedures in one part. They have objected

to the application of -- I can go into such detail as Your Honor wishes, but they have filed objections to the voting process, they've filed objections to the process of the claims or the way they're reviewed and the equality of that; they've challenged it on constitutional and due process grounds and individual review process. They have challenged the block-out of non-related cases that occurs in the plan. a limited amount of data. They have challenged the use of

It's (indiscernible) understanding

and position that trying to (indiscernible) a bankruptcy claim that goes on for the next forty years (indiscernible) cases that have been processed over the last three years is inadequate to allow the Court to approve any permanent bankruptcy (indiscernible); and, therefore, they rejected the block-out provisions that are (indiscernible). THE COURT: to confirmation. MR. RICE: THE COURT: Yes. All right. You understand that I'm not Okay. So I assume you're going to object

going to rule on the merits of your objections today. MR. RICE: Yes. I was just making (indiscernible) Mr.

Frenchman (indiscernible) indicated that (indiscernible) insurance issues got worked out, there would not be a contested confirmation, and I wanted to bring to the Court's attention

14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Mr. Rice? MR. RICE: THE COURT: Yes, sir, I have. Then you know that you didn't need to file that, as of the current status, there would be a contested confirmation on behalf of these claimants even if the insurance got worked out. And there is not an insignificant amount of

discovery that needs to be done in contemplation of the confirmation hearing. THE COURT: discovery demands? MR. RICE: THE COURT: MR. RICE: No, sir, we have not. Why not? We were -- we filed our objections and we Well, have you already served your

understood that the Court was having a hearing on Thursday to perhaps (indiscernible) everything that needed to get done. THE COURT: Have you read my case management order,

your objection to get your discovery underway, didn't you? MR. RICE: If our objection -- yes, sir, we could have We were hoping to

done it that way; that's what we understand.

narrow down -- there was a significant amount of information exchanged before the filing (indiscernible). Once we filed our

objections, we were hoping to be able to work out with the debtor's counsel (indiscernible) agreement to make use of (indiscernible) so that we wouldn't have to go through a fullblown discovery process. (Indiscernible) that process

15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (indiscernible). THE COURT: Well, Mr. Rice, I'm expressing no view on

whether you get discovery or not or whether any of the discovery you want is over-broad or entirely appropriate. But

what I am telling you is that, if whatever discovery you think you want, the time to ask for that was about four weeks ago, and you're way behind. And the time for getting your needs and

concerns done was quite awhile ago. I am not saying today, absolutely, positively no adjournments of anything. But what I am telling you is that,

with so many other clients similarly situated having supported this plan, and with the principal issue on the table being the needs and concerns of the insurers, I think you would be well served to get your work done because you might be very unrealistic in assuming that this case is going to be held up in its entirety to meet your needs and concerns. MR. RICE: Your Honor, we will -- I do want to bring

the Court's attention that one of our issues is that the Court has been told that there was approximately 90,000 votes in favor of the plan, but we've been led to believe that approximately 45,000 of those people were people that had been told they had no claim against THAN. issue we're trying to get to. So that's part of the

Because there was a significant

number of (indiscernible) votes, and we can establish that. THE COURT: Well, I don't know if people want to

16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 respond to that now or not. That sounds like the kind of thing

that is probably better addressed in a more fulsome discussion when that issue is on the table. MR. BAE: the debtor. THE COURT: MR. BAE: Yes, Mr. Bae. Mr. Rice's representation is false. We were Your Honor, this is John Bae on behalf of

-- I'm actually glad that Mr. Rice spoke up because I was going to ask the Court -- I understand -- while I understand that the discussions with the insurance carriers are ongoing, the debtor would like to respond to the objections filed by Mr. Rice, as well as the objections filed by -- well, filed by Owens Illinois, which frankly raised very similar issues as those raised by Volkswagen. Illinois. But we want to keep the process moving, Your Honor; and frankly, we don't believe that Mr. Rice has raised any legitimate issues that warrant discovery. And once we submit And we question the standing of Owens

our response to what Mr. Rice has filed, I think at that point we can have a fulsome discussion on the merits of the allegations in Mr. Rice's (indiscernible). a more orderly way to address this. And I think that's

And we, the debtor,

intends on -- with the Court's permission of course, the debtor intends on filing a response to the objections. THE COURT: Well, okay. But we're not going to deal

17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 with it today. MR. BAE: THE COURT: That's correct, Your Honor. All right. Mr. Rice, all we can and

should deal with today is for me to reiterate the importance of you getting to work to deal with any discovery that you perceive to be necessary or appropriate, and I forgot what was ordered, vis-a-vis objections to confirmation, but I assume you're working on your objection to confirmation, as well. When the matter is fully briefed, I'll decide the issues as the papers reflect. It's that simple.

Now the open issue for which I had solicited anybody else who wanted to be heard was whether all of folks who were involved in the debtor-insurer dialogue had a chance to speak their piece; that was when Mr. Rice spoke up. Is there anybody

else who wants to be heard before I deal with when we're going to have a follow-up call? (No verbal response.) THE COURT: All right. Hearing no response.

Mr. Frank, I understand your desire to keep things moving forward, but I -- and I certainly don't think that waiting a full, I guess it's more than ten days; it's almost sixteen days -- or thirteen days, is excessive, so we're going to have a follow-up call on this time, four o'clock eastern time, on January 21, which is Wednesday -- excuse me, January 14 -- no, January 21 was right -- January 21, a Wednesday, nine

18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 days from today. Now I gather you're going to have your dialogue on the 15th and the 16th; and while I find it surprising that the insurers need two days after that talk to their clients, I'm going to give it to you, mainly because I expect that if there are any open issues after Friday, you're going to use the Monday and Tuesday and three-quarters of the Wednesday to get them resolved. Okay? Now let's turn to the Volkswagen issues. I think I So four o'clock on Wednesday, the 21st, folks.

heard Mr. Munitz say he wanted to speak on behalf of Volkswagen, and I of course have briefs from Mr. Frank and Mr. Esserman, and I think Mr. Bae said he wanted to be heard on that, as well. So I'll hear from you, first, Mr. Munitz, and

make your remarks as you see fit, but when you do, I want you to address the following questions and concerns that I have: First, I reviewed your very thick exhibit package. looked to me like that complaint showed that your client Volkswagen and THAN were named in the same lawsuit, but I didn't see any evidence in that big package that your client has actually asserted any cross-claim against THAN. Now I It

don't know whether you're arguing that that's something that doesn't need to be done, but it looked like it was a pretty big hole in the record. Likewise, your opponents asserted -- and I understand

19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that the submissions were filed substantially contemporaneously, so I guess there's a risk of ships passing in the night -- that there was no evidence or even allegations at this point that THAN had done any business with your client Volkswagen. I didn't see any allegation in your papers that

your client had done business with THAN, aside from any proof of that, and it struck me that the silence in that regard was deafening. I would assume, subject to your opponents' rights to be heard, that if you had actually asserted a cross-claim against THAN, you would have a claim, albeit contingent, and would have 1109 status, but your opponents seems to be suggesting to the contrary. I think we need to get our arms

around the facts and then we can get to the various points that were made in your brief, which cause me some material concerns, Mr. Munitz, as to whether we should be holding up the case to address these needs and concerns; and some material concerns in my mind as to why discovery would be appropriate for them, whether or not you have the 1109 status to be heard in opposition to confirmation. So let me hear from you first; and then, if there's anybody else who has your view in life, I want to hear from him or her next, and then I'll hear from Mr. Frank or Mr. Esserman or Mr. Bae or anyone else who wants to be heard in opposition, and I'll give you each a chance to reply and surreply.

20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. MUNITZ: Your Honor, with your permission, I'd

like to defer to my partner Mr. Hartley, with respect to the question posed regarding the status of the (indiscernible) litigation. THE COURT: Okay. That's Mr. Hartley, H-a-r-t-l-e-y,

the second name on the papers? MR. MUNITZ: MR. HARTLEY: THE COURT: MR. HARTLEY: That's right. Right. Okay. Go ahead, Mr. Hartley.

Thank you, Judge.

I'm sorry if we were not clear enough, but, in fact, the papers do demonstrate that there are sixteen pending crossclaims by Volkswagen America against THAN in certain underlying cases. The way you come to this conclusion is (indiscernible)

two provides you with a list of various state courts, that we were able to get done in a few days, in which there are cases pending, in which both THAN and VWGOA are defendants. Then we

have provided you in Exhibits 3 and 4 with declarations and case management orders, establishing the fact that in some of these particular jurisdictions, cross-claims are automatically deemed filed in these underlying cases. So when you put the two together, the conclusion you reach is that in Delaware there is an automatic cross-claim, there are two pending cases involving both VWGOA and THAN, so there are two cross-claims there.

21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: All right. Pause, please, Mr. Hartley.

To what extent do these orders take into account whether or not the two parties have had any dealings with each other? MR. HARTLEY: Judge, they are not dependent on that,

nor is the existence of the cross-claim or contribution claim dependent, under state law, on the existence of a prior business relationship. So, essentially, they're offered you a

straw man there; that's not a prerequisite to a contribution claim under at least the law in most states. know all of them. I won't claim to

But in Illinois, for example, where I've

grown up doing half asbestos cases and half commercial litigation, there is no such requirement. Contribution claims

or an indemnity claim or (indiscernible) default does not require a preexisting business relationship. Now what we have shown you there, Judge, with the last column in Exhibit 2, is that, in fact, there are many codefendants in these cases which are (indiscernible) from THAN, if we take us through what THAN said in their disclosure statement as to who their customers were, and we of course take that at its face value. So while we were going through the

complaints, we looked and found in many cases that, in fact, some of the fiber customers are in those cases. And what that means as a general rule, Judge, is that the underlying tort victim has said to his lawyers or in

22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 interrogatories -- in answers to interrogatories, excuse me, that he believes or she believes they were exposed to fibers that came from those people who were customers of THAN. they are clearly squarely in the mix in the case, and the claims, by our count we have proved up sixteen: Two in We have So

Delaware, one in Rhode Island, thirteen in Illinois. ongoing work to find more.

And these are exactly the sorts of

proofs that were submitted in Federal-Mogul and deemed satisfactory (indiscernible) not even questioning the standing of VWGOA, Daimler-Chrysler, and other auto manufacturers. So with respect to the facts, Judge, which is really my side of the case, that's what I can say to you. bankruptcy law, I of course defer to Mr. Munitz. THE COURT: MR. MUNITZ: Okay. So are we back to you, Mr. Munitz. On the

Your Honor, I believe so.

Respectfully, Judge Gerber, if there are cross-claims, existing cross-claims, even though they may be contingent, unliquidated, and disputed, we nevertheless fit within the definition of "claim" contained in Section 1015 of the Bankruptcy Code. As -Pause, please, Mr. Munitz. I

THE COURT:

Respectfully or not, I don't need to be told that. understood that, and I said that was part of the assumptions under which I was asking the question. But what I needed to

know from you -- and you passed me off to Mr. Hartley -- was

23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the extent to which any such claims had been asserted against THAN. The next question we have is: Assuming that you're

going to have 1109 status because you do have claims, what you need discovery for. MR. MUNITZ: Your Honor, we may be able to latch on to But if we have

the discovery being conducted by others.

standing -- and one of the issues, you know, could range from any of the confirmation standards -- we are not sure whether a record has been developed with respect to those matters. We

appreciate the time constraints that may be imposed upon us. But among the issues that we would like to get into is, according to the pleading that -- the memorandum that they filed, the future claims representative contends that he is Volkswagen's representative. We would submit, Your Honor, that

we are not a future demand-holder of Volkswagen, whatever else may happen to it, will not contract an asbestosis case, and that we are a creditor. But most importantly, we don't understand how the future claims representative can represent both the plaintiff in that action, the alleged victim, and Volkswagen, who is one of the defendants in that action, or whatever the fallout from that action may be. There may be other issues in this case, Your Honor. was introduced to the matter the last week in December. But I

24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 among other questions, is a 524(g) injunction appropriate in the facts of this case? You know, is THAN, which is not -- you

know, which might not be eligible for a discharge, entitled to a 524(g) injunction? on that matter stand. I do not know where the, you know, facts We realize the need to get to those

immediately, you know, but absent a ruling as to standing, we have no opportunity to do so. THE COURT: Mr. Munitz? MR. MUNITZ: Your Honor, I have two other comments. All right. Anybody else who's allied with

I would invite your attention to Paragraph 3 of the committee's response to our position, and there is a sentence that appears in that paragraph, which I quote: "It is true that recovery by asbestos claimants against movants may give rise to claims; indeed, very substantial claims, against the debtors in the future." Your Honor, I think that is an admission that we do hold present contribution or reimbursement-type claims; and, therefore, even though our claims are contingent, unliquidated, and disputed, it gives us the status of a creditor, and when we follow through with the definitions of being a creditor, we have the right to oppose confirmation. Similarly, with respect to the future claims representative's opposition, there is a footnote on Page 8 that

25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 refers to Section 1109(b), it's a quote. The word "creditor"

appears in there, but there is no substance given to the fact that the term appears. THE COURT: They would (indiscernible) -Pause, please.

Pause, please, Mr. Munitz.

Where were you referring in the future claims representative's submission? MR. MUNITZ: There is, Your Honor, on Page 8, Footnote

9, there's an excerpt from the Section -- it's a quotation from Section 1109(b). THE COURT: point again, please? MR. MUNITZ: Your Honor, they recognize that 1109(b), They refuse to All right. I found it now. And your

you know, would be applicable to the matter.

acknowledge that we're a creditor (indiscernible) in there would pertain to someone in Volkswagen's position. THE COURT: MR. MUNITZ: Uh-huh. The holder of, you know, albeit a

contingent future and disputed claim. THE COURT: MR. MUNITZ: questions. THE COURT: All right. No. Thank you. Okay. Anything else, Mr. Munitz?

No, Your Honor, unless you have further

Is there anybody else who wants to argue

on Volkswagen's side before I give others a chance to be heard? MS. MAYER: Your Honor, this is Katherine Mayer from

26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 McCarter & English; I represent Owens Illinois in this matter. I'm not chiming in to argue because during the call today is the first I've heard that the debtors would plan on contesting the standing of Owens Illinois in this case. participated in numerous (indiscernible) We have

bankruptcies, and But I

this is the first time our standing would be challenged. would respectfully request the opportunity to respond when

papers are filed by the debtors with respect to the standing issue. THE COURT: All right. Let's add that to the list of

things we've got to talk about. All right. MR. FRANK: Mr. Frank, do you want to be heard first? Thank you, Your Honor. Joseph Frank on

behalf of the committee. Your Honor, it's clear you've read our papers, and I don't want to repeat or belabor. I do want to respond to

several things Mr. Munitz said, and then make some general comments. The quotation Mr. Munitz read from the third paragraph of our pleading was a quotation from a ruling by the Third Circuit in the Federal-Mogul case, and it's a case that should have been cited by Volkswagen, but wasn't, and it's a case that demonstrates among other things that their reliance on 157(b)(5) to try and bootstrap themselves into this bankruptcy case is -- you know, while not against the law in the Second

27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Circuit, is certainly against the law in the Third Circuit, and just has no basis. It's a case they should have cited. And to

try and quote it against us now is kind of silly, Your Honor. You know, getting back to the other points, the notion that a deemed cross-claim is a cross-claim remains to be seen, in our opinion. All they've shown has been that some standing

orders in state courts deem a cross-claim between the various codefendants, and that's not to say that they've ever been a cross-claim (sic). In addition, Your Honor, to compare the fact that standing wasn't contested in Federal-Mogul and is being contested here is to admit the point that the contribution rights between codefendants bears a relationship to their business relationship, Federal-Mogul was a case involving brake manufacturers, where car manufacturers came into the bankruptcy, and this is a case involving a fiber distributor who, as far as I can tell, didn't distribute fiber to brake manufacturers, so ... THE COURT: Pause, please, Mr. Frank. You broke up.

Did you say "did" or "didn't"? MR. FRANK: Did not, Your Honor.

So to try and draw a parallel between Federal-Mogul doesn't really hold any water. And in addition, to draw a

parallel between Federal-Mogul and this case, where this Court has adopted, in Quigley, standing position, doesn't really get

28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you anywhere. So Federal-Mogul is a (indiscernible) utility,

particularly a bankruptcy court order on a non-contested matter; or, it is, I think, the Third Circuit opinion basically telling the auto manufacturers to stop the mischief and let the state court cases go forward against them, has a great deal of bearing on this case. Beyond that, Your Honor, based on the ruling with respect to the insurers' standing, it's one thing to say you're a creditor. Even if we take that as a given, that they're a

creditor because of a contingent contribution claim that apparently arises from a deemed cross-claim, being a creditor in this case, the Court has already ruled, is not called "standing," and it's certainly not equal to broad standing. You still have to demonstrate where your ox is being gored. And Volkswagen really hasn't made that demonstration. They've laid out a few rote points (sic); they say the trust terms would block codefendants from invoking state statutes or common law rules, but they haven't really demonstrated how that would occur, and they haven't really demonstrated how that would occur in a way that (indiscernible) the Bankruptcy Code. They said that the trust distribution procedures in the confirmed plan would block transparency, but I don't really think that's the case. They would have the same rights to

information that they have right now, which is to subpoena information from people who are suing them, and subpoenaing

29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 debtor. THE COURT: Uh-huh. information from third parties. When the information is

properly subpoenaed, the information, I'd have to presume, would be produced by, you know, law-abiding third parties. The other issue they raise is the allocation among codefendants. And you know, everything they say about that is And

just the nature of bankruptcy and the nature of 524(g).

I'm not going to lecture anyone on federalism, and I'm not going to lecture them on what creates standing; in other words, something the plan doesn't contemplate, versus what the Bankruptcy Code does. Your Honor. So those are really my only points, which is -- and to sum it up, which is that, to the extent -- even if the Court is to buy it as a deemed cross-claim creating a creditor relationship with it in this bankruptcy, based on Your Honor's adoption of the Quigley standing position, we haven't seen anything to create standing here. And I think Volkswagen needs That doesn't really create standing,

to go back, read the plan carefully, rather than continuing to say they haven't had time to read the plan carefully, and tell us where their ox is being gored, or they just need to go back and defend the state court claims. THE COURT: MR. BAE: All right. Who wants to be heard next?

Your Honor, John Bae on behalf of the

30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BAE: Your Honor, what Volkswagen is saying is

that, because certain state courts adopted a procedural mechanism to avoid papers, needless papers being filed, so that every defendant -- every codefendant is deemed to have asserted a cross-claim against every other defendant does not create a substantive claim. It is purely a procedural mechanism the

courts have adopted to manage their docket; that's all that is. Now for Volkswagen to come in here now and claim that, based on that procedural mechanism, that they have a substantive cross-claim against THAN is ridiculous. Under that

logic, 1,500 defendants, who are constantly named in these asbestos actions, even though they have no business being in that action, every single one of those codefendants would have the ability to come into a bankruptcy case and be disruptive, and there's no law to support that. More importantly, Your Honor, we've asked Volkswagen countless time as to what is the factual basis for which you believe you have a cross-claim against THAN. get a response that is based on facts. We have yet to

It's ironic that Mr.

Munitz refers to facts, that he be focused on facts, but there are no facts that they've cited. The only fact that they've cited is that we were unfortunately named as a codefendant in (indiscernible) action just because the plaintiffs decided to name a handful of companies, whether or not there was any connection is

31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 irrelevant; they named companies as defendant. THAN is a named

codefendant, and we happen to be in a jurisdiction where the Court adopted a case management order that deems cross-claims to be asserted. Those are the only facts that they've And that, in and of itself, does not

presented to the Court.

provide a substantive claim for which a company can get recovery. But this is worse, Judge, than being a contingent claim that's not liquidated. articulated. There is no claim that's even

A case management order cannot create a

substantive case law claim that is enforceable, and that is what they're advocating here. And the bigger question, Your Honor, is: they're trying to achieve here? What is it

We had a mechanism built into

the trust distribution procedures, which governs how the claims are satisfied. And that contemplated in the event somebody can

demonstrate that they have an enforceable cross-claim or an indemnity claim that is fixed, so as to be able to satisfy the provisions of the Bankruptcy Code, so they will be enforceable, that there's a mechanism to be paid under the trust distribution procedures. Volkswagen doesn't complain about this because they don't care (indiscernible) what their recovery is going to be, because they know they don't have a claim against this debtor. What they're trying to do is essentially find a way to be

32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 disruptive here, so that they can solve a greater problem they have, which is in the state court litigation, the asbestos litigation system. And unfortunately or fortunately, this bankruptcy is not the right place to try to solve the world's problems. We're here to solve this debtor's problems with the claims that are being asserted against it. That's all we're trying to do. What we want to do is

We're not trying to change the world.

pursue our rights under the Bankruptcy Code and the law and get the best outcome that we can get. Volkswagen has no place in this case. And just

because they so -- they claim that they have standing here, just because they say they have an interest, doesn't make them have -- make them a creditor, whether it's contingent or not. They do not have a claim. And until they can present to the

Court how or why they have a legitimate and enforceable claim - it's a not a question of whether or not a claim is automatically asserted; that's superficial, that's completely irrelevant. What is relevant is, substantively, what claim do

they have, and they can't articulate a claim. So, Your Honor, I would respectfully submit that they do not have standing here. The mere fact that some state court

adopted a case management order that permits these cross-claims to be asserted automatically doesn't make them a creditor; it is purely a procedural mechanism, it was never intended to

33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 said. heard? THE COURT: Yes, Mr. Esserman. I would like to reiterate what Mr. Bae create a substantive right. THE COURT: Thank you, Your Honor.

All right. Your Honor, Sandy Esserman. May I be

MR. ESSERMAN:

MR. ESSERMAN:

If, in fact, Volkswagen had a claim, it would be very

easy to say, we bought THAN fiber on X date, we incorporated it into our product, we're getting sued for THAN's liability, and we paid THAN's liability. or alleged by Volkswagen. In fact, Volkswagen has never, ever sued THAN. And Nowhere has that ever been asserted

when I say "sued THAN," I'm now talking about the operation of law and procedural mechanism of filing a complaint, a counterclaim in which they allege facts as to why THAN is somehow liable. to do that. And they've really pussyfooted around trying

And despite -- if a plaintiff has a case against Well,

THAN, they've got to allege exposure damages, et cetera. that is not being done here by Volkswagen. They're not

alleging exposure damages or telling you that they've paid THAN's share because they can't, they just can't. They're

sorting of coming in here and hoping to get as much generalized standing (indiscernible) against 524(g) in general. I'd like to respond to this business about the FCR as Volkswagen's representative. That's just pure silliness. The

34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 statutory obligation of the FCR is set forth in the statute; the FCR has complied with that. Volkswagen -- the FCR doesn't Under

represent Volkswagen; Volkswagen represents Volkswagen. the statute, if a claim comes into being, that person represents his own claim.

What the duty of the FCR is, is to make sure that there's a process and mechanism to treat future claims and current claims substantially similar, and that the process is fair, and that future claims would have their fair share of the assets in the pie. It's not to represent Volkswagen ever, it's It's sort of almost in the

not to represent any claimant ever.

nature of a guardian ad litem for a class, which -- who doesn't represent anyone individually. the statute. If, in fact, there is any kind of standing here -which we don't think that they've shown factually -- and frankly is a very simple and easy to show standing if they had any facts: THAN sold me product, THAN damaged me, I sued THAN, That's very, very clear from

I've made a demand on THAN, THAN owes me money, THAN owes me this amount of money and this is how I calculate it in this lawsuit; they have not done any of that, nor can they. they. This is an effort by a defendant who's decided to make a statement in a bankruptcy; they've chosen, unfortunately or fortunately, your bankruptcy, Judge Gerber, to make that Nor can

35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 statement. And they're going to try and come in here and wreak

whatever havoc that they can. Next, I'd like to talk about Federal-Mogul because Volkswagen wants Federal-Mogul to be taken somehow to give them standing because cross-claimants were recognized as having standing. You know what? Cross-claimants can have standing.

in Federal-Mogul, cross-claimants -- they weren't just crossclaimants who had standing; they were cross-claimants with judgments against the debtor that had standing. They had

actual judgments, not just some assertion -- some general assertion through some case management order of the standing issue; they had judgments. Now of course, someone with a

judgment against a debtor, you know, no one is going to challenge standing, and that's what happened in the FederalMogul case. So I think what Volkswagen is trying to do here is they're trying to create as wide a swath as they can with whatever political agenda they've got to disrupt a potential (indiscernible), make havoc on (indiscernible) information they can about the process (indiscernible) you know, I guess we have to admire them for trying. But on the other hand, standing is

(indiscernible) it's constitutional, it's prudential, and it's very -- and it's limited to issues in which an ox is being gored. And frankly, these guys have now shown how their ox has When they do that, maybe they can have standing

been gored.

36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 for limited purposes for showing how their ox is being gored. These generalized sort of statements that they're making just don't cut it. Thank you. All right. Anybody else who agrees with

THE COURT:

Mr. Frank and Mr. Bae and Mr. Esserman before I give it back to Mr. Munitz to give him a chance to reply? (No verbal response.) THE COURT: Hearing none, Mr. Munitz, anything you

want to say before I -MR. MUNITZ: Hartley again? MR. HARTLEY: Judge, to -- this is Kirk Hartley, to Your Honor, may I first defer to Mr.

address the points that have been raised. First, they have not cited you the case for the proposition that there needs to be a preexisting business relationship in order to have a contribution or other crossclaim. If this were really so simply, I'm sure they would It is not so simple. Hang on a second. Are you telling me, Mr.

provide that to you. THE COURT:

Hartley, that if you have, let's say for sake of example, fifty defendants, and certain defendants are held liable and other defendants aren't held liable, that anybody who pays has claims against the ones who weren't held liable? MR. HARTLEY: Well, Judge, the way the trials are But as a general rule, what

conducted varies state by state.

37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you have happening in one of these underlying trials is a debate about whether the exposure to any particular defendant's product is sufficient to be causative of the disease. And in a

given case, for example, we might have a plaintiff who says, I am sick with mesothelioma or asbestosis as a result of having worked with products produced by Bondex or Kelly Moore, these various drywall and other kinds of products, and that one day, one time, I changed a brake lining from a Volkswagen car. In

that case, my position as a defense lawyer for VW would be that any fault or any harm was caused by the products that came from the companies using the THAN fiber, and not the one time that he changed one brake line. Depending on the state, that might

be framed as a claim for contribution or a portion of default; it might be viewed as a proximate cause issue. vary state by state. are tried. And to the point they were saying this has all been deemed, well, they were deemed because we -- when I was a young lawyer, we used to spend our lives generating these things, and actually filing them in the clerks' offices that held (indiscernible) because they were being asserted. So they did These issues

But it is, in fact, the way these cases

exist at one time, and then we stopped doing it because it was just too much paper inundating things. This is not -- they got

into CMOs for a reason, and that was because these were big processes, and they still are. They are a very important

38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 it. calculus, Judge, of what's going on in the dynamic as you run up to trial. THE COURT: MR. HARTLEY: THE COURT: Pause, please, Mr. Hartley. Sure. Because I think you need to slice and dice

You have to help me, because my specialty is in bankruptcy

and general civil litigation, and I didn't do, even as a lawyer, asbestos litigation. MR. HARTLEY: THE COURT: Okay. When you're talking about contributory

fault or something like that, or saying that it's somebody else's fault, and therefore the judgment against you should be reduced, I understand that. If you're saying something

analogous to contributory negligence or something like that, so that you're not liable for a hundred percent of the damages, I understand that. But if you're talking about a claim against the debtor, a cross-claim against the debtor, I have difficulty as a person who's been a lawyer for almost forty years understanding how THAN could be liable on a cross-claim unless THAN had some dealings with the underlying circumstance upon which your client was held liable. MR. HARTLEY: Can you help me in that? And I appreciate

I think I can, Judge.

the framing of the question.

And where these kinds of claims

come from, among other things, is if in any (indiscernible)

39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 there is a contribution between joint tort feasors. And

essentially, Judge, these have grown into place over the last ten or fifteen years because, when we started out with this tort, it was all -- everyone was liable for everything. And

over the years, it has become, according to some legislatures, more important to apportion fault between the relative different tort feasors. And there are, for example, specialized rules in some states, some of which come under the heading of tort reform, that say, if this particular defendant is deemed by the jury to be less than X percent at fault here, then they are liable only for a limited subset of the damages; if the defendant's relative responsibility is deemed to be more than X percent, then there is a more expansive liability (indiscernible). So where you are distinctively looking for contract relationships for the basis of these claims, in fact, by the legislative acts, that has been abolished, and all of this is balled up in the (indiscernible) state by state consistent, and frankly, rather it's someplace hard to follow, rules about contribution between joint tort feasors or alleged joint tort feasors. And these are, you know, something that we haven't even touched on today here, but that's cited in the papers -or our papers is the settlement credit issue. In an underlying

case, having a credit for a payment that's made by another

40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 defendant, which in this case would be THAN, would reduce my potential liability if VWGOA goes to trial. And we gave you an

example of that, very recent, from Illinois, where the way the whole trial and settlements played out, one defendant was essentially freed from paying damages because they were getting credit for payments made by others to resolve the case. That's why, for something like VWGOA, Owens Illinois, or any of the other codefendants, who are starting to pay attention to these very important facts, an entity such as THAN or the (indiscernible) entities that are not in bankruptcy, but (indiscernible) injunction, we want them intra (sic) on the verdict sheet, which in some states they have to be in the trial to be on the verdict sheet, so that we can apportion fault here. THE COURT: Then, Mr. Hartley, how could any asbestos

case ever be confirmed within the statutory scheme that Section 524 contemplates? MR. HARTLEY: Well, Judge, there are a lot of things

in asbestos litigation that are being done now and haven't been done before for a variety of reasons. In my personal

estimation, many codefendants should have been (indiscernible); long ago for a wide variety of reasons, they have chosen not to. But there are some real issues here, and they are really

coming to the fore these days, Judge, because we truly are moving into a world in which there is a (indiscernible) tort

41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 system and an outside trust system, if you will. And very

clearly, the goal of the plaintiffs, who are trying to serve their clients, to go mine the tort system; and then, after they are done with that, go mine the trust system, thereby depriving my client, Owens Illinois, and everybody else of offsets or credits for the amounts they are taking out of the bankruptcy system. And I agree with you, this has not been (indiscernible) of any challenge before to my knowledge, but they are starting to pop up in Thorpe (phonetic), in Sarco (phonetic), and in the other cases because the different remaining defendants are forced to start paying attention because of losing the economic benefit of the payments and the departure of these other entities. And it's going to be an

issue, I think, Judge, because we're seeing more and more about it. And then to switch to this issue of the FCR, this is a significant issue, Judge. As we read the FCR's papers, they

are suggesting that the professor (sic) is able to represent both the interests of the personal injury claimant and codefendants, both of whom want money out of the debtor. think under AmCam, Ortiz, he cannot do that because it is simply an inherently conflicted position. The tort claimants I

want more money, Mr. Rice wants more money; Volkswagen and others want money or credits. I don't see how Mr. Issacharoff

42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 can handle both roles. This is, to my knowledge, Judge -- and I will not claim to have been in every asbestos bankruptcy, obviously federal law will (indiscernible). This is, to my knowledge,

the first time there really has been precedent on the issue of the scope of the representation of the futures representative. And I think the position you are hearing is fairly remarkable, in that I do think that Mr. Issacharoff's role is leaving him purporting to protect the interests of Volkswagen in a future, as yet unknown case, in which we would want to make a crossclaim. I don't see how he can do that under the case law.

That, Your Honor, is one of the things that I do think needs to be the subject of some very focused discovery, so we can try and leave you with a record of exactly what he has done or not done to protect the interests of entities in the position of VW or OI. I think what we're going to find is that he did not take any steps to determine (indiscernible) to determine (indiscernible), and that in fact it's simply a role that is not properly (indiscernible), and instead, his role is to represent the personal injury (indiscernible). But that's

going to be here, Judge, an issue of first impression. Have I helped at all, Judge, on your question? THE COURT: matter, yes. You've helped clarify my thinking on the

All right.

43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Esserman. MR. HARTLEY: Judge, if -- I've read your case The assertions If people want MR. HARTLEY: MR. ESSERMAN: THE COURT: Did I address (indiscernible.) May I respond briefly, please?

Who is that, Mr. Esserman? Yes. Yes, Judge, can I make -- this is

MR. ESSERMAN: MR. HARTLEY:

Hartley -- can I make one more point (indiscernible). THE COURT: Yes. First Mr. Hartley, then Mr.

management order and understand the process.

we've made are supposed to be taken as correct.

to contravene them, then we're supposed to have a formal evidentiary hearing. I believe, and I'm confident we can bring you underlying tort lawyers to testify in more detail if you need further education or want further education about how the underlying tort cases work. And I think to say at this

juncture we do not have standing in light of sixteen indisputable cross-claims would be a mistake. I also want to address the transparency issue that was alluded to when our opponents were saying we're not harmed. a present claim, Judge, the plaintiff is sitting in court, in deposition, and saying, I was exposed the products of X, Y, and Z, and all of that is on the table during his deposition and during trial, so we are able to point to that evidence as we In

44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 are trying to make our trial proofs. Under this system, they are creating a deferral process under which the plaintiff in my tort trial will not be required to have made his claim against THAN, and will be depriving him evidence. THE COURT: If the claims is --

Pause, please, Mr. Hartley.

Are you telling me that you're not going to have the ability to depose the plaintiff in that tort litigation? MR. HARTLEY: We will have the ability, Judge, but

that is not -- in a normal case, we will have access to the papers and the product ID, which has been identified by plaintiff, the physical process, the answers to the interrogatories (indiscernible) deposition. The way this is

being set up, the claim may not even be on file at the time, and I may not have access to the information that was submitted. There have been some significant controversies already, Judge, in which the claimant, the tort claimant was found after the fact to have submitted a claim to a bankruptcy trust, and in deposition he has denied doing so. But the way

this is all being structured, I'm not going to have access to that information in the real important time, which is when these cases are being discovered for trial. So the transparency is a major issue for all of the codefendants. We need access to claims as they are being

45 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 filed; and when payments are being made, that too needs to be known, so that we're obtaining appropriate (indiscernible). THE COURT: MR. VALENZA: All right. Your Honor, this is Dennis Valenza. I

have a comment to make when Mr. Esserman is finished. THE COURT: All right. Are you --

MR. ESSERMAN: THE COURT: "Valenza"?

Your Honor? Did I hear

Wait, just a second.

I don't -Yes, Your Honor. I'm the special

MR. VALENZA:

counsel for THAN in the litigation, so I've been actively engaged in the (indiscernible). THE COURT: All right. Just a minute, Mr. Valenza, I

don't see you on my log here. MR. VALENZA: THE COURT: Oh -Oh, yes, now I do. All right. All right.

You're up after Mr. Esserman. a chance to respond. MR. ESSERMAN: Okay.

But Mr. Esserman, I promised you

This has been very productive

and (indiscernible) because, finally, after all the obfuscation of VW has given this Court, we finally hear from VW exactly what this is all about, and it has nothing to do with THAN, it has nothing to do with THAN exposure, it has nothing to do with THAN liability; it has to do with their concern that they're one of fifty defendants, and that there's going to be some

46 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 trust claim filed, there are going to be some other claims filed in the court system that they're getting sued, and they're not -- their concern is they're somehow not going to be able to discover exactly what exposures or what other claims that particular plaintiff had against others, so they can attempt to get a judgment reduction or some other benefit or credit. And you know what? solve that problem. This bankruptcy is not here to

To the extent that they've got a problem

with a plaintiff and they want to find out what the plaintiff has received from other places, it's very simple. allow subpoenas. The courts

He can subpoena -- he can subpoena the

plaintiff, he can take the plaintiff's deposition, he can do all sorts of things to find out exactly from the plaintiff exactly what the liability of Volkswagen is, to the extent he's allowed -- and that's another issue, that's a state court issue, to get into these other issues. so, depending on the state court. He may or may not do

But this is not a forum to

try and fix Volkswagen's codefendant problems that they're somehow generally concerned about; that they're concerned that they're either overpaying on a case, they're not getting credit, they're not doing whatever, none of which has anything to do with THAN liability. It has to do with the general tort

system, a generalized problem that they say. And I think -- you know, I commend Volkswagen for at

47 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 least finally getting it out on the table exactly what they're wanting and exactly what this is all about. This isn't about

trying to find a case that they can't find, where they've got (indiscernible) exposure. This is about a generalized

complaint about the legal system in general and about 524(g) in general, and how that operates. been very beneficial. THE COURT: MR. VALENZA: Thank you. All right. Mr. Valenza. And to -- just a So to that extent, this has

Yes, Your Honor.

couple of points, and following up on what Mr. Esserman just said, you know, the codefendants in the litigation have mechanisms to do discovery against the plaintiff, and they can use subpoena power, and in fact that's what's done in the litigation. The various trusts, bankruptcy trusts, are

routinely subpoenaed to get the information with respect to payments in order to get credit information. What is important and what Mr. Hartley said is that some of the plaintiffs can mislead and, in fact, perjure themselves in the process, and not give information to the plaintiff about THAN's potential exposure in a case. But

rarely, if ever -- and I can think of no occasion, Your Honor - was THAN sued because of a direct exposure to asbestos supplied by (indiscernible); to the contrary, it was always the case that another codefendant is sued, along with THAN, for a product that that codefendant manufactured using asbestos

48 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 matter: supplied by THAN. So there is in the litigation today those individual companies with which THAN had a contractual relationship, so that Volkswagen can pursue whether or not there is an appropriate contribution for an appropriate level of fault, because the codefendant is there in the courtroom that made the product. So I hope I haven't confused the issue, but they're basically making a statement that, because THAN is not available in the litigation, that there's no way that they can get information, and that's just not correct. MR. MUNITZ: Your Honor, this is Mr. Munitz.

Our memorandum cited two bases for our standing in the One was that, as a matter of state law or orders

entered in state court proceedings, we are deemed a crossclaimant and thereby become a creditor. We also refer to 28 U.S.C. 157(b)(5), and perhaps if I got an answer, it would probably go away. Assuming the THAN

plan were to be confirmed, would that preclude Volkswagen's right to ask that a particular pending lawsuit be tried pursuant to the provisions of that section or remanded by the District Court to the state court for trial, so that a state court allocation provision could be had in the course of that trial? In other words, if THAN and Volkswagen and three other

people are defendants in a particular action, is there anything

49 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 heard? THE COURT: MR. BAE: Yes. I'm a little confused by Volkswagen's 157(b)(5) does not provide a basis for in the THAN plan, such as a 524(g) injunction, that would prevent Volkswagen from asking that the liability be determined under 157(b)(5)? THE COURT: Now are you talking about the injured

asbestos victim's ability to get his damages from THAN, or are you saying that you have -- that 157(b)(5) applies to your claim for contribution, as well? MR. MUNITZ: Your Honor, I looked at the very language

of the section, and I do not see anywhere where the right to request that release is limited to the plaintiffs, to the tort victim. So I should think, especially in view of recent

developments with respect to allocation statutes, that a defendant would have the right to ask for invocation of that section. MR. BAE: Your Honor, this is John Bae. May I be

reference to 157(b)(5).

a codefendant to bring back and to assert a claim against a reorganized debtor or a trust that has been established by a -MR. MUNITZ: (indiscernible) -THE COURT: Wait. Gentlemen -- Mr. Munitz, we do not No. Your Honor, this is not

interrupt in my courtroom.

50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. MUNITZ: MR. BAE: THE COURT: I apologize, Your Honor.

Your Honor, to continue -I lost the train of thought, Mr. Bae.

You're going to have to go back over it again, please. MR. BAE: Yes, Your Honor.

Section 157(b)(5) is a provision under the statute that provides jurisdiction to the district court in which a bankruptcy case is pending to address and resolve personal injury and wrongful death actions. It is not -- it is purely a

jurisdictional mechanism to be sure that, if there is a personal injury action, that that issue is addressed by the District Court, not by the Bankruptcy Court in the claims resolution process. That's what 157(b)(5) is intended to do.

Hence, in the Dow Corning bankruptcy case, Your Honor, the issue was raised as to whether claims that are related to the bankruptcy could be transferred to the District Court where the bankruptcy case was pending because the wrongful death and personal injury claims should be resolved by the District Court, and not by the Bankruptcy Court. That is wholly

different than the issue that is being raised by Volkswagen. What Volkswagen is raising is it is saying that, because it has been sued with the debtor in a pending asbestos action, that somehow its rights are being compromised in its defense of the state court litigation. And it is now asking

this Court to fix that problem that they have in the state

51 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 court system. I don't believe that that creates standing. What that

does is it creates -- it's an inevitable problem, I suppose, in any litigation where there are multiple defendants, and individual defendants have -- are seeking relief under the Bankruptcy Code, and they are no longer present in the pending litigation. Whether it's fortunate or unfortunate, that is the Companies have a right to seek relief under

reality of life.

the Bankruptcy Code, and they can pursue those rights. I think what Volkswagen is trying to do here is to say that THAN and its creditors, who have legitimate claims against the debtor, are not entitled to the protections of the Bankruptcy Code because they don't like the impact of the relief that this Court may grant in any pending state court action, and that's not what this should be about. THE COURT: MR. HARTLEY: All right. Judge, this is Kirk Hartley. May I just

follow-up on Mr. Valenza's (indiscernible). THE COURT: MR. HARTLEY: Yes. The reality is that, of some of those

THAN fiber customers that he identified, several of them are now in bankruptcy; and so, therefore, it is very important for my client to be able to reach the fiber supplier which sold them the fiber. And just going off the list in their plan

disclosure statement, and going from memory, which could be

52 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 bench. faulty, they list the following entities as customers, that I believe are now bankrupt: (Indiscernible), Kaiser Gypsum, W.R. So it is very important for

Grace, and United States Gypsum.

my client to be able to go behind them and reach back to that fiber supplier, which is THAN, which is why I want to be able to bring a claim. That's all I wanted to follow up on. All right. Have I now heard from

THE COURT: everybody?

(No verbal response.) THE COURT: All right. I am going to be leaving the

Stand by, keep your telephone lines open, and I'll be

back with a ruling as soon as practical. (Recess taken at 5:22 p.m.) (Proceedings resume at 6:50 p.m.) THE COURT: All right. This is Judge Gerber. I

apologize for keeping you all waiting. Ladies and gentlemen, I'm ruling that Volkswagen hasn't satisfied me that it has the requisite standing, and most assuredly that it hasn't satisfied me that it needs any discovery or any accommodation for its stated desires in the scheduling for this case. bases for this decision: First, while Volkswagen has given me evidence that Volkswagen and THAN are named as defendants in a number of lawsuits, it hasn't given me any evidence of Volkswagen having The following is a summary of the

Court Decision 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

53

actually asserted any cross-claims against THAN, other than by the automatic operation of case management orders that deem cross-claims to have been filed. The fact that parties are named as codefendants, of course, doesn't mean by itself that one has claims against the other, especially in the absence of any evidence that they had any dealings with each other, or that one paid an obligation, for which the other is also liable. Now the answer that I was given was that, under various case management orders, cross-claims were deemed to have been filed. But as Mr. Bae pointed out, that was a pure

procedural mechanism, and what a case management provides for convenience lacks both the safeguards, like Rule 11 or any state law equivalent, or Rule 9011, of voluntary or intentional assertion by the party seeking the "right to payment" that provides the underpinning of "claim" under 1015 of the Code. case management order presumably can provide 'procedural' in the action in which it was entered, but it can't confer substantive rights. Federal-Mogul doesn't teach us that much because, as was noted in argument without contradiction, their judgments were entered creating substantive rights to payment. And I say A

this fully recognizing that a claim, once asserted, can be contingent, unliquidated, or any of the other things 1015 provides. But to find a "right to payment" under the Code, and

Court Decision 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to inflict upon all of the other parties in the case the

54

burdens that standing requirements are intended to protect them against, there must be something more than the happenstance that dozens of entities are named as defendants in the same case, and that an administrative orders says that they're deemed to have cross-claimed against each other. That's especially so since the claim of prejudice here, or perhaps I should say asserted legally cognizable injury, is not that Volkswagen could never recover anything from the estate or its trust in the event that -- and perhaps I should say inter alia, A, Volkswagen were held liable; B, Volkswagen made payments; C, THAN were liable to Volkswagen for something THAN sold for which Volkswagen were held liable, a matter that's conspicuously absent from the showings made in the papers and in oral argument, because the plan provides for a means and source of recovery if all of those things ever came to pass. Rather, it appears that Volkswagen is looking for one or more means to achieve a leg up in litigation against those suing it elsewhere, such as by substantive reductions in its possible liability to tort claimant plaintiffs by means of judgment reductions, if Volkswagen is found liable by the tort plaintiffs, or to achieve some kinds of benefits or credits in negotiations. There was also a hint in the oral argument that in the

Court Decision 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

55

so-called "case of first impression," Volkswagen wants to bring down the entire Bankruptcy Code scheme for dealing with mass torts, and/or the Code's express scheme for dealing with asbestos litigation. to that conclusion. Certainly, arguments I heard today lead But agendas of that character do not give

rise to rights of payment. And as Quigley, 391 B.R. 695, which I've told you earlier in this case I'm going to follow, teaches us: Standing must be evaluated in light of the legally cognizable issues that the party seeks standing to be heard on. Quigley is thoughtful authority from the Chief Judge of this district, and as I've told you before, I'm going to follow it. As the Second Circuit observed in the Refco case, it is important that a bankruptcy court is not too facile in granting applications for standing. Overly lenient standards pay potentially overburden the reorganization process by allowing numerous parties to interject themselves into the case on every issue, thereby thwarting the goal of a speedy and efficient reorganization. Granting peripheral parties

status as parties-in-interest thwarts the traditional purpose of bankruptcy laws, which is to provide reasonably expeditious rehabilitation of financially

Court Decision 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 distressed debtors with a consequent distribution to creditors who have acted diligently. As I said, that's the Second Circuit speaking in Refco, 505 F.3d at 118-119. We have exactly those kinds of risks here. I'm also mindful of the observation that Judge Bernstein made in Quigley -- once again, that's case law in this district -- quoting, in part, Refco:

56

Proceedings would quickly grind to a halt if the Court had to head every party on every issue. That's at Page 703. Now we heard about a reliance on 28 U.S.C. 157. You

don't need me to tell you that 157 applies to the ability of a bankruptcy judge to decide certain kinds of matters. But

limits in 157 on the bankruptcy judge's ability to decide personal injury actions have nothing to do with a bankruptcy judge's ability to decide core matters. And whether or not a

Chapter 11 plan should be confirm or how 524, including 524(g) of course, should be construed presents classic core matters, fully within the province of a bankruptcy judge to decide. See, in particular, 157(b)(2)(J). Now I don't yet need to decide, if I ever will, how I would rule vis-a-vis standing if Volkswagen had actually filed a claim for contribution against THAN in any of the actions in which they both happen to be named as defendants -- and by

Court Decision 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 "filed a cross-claim," I mean by some kind of volitional act that would stand up to Rule 11 scrutiny, or scrutiny of like character as imposed under applicable state law -- or if Volkswagen had filed a proof of claim here.

57

The assertion that

Volkswagen had done any of those things was conspicuously absent from what we heard today. I will also defer judgment pending the possibility that genuine claims, as contrasted to deemed claims, might be asserted in the future, or Volkswagen wants to roll the dice by pressing the issue without such, in which case Volkswagen might have limited standing to object to the proposed treatment of any contingent future claim it might have under Section 5.6 of the Asbestos P.I. Trust Distribution Procedures, or any other way in which its ox is actually gored with respect to any right of payment, in contrast to its desire to get advantages in nonbankruptcy litigation against asbestos plaintiffs. Moreover, even if Volkswagen had made a requisite showing of status, one that it hasn't yet made, if it every will, no cause has been shown for delaying the proceedings in this case. That's the exact thing that the Circuit urged us to There is no need for discovery to

be wary of in Refco.

interpret the plan; that's determined by reading the plan. There is no need for discovery to consider the role of a future claims representative; that's determined by reading the Bankruptcy Code, and to the extent necessary, reading the plan.

Court Decision 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 There extent to which there is an objection to the ability of the plan to avoid state law trials against THAN? an objection to the provisions of the code itself.

58

Well, that's And the

effect of not having THAN side by side with Volkswagen to facilitate Volkswagen's desire for reduction of any judgment against it, once again as a consequence of the Bankruptcy Code, and does not require discovery. And Volkswagen doesn't need discovery on its future ability to subpoena the trust for information, to verify that tort litigants aren't lying to Volkswagen in the tort litigations around the country because Volkswagen's ability to get such information from the trust has been conceded in the argument today. As the creditors' committee observes, Volkswagen only has standing to object to those provisions that affect its legal rights. It may someday have the latter, to the extent I

acknowledged earlier in this decision, but it doesn't have any such rights now, and especially to inquire as to the things that it's told us that it wishes to inquire about. As the

creditors' committee also observed, Volkswagen has no standing to take advantage of this Court and this bankruptcy case to advance its interests in far-removed asbestos litigation around the country. Standing is denied without prejudice to renew the request, to the extent, but only the extent I previously noted

Court Decision 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Note: Comments and arguments of participants appearing ______________________________________ Coleen Rand, AAERT Cert. No. 341 Certified Court Transcriptionist Rand Reporting & Transcription, LLC January 14, 2009 in this decision. In any event, no cause has been shown to

59

change the scheduling in this case to meet Volkswagen's stated needs. I am so ordering the record. order a copy of the transcript. Have a good evening, folks. COUNSEL: you, Your Honor. (Proceedings concluded at 7:02 p.m.) ***** CERTIFICATION I certify that the foregoing is a correct transcript from the electronic sound recording of the proceedings in the above-entitled matter. We're adjourned. Thank you. Thank I assume you'll all

Good night, Your Honor.

telephonically not adequately recorded for verbatim transcription and should be considered "conditionally certified."

Hearing Date & Time: February 17, 2009 at 9:45 a.m. EST Objection Deadline: February 13, 2009 at 12:00 p.m. EST

BRUNE & RICHARD LLP Susan Brune Theresa Trzaskoma 80 Broad Street New York, New York 10004 Telephone: (212) 668-1900 Facsimile: (212) 668-0315 -andSTUTZMAN, BROMBERG, ESSERMAN & PLIFKA, A PROFESSIONAL CORPORATION Sander L. Esserman (Admitted Pro Hac Vice) Andrea L. Ducayet (Admitted Pro Hac Vice) 2323 Bryan Street, Suite 2200 Dallas, Texas 75201 Telephone: (214) 969-4900 Facsimile: (214) 969-4999 Counsel for Samuel Issacharoff in his Capacity as the Legal Representative for Future Claimants UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------------X ) In re ) ) T H AGRICULTURE & NUTRITION, L.L.C. ) ) Debtor. ) --------------------------------------------------------------X

Chapter 11 Case No. 08-14692 (REG)

RESPONSE OF LEGAL REPRESENTATIVE FOR FUTURE ASBESTOS CLAIMANTS IN SUPPORT OF DEBTORS MOTION TO STRIKE OWENS-ILLINOIS, INC.S OBJECTION TO THE PREPACKAGED PLAN OF REORGANIZATION FOR LACK OF STANDING

TABLE OF CONTENTS I. INTRODUCTION...................................................................................................... 1 II. RESPONSE.............................................................................................................. 2 III. CONCLUSION ....................................................................................................... 5 TABLE OF AUTHORITIES Cases

In re Ionosphere Clubs, Inc., 101 B.R. 844 (Bankr. S.D.N.Y. 1989) ............................ 5 In re James Wilson Assocs., 965 F.2d 160 (7th Cir. 1992)........................................... 2 In re Quigley Co., Inc., 391 B.R. 695 (Bankr. S.D.N.Y. 2008).................................. 2, 4 In re Refco, Inc., 505 F.3d 109 (2d Cir. 2007) ........................................................... 3, 5 Lee v. Board of Governors, 118 F.3d 905 (2d Cir.1997) ............................................... 5 OneBeacon America Ins. Co. v. A.P.I., Inc., No. Civ. 06-167(JNE), 2006 WL
1473004 (D. Minn. May 25, 2006) ................................................................................. 4

Warth v. Seldin, 422 U.S. 490 (1975)............................................................................ 5


Statutes U.S. CONST. art. III, 2. ................................................................................................ 4

ii

RESPONSE OF LEGAL REPRESENTATIVE FOR FUTURE ASBESTOS CLAIMANTS IN SUPPORT OF DEBTORS MOTION TO STRIKE OWENS-ILLINOIS, INC.S OBJECTION TO THE PREPACKAGED PLAN OF REORGANIZATION FOR LACK OF STANDING Professor Samuel Issacharoff, as the Court-appointed legal representative for future claimants (the FCR), submits this response in support of Debtors Motion to Strike Owens-Illinois, Inc.s Objection to the Prepackaged Plan of Reorganization for Lack of Standing (the Motion to Strike) (Dkt. No. 294) and respectfully states as follows: I. INTRODUCTION As the FCR has previously told this Court, the law of standing is designed to prevent strangers who lack a stake in a debtors reorganization from wandering into court and insinuating themselves into a chapter 11 proceeding.1 That is precisely what Owens-Illinois is attempting to do in the current bankruptcy case. This Court, however, has already considered and denied standing to a similarly situated entityVolkswagen.2

See Transcript of Telephonic Conference Before the

Honorable Robert E. Gerber United States Bankruptcy Judge at p. 52, 58-59,


1 See Response of Legal Representative for Future Asbestos Claimants to Amended Statement of Volkswagen Group of America, Inc. in Support of Motion to Modify Scheduling Order Entered November 25, 2008 (the Volkswagen Objection) (Dkt. No. 221). The FCR adopts and incorporates by reference the standing arguments and authorities raised in the Volkswagen Objection. 2 Objections to Volkswagens standing were filed by T H Agriculture & Nutrition, LLC (THAN or the Debtor) (Dkt. No. 193), the Official Committee of Unsecured Creditors (the Committee) (Dkt. No. 222, as amended by Dkt. No. 237), and the FCR.

hereafter cited as Tr. at p. __, attached as Exhibit A to the Debtors Motion to Strike. Indeed, the alleged connections between Owens-Illinois and the Debtor are factually indistinguishable from the connections between Volkswagen and the Debtor. Hence, the same arguments relied upon by this Court in determining that Volkswagen lacked standing apply with equal, if not greater, force to Owens-Illinois efforts to insinuate itself into the Debtors bankruptcy case. The FCR urges the Court to follow its prior ruling and conclude that Owens-Illinois has no standing to participate in the Debtors chapter 11 case. II. RESPONSE The threshold question with respect to standing is constitutional: whether someone seeking to be heard has a sufficiently concrete, personalized stake in the outcomea tangible injury in fact. See, e.g., In re Quigley Co., Inc., 391 B.R. 695, 701-02 (Bankr. S.D.N.Y. 2008). In the specific context of an asbestos reorganization case, Chief Judge Bernstein has stated that only one who has a legally protected interest that could be affected by a bankruptcy proceeding is entitled to assert that interest, and even then, only with respect to those issues to which its interest pertains. In re Quigley Co., Inc., 391 B.R. at 703 (quoting In re James Wilson

Assocs., 965 F.2d 160, 169 (7th Cir. 1992)).

Even a party in interest cannot

challenge portions of a plan that do not affect its direct interests. In re Quigley

Co., Inc., 391 B.R. at 703 (citations omitted). Indeed, as announced by this Court in
its January 12, 2009, ruling on the various Volkswagen objections:

Overly lenient standards potentially overburden the reorganization process by allowing numerous parties to interject themselves into the case on every issue, thereby thwarting the goal of a speedy and efficient reorganization. Granting peripheral parties status as partiesin-interest thwarts the traditional purpose of bankruptcy laws, which is to provide reasonably expeditious rehabilitation of financially distressed debtors with a consequent distribution to creditors who have acted diligently. Tr. at p 55-56 (quoting In re Refco, Inc., 505 F.3d 109, 118-19 (2d Cir. 2007). Here, Owens-Illinois alleges (just as Volkswagen alleged) that it is an alleged joint tortfeasor with the Debtor and that it has contribution and indemnity rights against the Debtors.3 The Court, however, has already

considered and rejected the notion that such an unfounded allegation constitutes a sufficient injury in fact to confer standing. See Tr. at 53 (The fact that parties are named as codefendants, of course, doesnt mean by itself that one has claims against the other, especially in the absence of any evidence that they had any dealings with each other, or that one paid an obligation for which the other is liable.). OwensIllinois, like Volkswagen, has never prosecuted a cross claim against the Debtor.

See Motion to Strike, p. 5. Nor has Owens-Illinois ever filed or prosecuted any
action seeking contribution or indemnity from the Debtor. Id. at 1; see also Tr. at 18 (describing the lack of evidence that Volkswagen had ever asserted a cross-claim against THAN as a pretty big hole in the record). This is not surprising, given

3 See Owens-Illinois, Inc.s Objection to the Prepackaged Plan of Reorganization (the Plan Objection) [Dkt. No. 195], 10. Despite the allegation, Owens-Illinois fails to identify any lawsuit where it has asserted an actual contribution or indemnity claim against the Debtor. In fact, Owens-Illinois fails to identify any lawsuit where it is even a co-defendant with the Debtor.

that the Debtor never sold asbestos to Owens-Illinois nor conducted any other type of business with Owens-Illinois.

See Motion to Strike, p. 1; see also Tr. at 19

(discussing Volkswagens failure to prove or even to allege that it had ever done any business with THAN, and stating that Volkswagens silence in that regard was deafening). Put simply, Owens-Illinois has failed to prove (or even to allege) any facts demonstrating that it has a present claim against the Debtor, and any hypothetical claim that may possibly arise under certain circumstances at some future time does not demonstrate that Owens-Illinois has a concrete, personalized stake in the Debtors reorganizationthe hallmark of Article IIIs case or controversy requirement.4 See, e.g., OneBeacon America Ins. Co. v. A.P.I., Inc., No. Civ. 06167(JNE), 2006 WL 1473004, at *6, n.1 (D. Minn. May 25, 2006) (rejecting an assertion of standing based on a hypothetical cross-claim, stating as follows: [h]aving failed to offer any support for a contribution claim, OneBeacon cannot demonstrate that the injunctive relief contemplated by the Modified Plan directly and adversely affects its pecuniary interests) (cited by Quigley, 391 B.R. at 70405).5 Accordingly, Owens-Illinois has failed to carry its burden of establishing that

U.S. CONST. art. III, 2.

5 Moreover, Owens-Illinois reliance on some remote contingency also runs head-on into the Bankruptcy Codes mandate that contingent claims are disallowed under 11 U.S.C. 502(e)(1)(B) and the parallel provision of 11 U.S.C. 509 that hypothetical subrogation claims are not recognized in bankruptcy. Reorganization cases deal with serious issues among parties with real issues. They do not have time to sort out the hypothetical inquiries

[Footnote continued on next page] 4

it has standing to participate in the current bankruptcy case. See, e.g, Lee v. Board

of Governors, 118 F.3d 905, 910 (2d Cir.1997) ([T]he party invoking the authority
of the court bears the burden of proof on the issue of standing.) (quoting Warth v.

Seldin, 422 U.S. 490, 501-02, 95 S.Ct. 2197, 2206-07, 45 L.Ed.2d 343 (1975)).
III. CONCLUSION Standing rules exist for a reason and play a key role in federal jurisprudence. No one can be heard in court without a sufficiently discernible stake in the outcome, particularly in a bankruptcy case designed to ensure a speedy and efficient reorganization. Tr. at 55 (quoting In re Refco, 505 F.3d at 118-19; see also In re

Ionosphere Clubs, Inc., 101 B.R. 844, 849 (Bankr. S.D.N.Y. 1989) (Only those
parties sufficiently affected by a Chapter 11 proceeding should be able to appear before it and be heard.). Here, Owens-Illinois lacks any discernible stake in the outcome of the Debtors bankruptcy case, and thus Owens-Illinois cannot participate in it. WHEREFORE, for the reasons set forth, the FCR respectfully urges the Court to grant the Debtors Motion to Strike and reject Owens-Illinois efforts to participate in this bankruptcy case based on a lack of standing.

[Footnote continued from previous page]


of unaggrieved parties. In the event Owens-Illinois should ever establish a real, concrete, cognizable claim for contribution arising from THANs asbestos liabilities founded on state law, the TDPs provide a mechanism for satisfying such a claim.

Dated: New York, New York, February 11, 2009

Respectfully submitted, BRUNE & RICHARD LLP By: /s/ Theresa Trzaskoma Theresa Trzaskoma Susan Brune 80 Broad Street New York, New York 10004 Telephone: (212) 668-1900 Facsimile: (212) 668-0315 -andSTUTZMAN, BROMBERG, ESSERMAN & PLIFKA, A PROFESSIONAL CORPORATION Sander L. Esserman (Admitted Pro Hac Vice) Texas Bar No. 06671500 Andrea L. Ducayet (Admitted Pro Hac Vice) Texas Bar No. 24032790 2323 Bryan Street, Suite 2200 Dallas, Texas 75201 Counsel for Samuel Issacharoff in his Capacity as the Legal Representative for Future Claimants

GREENBERG TRAURIG, LLP 200 Park Avenue New York, New York 10166 Telephone: (212) 801-9200 Facsimile: (212) 801-6400 Bruce R. Zirinsky, Esq. John H. Bae, Esq. Proposed Counsel for the Debtor and Debtor in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------In re: T H AGRICULTURE & NUTRITION, L.L.C., Debtor. ----------------------------------------------------------

x : : : : x

Chapter 11 Case No. 08-14692 (REG)

DEBTORS REPLY TO OWENS-ILLINOIS, INC.S OBJECTION TO DEBTORS MOTION TO STRIKE OWENS-ILLINOIS, INC.S OBJECTION TO PREPACKAGED PLAN OF REORGANIZATION FOR LACK OF STANDING TO THE HONORABLE ROBERT E. GERBER UNITED STATES BANKRUPTCY JUDGE: T H Agriculture & Nutrition, L.L.C. (THAN or the Debtor), as debtor and debtor in possession, submits this response to the February 11, 2009 objection (the Objection) filed by Owens-Illinois, Inc. (Owens-Illinois), and in further support of its motion to strike Owens-Illinois objection to the Debtors prepackaged plan of reorganization (the Plan) for lack of standing (the Motion). For the reasons set forth below, the Debtor respectfully submits that Owens-Illinois has no cognizable claim in this chapter 11 case. The Court should overrule Owens-Illinois Objection in its entirety, grant the Debtors Motion and reject Owens-Illinois efforts to force participation in this chapter 11 case, including its efforts to obtain discovery from the Debtor.

1.

The Court should grant the Debtors Motion, and strike Owens-Illinois

objection to the Plan, because Owens-Illinois has presented no facts to establish that it has any claim whatsoever against the Debtor. The only facts Owens-Illinois has presented are the exact same facts presented by Volkswagen, which this Court already ruled were not sufficient to establish a claim against this estate. 2. Owens-Illinois argument that it should be afforded standing is based on a

single fact: that it is a named codefendant with the Debtor in several pending state tort claims. This Court, however specifically rejected this claim to standing when ruling that Volkswagen lacked standing to participate in this case. As the Court stated, The fact that parties are named as codefendants, of course, does not mean by itself that one has claims against the other, especially in the absence of any evidence that they had any dealing with each other, or that one paid an obligation for which the other is liable. Transcript of Telephonic Conference Before the honorable Robert E. Gerber United States Bankruptcy (the Volkswagen Hearing) at p.58-59. 3. While Owens-Illinois complains that the codefendants in the pending

asbestos state court actions could stand to pay more than their proportional share of the liability, Owens-Illinois has offered no facts to demonstrate that it had ever made any payment in any action on behalf of the Debtor in any case. It is pure conjecture, and nothing more. Indeed, if Owens-Illinois purported claim gave rise to standing, any defendant in a mass tort litigation involving multiple defendants that seeks relief under chapter 11 would have to invite every codefendant into the chapter 11 case based on speculation that the remaining defendants may have to pay more than their proportional share. No law supports such a preposterous outcome. 4. Owens-Illinois complains that the automatic stay under section 362 of the

Bankruptcy Code precludes the remaining codefendants from asking the jury to assess the

debtors share of the liability. That concern alone, however, does not provide a claim against the Debtor, and does not confer standing on Owens-Illinois to assert a claim against this estate. It is an intended function of section 362 as enacted by Congress, and this Court is not the proper forum to seek to rewrite the Bankruptcy Code. 5. The Court should also disregard Owens-Illinois assertion that the Court is

somehow bound to provide full faith and credit to various state court orders that provide as a matter of docket control and convenience for the automatic assertion of cross-claims among codefendants. The Court already rejected that argument at the Volkswagen Hearing, where the Court stated, automatic operating of case management orders that deem cross-claims to have been filed. . . . [is] a pure procedural mechanism. . . . A case management order presumably can provide procedural in the action in which it was entered, but it cant confer substantive rights. Volkswagen Hearing Tr. at p. 53. 6. Owens-Illinois reliance on 10 Del. C. 6302 to contend that it provides a

substantive legal right of contribution also is misplaced. That statute merely provides for the automatic right of contribution among joint tortfeasers, which right of contribution arises only when payment to such claimant has extinguished the liability to the injured party on behalf of all joint tortfeasers. See 10 Del. C. 6302. Owens-Illinois, of course, has not presented any evidence that it has ever made any payment on behalf of the Debtor as a joint tortfeasor. 7. Having presented no fact to support a claim that Owens-Illinois holds

against the estate, its decision to file a proof of claim should be seen as nothing more than an effort to manufacture standing. The Court should see it for what it is, and give zero credence to it. The law is clear that the mere filing of a proof of claim does not confer standing where standing did not previously exist. See e.g., In re Abijoe Realty Corp., 943 F.2d 121, 125 (1st

Cir. 1991) (a facially meritless proof of claim which plainly evidences no right to payment, disputed or otherwise, cannot confer creditor standing upon the holder); In re FirstPlus Financial, Inc., 248 B.R. 60, 70 (Bankr. N.D. Tex. 2000) (A proof of claim filed by a party who is not a creditor is not a properly filed proof of claim) (cited with approval in In re Musicland Holding Corp., 362 B.R. 644, 652 (Bankr. S.D.N.Y. 2007)). 8. Owens-Illinois conclusory assertion that it has standing to assert narrow

challenges to specific portions of the plan which adversely affect its interests misses the point entirely. Objection at. p. 13. If Owens-Illinois has no claim against the Debtor, it has no standing to present any objection to the Plan, irrespective of how narrow or broad the objection may be. Owens-Illinois simply cannot establish standing under Kane v. Johns-Manville Corp., 843 F.2d 636 (2d Cir. 1988), and In re Quigley Co., 391 B.R. 695 (Bankr. S.D.N.Y. 2008), and its contention that its ox is being gored is baseless. 9. Having shown no facts to demonstrate that it has a claim against the estate,

Owens-Illinois baseless speculation that it somehow may have a claim against the Debtor in the future does not entitle it to be represented by a future claims representative. Owens-Illinois has presented no factual or legal basis for the appointment of a separate future claims representative to represent Owens-Illinois nonexistent claim. 10. Owens-Illinois has no business participating in this chapter 11 case. It is

no different than Volkswagen, which this Court already ruled lacks standing to participate in this case. Its efforts to object to the Debtors Plan and disrupt this chapter 11 case is nothing more than an effort to leverage the Debtor to help it obtain a benefit in its pending state court actions. Fortunately, the law does not allow it to participate here to achieve its ulterior goals. The Court should grant the Motion.

WHEREFORE, for all of the reasons set forth in the Motion and herein, the Debtor respectfully requests that the Court grant the Motion, overrule Owens-Illinois Objection in all respects, and hold that Owens-Illinois lacks standing to participate in this chapter 11 case, including the right to obtain discovery from the Debtor, and grant to the Debtor such other and further relief as is just and proper. Dated: New York, New York February 13, 2009 By: /s/ John H. Bae Bruce R. Zirinsky, Esq. John H. Bae, Esq. GREENBERG TRAURIG, LLP 200 Park Avenue New York, New York 10166 Telephone: (212) 801-9200 Facsimile: (212) 801-6400 zirinskyb@gtlaw.com baej@gtlaw.com Proposed Counsel for the Debtor and Debtor in Possession

FRANK/GECKER LLP Frances Gecker Joseph D. Frank 325 North LaSalle Street, Suite 625 Chicago, Illinois 60654 (312) 276-1400 telephone (312) 276-0035 facsimile Counsel to Official Committee of Unsecured Creditors of T H Agriculture & Nutrition, L.L.C.

Hearing Date and Time: February 17, 2009 9:45 a.m.

IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK ) Chapter 11 ) ) Case No. 08-14692 (REG) ) )

In re: T H AGRICULTURE & NUTRITION, L.L.C., Debtor.

RESPONSE OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF T H AGRICULTURE & NUTRITION, L.L.C. IN SUPPORT OF DEBTORS MOTION TO STRIKE OWENS-ILLINOIS, INC.S OBJECTION TO PREPACKAGED PLAN OF REORGANIZATION FOR LACK OF STANDING The Official Committee of Unsecured Creditors (the Committee) of T H Agriculture & Nutrition, L.L.C. (THAN or the Debtor), by its counsel, Frank/Gecker LLP, hereby responds in support of the Debtors Motion to Strike Owens-Illinois, Inc.s Objection to Prepackaged Plan of Reorganization For Lack of Standing (the Motion to Strike) [Docket No. 294]. 1. On January 12, 2009, this Court held a hearing on the standing of Volkswagen

Group of America, Inc. to be heard in this bankruptcy case and ruled that Volkswagen does not have the requisite standing. Transcript of Telephonic Conference before the Honorable Robert E. Gerber, January 12, 2009 at p. 52 (hereafter, the Transcript, attached to Motion to Strike as Exhibit A).

{ THAN / 001 / 00016620.DOC /}

2.

However, in so ruling, the Court did not completely close the standing door to the

Debtors other corporate co-defendants: Now I dont need to decide, if I ever will, how I would rule vis--vis standing if Volkswagen had actually filed a claim for contribution against THAN in any of the actions in which they both happen to be named as defendants and by filed a cross-claim, I mean by some kind of volitional act that would stand up to Rule 11 scrutiny, or scrutiny of like character as imposed under applicable state law or if Volkswagen had filed a proof of claim here. Transcript at pp. 56 57. Owens-Illinois, Inc. (Owens) now hopes to squeeze through that slightly-open door. 3. Owens has bombarded this Court and the other parties with nearly two hundred

pages of documents, attached as exhibits to Owens objection to the Motion to Strike (the Owens Objection) [Docket No. 308]. Buried in that stack is a proof of claim filed by Owens and dated February 5, 2009, three weeks after this Court ruled on the standing of Volkswagen. The Owens proof of claim is unliquidated as to amount and alleges a claim for contribution/indemnification. Owens has attached to the proof of claim four compact disks and a four-page written narrative. The disks allegedly contain a list of all asbestos personal injury cases settled by Owens in the two years before THAN filed for bankruptcy, a list of all asbestos personal injury cases settled by Owens after the petition date, a list of all asbestos personal injury claims alleging exposure to Owens products that have been placed on pleural registries or inactive dockets, and a list of all pending asbestos personal injury cases against Owens. In the four-page narrative, Owens never affirmatively states that it has a contribution or indemnification claim against THAN arising from any of these settled, pending or inactive cases. All Owens is able to assert is that it may have contribution or indemnification claims arising from these cases and that it reserves its rights to supplement and amend its claims against THAN. See Owens Proof of Claim, attached hereto as Exhibit A and attached to the Owens

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{ THAN / 001 / 00016620.DO

Objection as Exhibit C. The Committee respectfully suggests that this unliquidated and speculative proof of claim is not the type of claim that the Court envisioned might afford standing to a corporate co-defendant. 4. Also buried in Owens stack of documents is the answer and cross-claim of

Owens in a pending Massachusetts state court lawsuit, Dimammalena v. Metropolitan Life Insurance Co., et al. On the last page of that pleading is Owens Cross Claim Against All Defendants, which states in its entirety: Defendant hereby complains against all present and future co-Defendants, by adopting and incorporating herein each and every allegation set forth in the model Crossclaim referenced in Pretrial Order No. 9, section V(D). See Answer and Other Affirmative Defenses and Crossclaim of Defendants Owens-Illinois, Inc. and Owens-Illinois Glass Company to Plaintiffs Complaint, attached hereto as Exhibit B and attached to Owens Objection as Exhibit D. Again, the Committee respectfully suggests that this generic and perfunctory allegation is not the kind of cross-claim the Court envisioned would withstand scrutiny and confer standing upon a corporate co-defendant. 5. In fact, Owens can fare no better than Volkswagen. Today, Owens-Illinois is

among the largest manufacturers of glass containers in the world. However, prior to 1958, Owens-Illinois also manufactured asbestos pipe and boiler insulation under the Kaylo brand name. In 1958, Owen-Illinois sold this business to Owens Corning. In 2006, Owens Corning confirmed its own Chapter 11 plan, which created the Owens Corning/Fibreboard Asbestos Personal Injury Trust to evaluate and pay asbestos claims. The fact that Owens-Illinois had standing in other asbestos bankruptcy cases is not surprising because those cases, like the bankruptcy case of Thorpe Insulation upon which Owens relies, involved exposure to asbestoscontaining insulation. More than 80% of the THAN asbestos personal injury claims allege exposure to joint compound and joint cement products manufactured by Bondex International

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{ THAN / 001 / 00016620.DO

and Kelly-Moore Paint Company with asbestos fiber supplied by THAN. The remaining claims allege exposure to other products manufactured by a handful of companies that purchased asbestos fiber from THAN. See Disclosure Statement with Respect to Prepackaged Plan of Reorganization of T H Agriculture & Nutrition, L.L.C. Under Chapter 11 of the Bankruptcy Code at pp. 3 4 (the Disclosure Statement) [Docket No. 21]. Owens is not among those companies. 6. 7. Owens is no different than Volkswagen and its claim to standing must fall. Moreover, the merits of Owens objection to the Plan also have been addressed by

this Court and found lacking. Owens objects that because the Trust Distribution Procedures allow claimants to file a claim and defer evaluation by the Trust for a period of time, Owens is deprived of its substantive legal right to contribution and set-off in personal injury lawsuits against Owens. Owens also objects because the Plan may preclude Owens from having liability allocated to THAN in these lawsuits. Owens Response at pp. 13 15. 8. At the January 12, 2009 hearing on the standing of Volkswagen, this Court stated:

The extent to which there is an objection to the ability of the plan to avoid state law trials against THAN? Well, thats an objection to the provisions of the code itself. And the effect of not having THAN side by side with Volkswagen to facilitate Volkswagens desire for reduction of any judgment against it, once again is a consequence of the Bankruptcy Code and does not require discovery. Transcript at p. 58. 9. Like Volkswagen, Owens has never asserted a specific right to contribution or

indemnification from THAN. Like Volkswagen, Owens is primarily concerned with how this bankruptcy case and this Plan will affect Owens in future asbestos litigation. Like Volkswagen, Owens has no standing to take advantage of this Court and this bankruptcy case to advance its interests in far-removed asbestos litigation pending across the United States.

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{ THAN / 001 / 00016620.DO

10.

Finally, Owens hyperbolic attacks on the Future Claimants Representative (the

FCR) rely on out-of-context quotations and a purposeful disregard for the provisions of the Bankruptcy Code. Owens argues that [t]he Plan Proponents would likely agree that the FCR does not represent the interests of the co-defendants, such as Owens-Illinois and therefore a class of future claimants is without the representation contemplated by 11 U.S.C. 524(g)(4)(B)(i). Owens Objection at 12. This argument, which relies on snippets from the argument made by counsel to the FCR at the Volkswagen standing hearing, ignores the substantive position set forth by the FCRs counsel at that hearing. What the duty of the FCR is, is to make sure that theres a process and mechanism to treat future claims and current claims substantially similar, and that the process is fair and that future claims would have their fair share of the assets in the pie. Its not to represent Volkswagen ever, its not to represent any claimant ever. Its sort of almost in the nature of a guardian and litem for a class, which who doesnt represent anyone individually. Thats very, very clear from the statute. Transcript at p. 34. This is an apt restatement of 11 U.S.C. 524(g)(4)(B)(i), which provides: as part of the proceedings leading to issuance of such an injunction, the court appoints a legal representative for the purpose of protecting the rights of persons that might subsequently assert demands of such kind. 11. That the FCR has fulfilled his statutory duty in this case on behalf of

Owens-Illinois and all other future indirect asbestos claimants is manifestly clear from the provisions of the Asbestos PI Trust Distribution Procedures (the TDP) (Exhibit C to the Disclosure Statement). As set forth in the Committees Response to Volkswagen, it is simply necessary to point out again that if Owens ever were to present a valid cross claim to the Asbestos PI Trust, it would be paid. The TDP, at section 5.6, pop. 35-38, provides that an Indirect Claimant such as Owens would be paid on an expedited basis if the Indirect Claimant meets certain presumptive criteria, such as payment to an individual asbestos claimant to whom

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{ THAN / 001 / 00016620.DO

THAN would have had a liability. If the Indirect Claimant cannot meet the presumptive requirements, the Indirect Claimant may request individualized review by the Asbestos PI Trust. If the Indirect Claimant is not satisfied with the determination of the Asbestos PI Trust, the Indirect Claimant may mediate or arbitrate its claim under the Alternative Dispute Resolution Procedures adopted by the Asbestos PI Trust. If the Indirect Claimant is not satisfied through mediation or arbitration, the Indirect Claimant may bring an action against the Asbestos PI Trust in the tort system. See TDP at 5.6, pp. 35-38. The procedures set forth in Section 5.6 are clear and unambiguous and demonstrate that Owens attack on the FCR is neither accurate nor compelling. CONCLUSION For all of the foregoing reasons, the Official Committee of Unsecured Creditors respectfully requests that this Court find that Owens-Illinois, Inc. lacks standing and strike its objection to the Debtors prepackaged plan of reorganization. Dated: New York, New York February 13, 2009 OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF T H AGRICULTURE & NUTRITION, L.L.C. By: /s/ Joseph D. Frank

Frances Gecker (IL ARDC # 6198450) Joseph D. Frank (IL ARDC # 6216085) FRANK/GECKER LLP 325 North LaSalle Street, Suite 625 Chicago, Illinois 60654 Phone.: (312) 276-1400 Fax: (312) 276-0035 Counsel to Official Committee of Unsecured Creditors of T H Agriculture & Nutrition, L.L.C.

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{ THAN / 001 / 00016620.DO

CERTIFICATE OF SERVICE I, Joseph D. Frank, hereby certify that on February 13, 2009, a true and correct copy of the foregoing Response of the Official Committee of Unsecured Creditors of T H Agriculture & Nutrition, L.L.C in Support of Debtors Motion to Strike Owens Illinois, Inc.s Objection to Prepackaged Plan of Reorganization for Lack of Standing was filed electronically. Notice of the filing will be sent to all parties who are currently on the Courts Electronic Mail Notice List, a copy of which is attached hereto, by operation of the Electronic Filing System. In addition, a copy was sent to the parties listed below via electronic transmission on February 13, 2009. Counsel to the Debtor John H. Bae Denise J. Penn GREENBERG TRAURIG, L.L.P. MetLife Building 200 Park Avenue New York, New York 10166 Facsimile: (212) 805-9316 Counsel to Owens-Illinois, Inc. Eduardo J. Glas McCarter & English, LLP 245 Park Avenue 27th Floor New York, New York 10167 Facsimile: (212) 609-6921 eglas@mccarter.com Counsel to the Future Claimants Representative Sander L. Esserman STUTZMAN, BROMBERG, ESSERMAN & PLIFKA 2323 Bryan Street, Suite 2200 Dallas, Texas 75201 Facsimile: (214) 969-4999 esserman@sbep-law.com United States Trustee OFFICE OF THE UNITED STATES TRUSTEE FOR THE SOUTHERN DISTRICT OF NEW YORK Attn: Serene Nakano 33 Whitehall Street, 21st Floor New York, New York 10004 Facsimile: (214) 767-8967 serene.nakano@usdoj.gov Counsel to Owens-Illinois, Inc. Katharine L. Mayer Daniel M. Silver McCarter & English, LLP Renaissance Center 405 North King Street, 8th Floor Wilmington, Delaware 19899 Facsimile: (302) 984-6399 ekmayer@mccarter.com Counsel to the Future Claimants Representative Susan Brune BRUNE & RICHARD, LLP 80 Broad Street New York, New York 10004 Facsimile: (212) 668-0315 sbrune@bruneandrichard.com

{ THAN / 001 / 00016620.DOC /}

Jo Christine Reed SONNENSCHEIN NATH & ROSENTHAL LLP 1221 Avenue of the Americas New York, New York 10020-1089 Facsimile: (212) 768-6800 jcreed@sonnenschein.com Constantine D. Pourakis STEVENS & LEE, P.C. 485 Madison Avenue, 20th Floor New York, New York 10022 Facsimile: (610) 371-1237 cp@stevenslee.com John D. Demmy STEVENS & LEE, P.C. 485 Madison Avenue, 20th Floor New York, New York 10022 Facsimile: (610) 371-8515 jdd@stevenslee.com David C. Christian II STEVENS & LEE, P.C. 131 South Dearborn Street, Suite 2400 Chicago, Illinois 60603-5577 Facsimile: (312) 460-7833 dchristiand@seyfarth.com Marc S. Casarino WHITE AND WHITE LLP 824 Market Street, Suite 902 Wilmington, Delaware 19801 Facsimile: (302 ) 467-4550 casarinom@whiteandwilliams.com

Robert B. Millner SONNENSCHEIN NATH & ROSENTHAL LLP 7800 Sears Tower 233 South Wacker Drive Chicago, Illinois 60606-6404 Facsimile: (312) 876-7934 rmillner@sonnenschein.com Leonard P. Goldberger STEVENS & LEE, P.C. 485 Madison Avenue, 20th Floor New York, New York 10022 Facsimile: (610) 371-7376 lpg@stevenslee.com Robert W. Dremluk SEYFARTH SHAW LLP 620 Eighth Avenue New York, New York 10018-1405 Facsimile: (212) 218-5526 rdremluk@seyfarth.com Karel S. Karpe WHITE AND WHITE LLP One Penn Plaza, Suite 4110 New York, New York 10119 Facsimile: (212) 631-4431 karpek@whiteandwilliams.com Kirk T. Hartley Gerald F. Munitz Karen M. Borg BUTLER RUBIN SALTARETTI & BOYD LLP 70 West Madison Street, Suite 1800 Chicago, Illinois 60602 Facsimile: (312) 873-7382 (Hartley) (312) 444-9294 (Munitz) (312) 444-11116 (Borg) khartley@butlerrubin.com; gmunitz@butlerrubin.com; kborg@butlerrubin.com

By:

/s/ Joseph D. Frank

{ THAN / 001 / 00016620.DO

Mailing Information for Case 08-14692-reg


Electronic Mail Notice List
The following is the list of parties who are currently on the list to receive e-mail notice/service for this case.

John H. Bae baej@gtlaw.com Lawrence Jay Brenner lbrenner@crowell.com Jacob C. Cohn jcohn@cozen.com Robert W. Dremluk rdremluk@seyfarth.com, pbaisier@seyfarth.com,lravnikar@seyfarth.com,dchristian@seyfarth.com, Joseph D. Frank jfrank@fgllp.com, ccarpenter@fgllp.com;rheiligman@fgllp.com Alan E. Gamza Agamza@mosessinger.com, dkick@mosessinger.com;dbutvick@mosessinger.com Jeanette M. Gilbert jgilbert@motleyrice.com Eduardo J. Glas eglas@mccarter.com Frederic C. Goodwill fgoodwill@salawus.com, dsalinas@salawus.com Karel S. Karpe karpek@whiteandwilliams.com, yoderj@whiteandwilliams.com David P. McClain dmcclain@wwmlawyers.com, sphillips@wwmlawyers.com;falvarez@wwmlawyers.com Serene K. Nakano serene.nakano@usdoj.gov Constantine Pourakis cp@stevenslee.com Jo Christine Reed jcreed@sonnenschein.com, rmillner@sonnenschein.com Ira A. Reid ira.a.reid@bakernet.com Joseph F Rice jrice@motleyrice.com Tancred V. Schiavoni tschiavoni@omm.com, allenschwartz@omm.com Christina C. Skubic bankruptcy@braytonlaw.com Theresa Trzaskoma ttrzaskoma@bruneandrichard.com, anoda@bruneandrichard.com;igugan@bruneandrichard.com Bruce J. Zabarauskas bzabarauskas@crowell.com

{ THAN / 001 / 00016620.DOC /}

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