Court Paves Way for Federal-Mogul Reorganization

Auto parts maker Federal-Mogul Corp. reports that a Delaware bankruptcy court has approved the disclosure statement for its amended reorganization plan, paving the way for a vote by creditors and asbestos claimants.
Federal-Mogul of Southfield, Mich., filed for Chapter 11 bankruptcy protection in October 2001 after it was hit with numerous asbestos lawsuits stemming from its acquisition of British piston maker T&N LLC in 1998.
The T&N unit, which made building materials that led to the asbestos compensation claims, is operating under United Kingdom administration, a parallel to U.S. bankruptcy proceedings.
The U.S. Bankruptcy Court in Delaware set a deadline of Nov. 3 for receiving the votes. It will determine whether to confirm the plan at a hearing set for Dec. 9.
Key to the reorganization plan is the proposed establishment of a trust to pay existing and future asbestos claims, allowing Federal-Mogul to emerge from bankruptcy free from asbestos liability. The trust would own about 50 percent of the stock in the reorganized company