In re W.R. Grace & Co.

The court's jurisdiction was not at issue. This Memorandum Opinion constitutes our findings of fact and conclusions of law with respect to the remaining objections to confirmation. The Court has jurisdiction under 28 U.S.C. § 157 and § 1334 in this core proceeding. See 28 U.S.C. § 157(b)(2). Each Debtor is qualified to be a debtor under 11 U.S.C. § 109. Venue is proper under 28 U.S.C. § 1408.

The Debtors consist of the following 62 entities: W.R. Grace & Co. (f/k/a Grace Specialty Chemicals, Inc.), W.R. Grace & Co. Conn., A–1 Bit & Tool Co., Inc., Alewife Boston Ltd., Alewife Land Corporation, Amicon, Inc., CB Biomedical, Inc. (f/k/a Circe Biomedical, Inc.), CCHP, Inc., Coalgrace, Inc., Coalgrace II, Inc., Creative Food 'N Fun Company, Darex Puerto Rico, Inc., Del Taco Restaurants, Inc., Dewey and Almy, LLC (f/k/a Dewey and Almy Company), Ecarg, Inc., Five Alewife Boston Ltd., GC Limited Partners I, Inc., (f/k/a Grace Cocoa Limited Partners I, Inc.), GC Management, Inc. (f/k/a Grace Cocoa Management, Inc.), GEC Management Corporation, GN Holdings, Inc., GPC Thomasville Corp., Gloucester New Communities Company, Inc., Grace A–B Inc., Grace A–B II Inc., Grace Chemical Company of Cuba, Grace Culinary Systems, Inc., Grace Drilling Company, Grace Energy Corporation, Grace Environmental, Inc., Grace Europe, Inc., Grace H–G Inc., Grace H–G II Inc., Grace Hotel Services Corporation, Grace International Holdings, Inc. (f/k/a Dearborn International Holdings, Inc.), Grace Offshore Company, Grace PAR Corporation, Grace Petroleum Libya Incorporated, Grace Tarpon Investors, Inc., Grace Ventures Corp., Grace Washington, Inc., W.R. Grace Capital Corporation., W.R. Grace Land Corporation, Gracoal, Inc., Gracoal II, Inc., Guanica–Caribe Land Development Corporation, Hanover Square Corporation, Homco International, Inc., Kootenai Development Company, L B Realty, Inc., Litigation Management, Inc. (f/k/a GHSC Holding, Inc., Grace JVH, Inc., Asbestos Management, Inc.), Monolith Enterprises, Incorporated, Monroe Street, Inc., MRA Holdings Corp. (f/k/a Nestor–BNA Holdings Corporation), MRA Intermedco, Inc. (f/k/a Nestor–BNA, Inc.), MRA Staffing Systems, Inc. (f/k/a British Nursing Association, Inc.), Remedium Group, Inc. (f/k/a Environmental Liability Management, Inc., E & C Liquidating Corp., Emerson & Cuming, Inc.), Southern Oil, Resin & Fiberglass, Inc., Water Street Corporation, Axial Basin Ranch Company, CC Partners (f/k/a Cross Country Staffing), Hayden–Gulch West Coal Company, H–G Coal Company.

Section 1.1(172) of the Joint Plan defines “Plan Documents” as “the Plan, the Exhibit Book, the Disclosure Statement, all exhibits in the Exhibit Book, and the Plan Supplement, either in the form approved by each of the Plan Proponents or as each may be amended, supplemented, or otherwise modified from time to time in accordance with its terms.”

The bankruptcy case was filed on April 2, 2001. Negotiations with respect to the current Plan have been ongoing since at least 2005. The Bank Lenders and the Creditors' Committee contend that the Joint Plan was filed in bad faith because “it seeks to maximize the value retained by its equity holders at the expense of its creditors.” Doc. No. 22441 at 68. The fact that the Joint Plan proposes retention of an interest by equity holders is not, in and of itself, indicative of bad faith. Moreover, the objecting creditors are being paid 100 percent of their allowed claims, with interest. Thus, 11 U.S.C. § 1129(a)(7)(A)(ii) has been satisfied. The absolute priority rule is discussed in text, infra.

The State of Montana complains that the settlement of Asbestos PI Claims did not involve discussions with the State. The Crown in Right of Canada also objects because it was not included in plan negotiations. There is no requirement in the Bankruptcy Code that all creditors participate in plan negotiations. We note that, if these entities' claims are in Class 6 (Asbestos Personal Injury Claims), that Class voted overwhelmingly to accept the plan which was negotiated by the Asbestos Claimants' Committee and the Future Claims Representative. See Doc. No. 22020, Declaration of Kevin A. Martin Certifying Tabulation of Ballots; Doc. No. 22706, Amended Declaration of Kevin A. Martin Certifying Tabulation of Ballots. Furthermore, neither Montana nor the Crown has active claims against Debtors, although facing suit for failure to warn of the dangers of asbestos. See, e.g., Montana Brief in Opposition to Plan, Doc. No. 21785 at 6. Under Montana law, the asserted liability based on failure to warn would be the State's independent responsibility. In re W.R. Grace & Co., 591 F.3d 164, 173 (3d Cir.2009). To the extent Grace has contribution or indemnity liability to Montana or the Crown, the liability would arise from Debtors' asbestos products or operations and would be channeled to the Asbestos PI Trust.

We will not rehash the reasons for our 2009 finding that Bank Lenders are not entitled to the default rate of interest but address only those aspects of the Bank Lenders' argument that concern plan confirmation. The 2009 decision is on appeal. Notice of Appeal, Bankr. Doc. No. 21905, Civ. A. No. 09–CV–644 (Bank Lenders' appeal docketed in District Court August 27, 2009); Notice of Appeal, Bankr. Doc. No. 21922, Civ. A. No. 09–CV–807 (Creditors' Committee's appeal docketed in District Court October 28, 2009).

Bank Lenders argued that this court lost jurisdiction when they appealed the earlier ruling. However, the issue of impairment was specifically excluded from that ruling and, therefore, cannot properly be the subject of an appeal.

Bank Lenders challenge the Joint Plan's classification scheme as it pertains to them. They cite Debtors' objection to their claim and their opposition to that objection with respect to default interest as proof that their “voting interest ... is sufficiently distinct and weighty to merit a separate voice” because there are different types of unsecured claims in Class 9—those arising from prepetition credit facilities, from certain (liquidated) environmental claims, from existing contracts specifying a non-default rate of interest, and all other unsecured claims. Doc. No. 21789 at 18 –20, ¶¶ 43–44. We find that there is no merit to the contention that separate classification is required. All creditors in Class 9 hold general unsecured claims. See 11 U.S.C. § 1122(a). Even if Bank Lenders were separately classified, they are being paid in full with interest on the Effective Date and are not impaired. Thus, they do not vote and are deemed to accept the Plan.
We note that their vote was provisionally solicited in light of the default interest issue. See Declaration of Kevin A. Martin Certifying Tabulation of Ballots Regarding Vote on First Amended Joint Plan of Reorganization, Doc. No. 22020 at 13, ¶ 24; Amended Declaration of Kevin A. Martin Certifying Tabulation of Ballots Regarding Vote on First Amended Joint Plan of Reorganization, Doc. No. 22076 at 17, ¶ 4. The requisite number of unsecured creditors have voted to accept the Joint Plan. The Bank Lenders, whose claim, at millions of dollars, far exceeds the total dollar amount of other unsecured creditors in Class 9, rejected it and therefore the necessary dollar amount of accepting votes is not met. See Doc. No. 22706.

It is not disputed that the Plan provision for interest until 2005 exceeds Bank Lenders' nondefault contract rate of interest.

Bank Lenders rely on the Creditors' Committee's expert, Robert Frezza, a Certified Public Accountant, who performed a solvency analysis, and concluded that Grace was solvent under various tests (cash flow, balance sheet using market approach). Doc. No. 23531, Tr. 9/16/09 at 295. For that conclusion he relied primarily on a cash flow test. Id. at 278–80. Plan Proponents' expert, Pamela Zilly, qualified as a financial expert with respect to restructuring matters, did not do a solvency analysis as such but examined certain documents and analyzed Mr. Frezza's report. She testified, and we find, that Mr. Frezza did not consider certain critical factors and, therefore, his conclusion of solvency is flawed. We credit Ms. Zilly's testimony and find that there is insufficient evidence to conclude that Debtors are solvent or insolvent. See infra.

Bank Lenders argue that because Debtors' market capitalization is substantial and the Joint Plan proposes that equity retain an interest, Debtors are solvent and therefore must pay the contract default rate of interest. Bank Lenders cite VFB LLC v. Campbell Soup Co., 482 F.3d 624 (3d Cir.2007), as, in effect, holding that market price establishes solvency. The court in VFB LLC said that market valuation of a company was strong evidence of its solvency. Id. at 633. However, Bank Lenders have not backed up their contention that Debtors' market capitalization is conclusively one of solvency; Bank Lenders merely cite a number which, because it is a large number, they conclude translates to solvency. We note that Debtors' current asbestos liabilities were not litigated. Rather, a settlement was reached with the ACC. Debtors' future asbestos liabilities cannot, of course, be determined as they are unknown. However, it is clear that there will be future liabilities and the FCR agreed to the settlement regarding the amount to be set aside to address Debtors' present and future asbestos liabilities in the Trust.
Ms. Zilly was qualified as a financial advisor with respect to restructuring matters. Doc. No. 23531, Tr. of 9/16/09 at 103–04. With respect to Debtors' solvency she had been charged by Debtors with reviewing a report prepared by Robert Frezza for the Unsecured Creditors Committee. Id. at 104. Mr. Frezza is a CPA and financial advisor and is with the Capstone Advisory Group, a nationwide restructuring firm. Id. at 255–57. Ms. Zilly testified that she did not do a complete solvency analysis and offered no opinion on Grace's solvency. Id. at 15–16. However, she examined the estimates presented in the estimation hearing (which never concluded as parties' agreed to cease pursuit of that issue), the Joint Plan with respect to the assets committed to the Trust, various financial reports and cash flow statements, among other things. Id. at 115. Based on the different estimates that were available Ms. Zilly testified that a formal opinion regarding Grace's solvency could not be rendered. Id. at 106–07. She testified that if Grace's liabilities were established to be the median amount of $468 million as testified to by Dr. B. Thomas Florence, President of Analysis Research Planning Corporation and asbestos claims consultant to Grace, Grace would be solvent; if at the high end testified to by Dr. Mark A. Peterson of Legal Analysis Systems, the ACC's expert, ($6.2 billion), Grace would be insolvent. Id. at 108. She further testified that the point at which Grace would transition from solvent to insolvent would be closer to the $468 million figure. Id.
In analyzing Mr. Frezza's method Ms. Zilly testified that he “primarily relie[d] on a balance sheet test” using the $468 million estimate of asbestos PI claims, id. at 109, but clarified her statement testifying that he did not actually do such a test because he did not “value [ ] Grace's assets, at all.” Id. at 140. Under his analysis Grace would have no asbestos liability because that amount would be paid from the Sealed Air (Adv. No. 02–2210) and Fresenius (Adv. No. 02–2211) settlements. Id. at 109–10. In her opinion, his method ignored the effect of other figures that would have to be considered. Id.
In addition to her report regarding Mr. Frezza's analysis, Ms. Zilly submitted reports regarding that of H. Sean Mathis, CNA's expert, and an affidavit with respect to Debtors' objection to the Bank Lenders' proofs of claim. Id. at 115. She further testified with respect to the methods of analyzing a company's enterprise value. Id. at 121–24. She did not calculate Grace's enterprise value in her rebuttal to Mr. Mathis' report; rather she evaluated his methodology. For purposes of the disclosure statement she prepared a valuation analysis assuming that the Joint Plan became effective. That analysis was based on Debtors' projections. Id. at 129–30. She was very clear that she had not done a solvency analysis and therefore had no opinion as to what the best method of determining solvency would be. Id. at 133. She also testified that Mr. Frezza's report failed to value Grace's assets at all. Id. at 140.
In determining the enterprise value of Grace for purposes of the disclosure statement Ms. Zilly testified that she used traditional valuation methodologies and that the value ranged from $2.1 billion to $2.5 billion. Doc. No. 23532, Tr. of 9/17/09 at 126. She further testified that she considered administrative and priority claims as well as tax claims and asbestos PI and PD claims. She concluded that Grace's general unsecured claims, exclusive of its asbestos PI and PD claims, would be approximately $1.397 billion. Id. at 136–37. In a Chapter 7 the liabilities to the general unsecured creditors would be the same but no interest would be paid to them. Id. at 137.

AMH cites a provision of the disclosure statement asserting that it precludes payment of interest. The provision in fact simply describes a default term for settlements providing that settled claims will include interest to the extent the parties to the settlement agree. The Class 7A Deferred Payment Agreement, as described, provides for interest once a claim is allowed.

As noted, the issue of solvency was raised at various times in the course of this case and this court offered the parties the opportunity to revive the solvency litigation. No party chose to do so.

AMH asserts that the Asbestos PD Trust is not a “genuine” trust for Class 7A members because it is only a conduit for payment by the Reorganized Debtors, the structure of which, AMH alleges, makes it harder for claimants to recover than if the Reorganized Debtor assumed liability for unresolved PD claims. That is, it argues, the Asbestos PD Trust will only be funded enough to pay settled PD claims and if additional PD claims are resolved or asserted in the future, the Trust will seek funding from the Reorganized Debtors. This Trust funding mechanism is addressed further in note 80 and accompanying text, infra. The issues regarding PD Future Demands (as opposed to Claims) is discussed infra. The Class 7A Case Management Order, Doc. No. 24657 at Exhibit 25, provides procedures for determining allowed amounts of PD claims and how such claims will come before the Trust.

What has been referred to in this case as “the California claims,” those filed by the California Department of General Services, are also in Class 7A and will be resolved in accordance with the treatment for claims in that class, according to Debtors' counsel at a hearing on December 13, 2010. This court's summary judgment in favor of Debtors and against the Department of General Services, Doc. No. 19727, on a statute of limitations issue, was reversed by the district court. See In re W.R. Grace & Co., 418 B.R. 511 (D.Del.2009). Therefore, the California claims remain unresolved and are in Class 7A.

AMH also contends that it has class claims and there was inadequate notice of the bar date. Regarding the former, this court ruled that AMH does not have a class claim, that no class action is appropriate, inasmuch as the only claim in the purported class that still exists is AMH's. The order was affirmed by the District Court for the District of Delaware and the appeal was dismissed by the Court of Appeals for the Third Circuit. See note 81, infra.
The adequacy of the notice of the bar date was resolved long ago. See, e.g., In re W.R. Grace & Co., 366 B.R. 302 (Bankr.D.Del.2007), affirmed 316 Fed.Appx. 134 (3d Cir.2009). In addressing AMH's motion for reconsideration of the District Court's order affirming the Bankruptcy Court's order denying class certification, the District Court for the District of Delaware noted that
at the request of the Asbestos Property Damage Committee
—of which [counsel for AMH] is a member—the Bankruptcy Court abated “the requirement in the Bar Date Notice that counsel of record for asbestos property damage claimants either (1) certify that they notified their clients of the bar date by transmitting to them the proof of claim package or (2) give names and addresses to Grace so Grace could notify them directly.” Despite W.R. Grace's objection, the Court approved the PD Committee's opt-out proposal.
and that
[f]ollowing this Order, W.R. Grace “sent a considerable amount of money publishing the notice in both national and local publications.” Notice was provided to property damage claimants, and actual notice was given to “200,000 known asbestos claimants” [which] includ[ed] “all named parties to the handful of property damage cases pending when Grace filed its bankruptcy petition, and all known personal injury and property damage lawyers.”
In re W.R. Grace & Co.,
398 B.R. 368, 373 (D.Del.2008) (emphasis added) (citations omitted). The District Court noted that the validity of the notice program was the law of the case, id. at 374, citing Mission Towers v. W.R. Grace, et al., 2007 WL 4333817 (D.Del., Dec.6, 2007). It is still the law of the case. These objections of AMH to confirmation of the Joint Plan are overruled.

AMH contends that it is singled out for treatment not afforded other asbestos creditors all of which have either settled, are subject to alternative resolution procedures (allegedly with lowered proof thresholds) or are permitted to litigate in their chosen forum. However, AMH is not singled out—it filed a proof of claim and thereby consented to this court's determination of the allowed amount of its claim.
AMH also complains because Debtors made no effort to identify asbestos PD claimants from their records, nor did the Bar Date Notice require it. However, it was PD claimants' counsel who actively resisted notice being given by the Debtors. PD counsel insisted that they be the ones to notify their clients of the bar date. Their request was granted. AMH's recitation in its objection to confirmation that intimates that notice of the bar date was improper has already been addressed and found lacking by the appellate process.

AMH recites its version of events concerning its motion for certification of a class action, characterizing its motion as having been timely filed. In this court's opinion of May 29, 2008, 389 B.R. 373, we noted that in 2002 there was a hearing in which the necessity of and requirement for a class action was debated at length and in order to fully address the issue in a timely manner this court ordered that if a motion to certify a class action was going to be filed it should be filed soon. See Doc. No. 1793, Tr. 2/25/02. It was years after that that AMH filed its class action motion which, for the reasons stated in our opinion, was denied with prejudice. AMH's motion for leave to appeal was denied by the District Court. 2008 WL 4234339 (D.Del., Sept. 4, 2008). The District Court also denied AMH's motion for reconsideration. 398 B.R. 368 (D.Del.2008). AMH appealed to the Third Circuit which dismissed the appeal by order dated December 14, 2009. See Third Circuit Court of Appeals Case No. 08–4829 where, in dismissing AMH's appeal, the court ruled that:
A district court's determination that an action may not be maintained as a class action under Rule 23 is not a final decision within the meaning of 28 U.S.C. § 1291 ... [because an] order refusing to certify class “does not of its own force terminate the entire litigation because plaintiff is free to proceed on his individual claim”; Nelson v. County of Allegheny, 60 F.3d 1010, 1013 (3d Cir.1995) (noting denial of class certification by federal court is interlocutory and not immediately appealable).... Moreover, the four factors to be considered when determining the finality of a bankruptcy court order weigh against a finding that the Bankruptcy Court order denying class certification should be final.... The Bankruptcy Court order is not reviewable under the collateral order doctrine ... Because the Bankruptcy Court's order was interlocutory, the District Court's decision whether to exercise jurisdiction to review the order denying class certification was discretionary.... This Court cannot review that discretionary decision....

The Libby Claimants also assert that they have the right to have their claims allowed in accordance with nonbankruptcy law, with the result that the Trust Distribution Procedures are unconstitutional because they deprive the Libby Claimants of their Seventh Amendment right to a jury trial. However, the Trust Distribution Procedures (“TDP”) permit resort to the tort system and to a jury trial if the claimant decides to litigate. See Doc. No. 24657, Exhibit 4, Asbestos PI TDP, at § 5.11. That section provides that “Claimants who elect non-binding arbitration and then reject their arbitral awards retain the right to institute a lawsuit in the tort system against the PI Trust pursuant to Section 7.6.... However, a claimant shall be eligible for payment of a judgment for monetary damages obtained in the tort system from the PI Trust's available cash only as provided in Section 7.7....” Id. Thus, the TDP does not violate the Seventh Amendment.

See Doc. No. 22706, Amended Declaration of Kevin A. Martin Certifying Tabulation of Ballots. Class 7A consisted of 397 voting claims, 393 (98.99 percent) of which voted to accept the plan and 4 (1.01 percent) voted to reject the Plan. In Class 7B there were 2,073 voting claims of which 1,833 (88.42 percent) voted to accept the Plan and 240 (11.58 percent) voted to reject.

The Asbestos PI Trust TDP, Doc. No. 24657 at Exhibit 4, § 5.11, permits personal injury claimants to seek a jury trial under some circumstances. This does not constitute disparate or unequal treatment of AMH's property damage claim.

AMH also objects on the basis that settling Class 7A Claimants have determined the fate of unresolved claims in that class and asserts that this constitutes artificial impairment. “ ‘Artificial’ impairment occurs when a Joint Plan imposes an insignificant or de minimis impairment on a class of claims to qualify those claims as impaired under § 1124. The chief concern with such conduct is that it potentially allows a debtor to manipulate the Chapter 11 confirmation process by engineering literal compliance with the Code while avoiding opposition to reorganization by truly impaired creditors.” In re Combustion Engineering, Inc., 391 F.3d 190, 243 (3d Cir.2004). That is not the situation in this case. Unlike Combustion Engineering, all creditors in Class 7A will be paid in full and, if the court so determines, with interest. Thus, the argument fails.
AMH complains because it was not placed in its own class for purposes of voting. AMH asserts an asbestos property damage claim. It has stated no basis upon which its asbestos property damage claim is not properly classified with all other non-ZAI asbestos PD claims.

Dr. Alan Whitehouse's specialty is pulmonology. Dr. David Weill, Plan Proponents' rebuttal witness, testified that the patient population in Dr. Whitehouse's study was not randomly selected and was, in fact, drawn from Dr. Whitehouse's own patients.

We note that an objection was made to relevance. See Tr. of 9/10/09, Doc. No. 23362.

Because of the multiple exposure paths in Libby, Libby Claimants' burden of production regarding their diseases is lower than that of other claimants. Libby Claimants need not establish significant occupational exposure. See note 26, infra.

Plan Proponents also made several changes to the TDP to account for greater exposure history by the Libby Claimants. See Doc. 22731 at 10–12, ¶¶ 2.1–2.10. The medical criteria were supplemented to include a diagnostic category for “Severe Disabling Pleural Disease” (Disease Level IV–B). See Doc. No. 23282, Tr. 9/8/09 at 54, (Testimony of Elihu Inselbuch, an attorney who was Plan Proponents' witness and who has had much experience as counsel to asbestos creditors' committees). The Libby Claimants' position was that there was a disease common in Libby (and not elsewhere) that they describe as severe disabling pleural disease and that the original TDP had not accounted or provided for that disease. Id. at 44 (Inselbuch). The drafters of the TDP consulted with medical experts, who confirmed the existence in the literature of this disease, although it was unusual to observe in practice. However, because it existed in the medical literature and because the Libby claimants took the position that people from Lincoln County, Montana, suffered from it, the Plan Proponents added disease level IV B to the TDP. Id. The drafters worked closely with Dr. Laura Welch to develop the medical and exposure criteria for the new category. Dr. Welch is a medical doctor certified both in occupational environmental medicine and in internal medicine. Id. at 108. Dr. Welch testified that with respect to disease Level IV B that she
looked at all the literature I could find relating to severe disabling pleural disease ... In addition, I looked at all the Libby specific information, government reports, published papers that related to Libby, and testimony and reports from Dr. Whitehouse and Dr. Frank that talk about the impact of pleural disease in that population so I could kind of understand what the questions were and design a TDP that I thought was medically reasonable in that context.
Id.
at 119. She also read government reports about asbestos-containing vermiculite shipped to places outside of Montana. Id. She used this information to help design a TDP that in her opinion was medically reasonable. Id. Dr. Welch further consulted colleagues in the asbestos medical field about Libby specific issues. Id. at 121–22.
In addition, because severity is an important element of compensation for asbestos disease, Dr. Welch testified that she reviewed medical literature to distinguish between asbestos-related pleural disease that was likely to cause lung function impairment on the one hand, and less serious forms of pleural disease on the other. She concluded that those who have blunting of the costophrenic angle have more severe lung function impairment. Id. at 135–36. She described it as “a pretty dramatic difference in that the people ... who have diffused pleural fibrosis, their pulmonary function tests are uniformly under that 80 percent when ... the people who have pleural scarring absent blunting of the costophrenic angle [are] close to 80 percent [lung function].” Id.
The Plan Proponents also modified the TDP to permit a claimant at a lower level of disease to assert a subsequent claim, not only for the initial development of a malignant disease, but also for the progression of their disease to severe asbestosis or Severe Disabling Pleural Disease. See PP Exh. 277.4, § 5.9. This modification was made because the Libby Claimants contend that their pleural disease is progressive. Thus, the Plan Proponents provided a second opportunity to come back and claim at Level IV B (severe disabling pleural disease) even after first recovering in Level III. Doc. No. 23282, Tr. 9/8/09 at 55, (Inselbuch). That is, in response to the Libby Claimants' concerns, the “comeback” rights were modified even though such a claimant may not in fact have what is ordinarily considered a “new” disease.
Third, the Grace TDP was modified to include an additional category of extraordinary claims treatment, again in response to the Libby Claimants' concerns. Id. at 52–55 (Inselbuch); PP Ex. 277.4 § 5.4. The extraordinary claims multiplier was adjusted “to address the issue that the Libby claimants raised about the fact that they had claimants who were exposed exclusively, or almost exclusively, by W.R. Grace.... it was a concession on the part of the ACC to have a more generous treatment of extraordinary claims in order to give greater compensation to the Libby claimants.” See Doc. No. 23282, Tr. 9/8/09 at 253, (Peterson). The adjustment (§ 5.4 of the TDP) of extraordinary claims multiplier raised from five times the Expedited Review scheduled value to eight times the scheduled value, so that any claimant whose injuries were caused almost entirely by exposure to Grace asbestos would receive compensation in line with what severely injured prepetition claimants from Libby had received in settlement of their claims. Id. (Peterson). This adjusted extraordinary claims multiplier is available to any claimant who was exposed exclusively to Grace asbestos, not just to the Libby Claimants. Id. (Peterson testimony that the modified multiplier “applies to claims from any location.”)
Finally, the significant occupational exposure requirement was waived for Libby Claimants. Id. at 152–53 (Welch). Significant occupational exposure is exposure on the job working with asbestos fibers or in close proximity to someone who works with asbestos fibers. However, because much of the Libby exposure is asserted to be not of that nature, the exposure requirements were modified to accommodate Libby Claimants. Id. at 55 (Inselbuch).
Libby Claimants assert that their disease is unique because they contract fatal non-malignant diseases and their exposure has been exclusively, or nearly exclusively, to Grace asbestos. Dr. Mark Alan Peterson, Plan Proponents' witness, has a law degree from Harvard, and a Masters and Ph.D. in Experimental Social Psychology from the University of California, Los Angeles. Id. at 207. He testified that there are claimants outside of Libby who have the same kind of characteristics; i.e., those with fatal non-malignant disease and whose exposure was solely (or almost solely) to Grace asbestos. There are also people who have combinations of both and those characteristics are not unique to Libby. Id. at 291. PP Exh. 277.4 §§ 5.3(a)(3) & 5.7(b)(3).

In addition, there are mechanisms by which the scheduled values and the payment percentages can be adjusted if unforeseen circumstances arise. Doc. No. 23432, Tr. 9/15/09 at 57, testimony of David Austern. There also is a provision for extraordinary claims so that, if the exposure to Grace's product is at least 75 percent for a particular claimant, the maximum that could be recovered by an individual review, is multiplied by five to provide a higher payment to that claimant. Doc. No. 23282, Tr. 9/8/10 at 52–53, testimony of Elihu Inselbuch, counsel for ACC. See PI TDP § 5.4, Doc. No. 24657, Exhibit 4. “Extraordinary Claim” is defined therein as
a PI Trust Claim that otherwise satisfies the Medical Criteria for Disease Levels II–VIII, and that is held by a claimant whose exposure to asbestos (I) occurred predominantly as a result of working in a manufacturing facility of Grace during a period in which Grace was manufacturing asbestos-containing products at that facility, or (ii) was at least 75% the result of exposure to asbestos or an asbestos-containing product or to conduct for which Grace has legal responsibility, and in either case there is little likelihood of a substantial recovery elsewhere. All such Extraordinary Claims shall be presented for Individual Review and, if valid, shall be entitled to an award of up to a maximum extraordinary value of five (5) times the Scheduled Value set forth in Section 5.3(b)(3) for claims qualifying for Disease Levels II–V, VII and VIII, and five (5) times the Average Value for claims in Disease Level VI, multiplied by the applicable Payment Percentage; provided, however, that if the claimant's exposure to asbestos was 95% the result of exposure to an asbestos-containing product or to conduct for which Grace has legal responsibility, the maximum extraordinary value shall be eight (8) times the Scheduled Value set forth in Section 5.3(b)(3) for claims qualifying for Disease Levels II–V, VII and VIII and eight (8) times the Average Value for claims in Disease Level VI, multiplied by the applicable Payment Percentage.
Any dispute as to Extraordinary Claim status shall be submitted to a special Extraordinary Claims Panel established by the PI Trust with the consent of the TAC and the Futures Representative. All decisions of the Extraordinary Claims Panel shall be final and not subject to any further administrative or judicial review. An Extraordinary Claim, following its liquidation, shall be placed in the FIFO Payment Queue ahead of all other PI Trust Claims except Pre–Petition Liquidated Claims, Disease Level I Claims, Existing Claims and Exigent Hardship Claims, which shall be paid first, based on its date of liquidation, subject to the Maximum Available Payment and Claims Payment Ratio described above.
Section 5.4(b) of the PI TDP addresses Exigent Hardship Claims which are those that
meet the Medical/Exposure Criteria for Severe Asbestosis (Disease Level IV–A), Severe Disabling Pleural Disease (Disease Level IV–B) or an asbestos-related malignancy (Disease Levels V–VIII), and the PI Trust, in its sole discretion, determines (I) that the claimant needs financial assistance on an immediate basis based on the claimant's expenses and all sources of available income, and (ii) that there is a causal connection between the claimant's dire financial condition and the claimant's asbestos-related disease.

Montana's contention that the Joint Plan calls for distribution of stock to the State in violation of its constitution is incorrect. The Joint Plan provides for stock to be distributed to the Trusts' Representative. See, e.g., Joint Plan, Doc. No. 24657, Exhibit 1, at § 1.1.37 (referring to the obligation to issue to the Trusts' Representative, on behalf of the Asbestos PI and PD Trusts, 50.1 percent of Parent Common Stock as of the Effective date of the Joint Plan). There is no provision for a distribution of stock to the State in the event the State is determined to have an allowed claim. Rather, its claim would be paid just as any other claim—in cash.

Insurer CNA objected to the Joint Plan on various grounds but its objections have been withdrawn based upon a settlement. See Doc. No. 26106.

Section 5.6 of the TDP, Exhibit 4 to Doc. No. 24657, at 36, states how Indirect Claims are presumptively valid. Peter Lockwood, counsel to the ACC, explained the provision at the request of the court, during a status conference conducted on notice to all parties on December 13, 2010. See Doc. No. 25928, Tr. 12/13/10. He also explained how, if an Indirect Claimant cannot meet the requirements for a presumptively valid Indirect Claim, the validity of such claim can be established by other means. Id. at 47–50. We accept the explanation.
In full, § 5.6 of the TDP provides:
Indirect PI Trust Claims asserted against the PI Trust shall be treated as presumptively valid and paid by the PI Trust subject to the applicable Payment Percentage if the holder of such claim (the “Indirect Claimant”) establishes to the satisfaction of the Trustees that (I) the Indirect Claimant has paid in full the liability and obligation of the PI Trust to the individual claimant to whom the PI Trust would otherwise have had a liability or obligation under this TDP (the “Direct Claimant”), (ii) the Direct Claimant and the Indirect Claimant have forever and fully released the PI Trust from all liability to the Direct Claimant, and (iii) the claim is not otherwise barred by a statute of limitation or repose or by other applicable law. In no event shall any Indirect Claimant have any rights against the PI Trust superior to the rights of the related Direct Claimant against the PI Trust, including any rights with respect to the timing, amount or manner of payment. In addition, no Indirect PI Trust Claim may be liquidated and paid in an amount that exceeds what the Indirect Claimant has actually paid the related Direct Claimant.
To establish a presumptively valid Indirect PI Trust Claim, the Indirect Claimant's aggregate liability for the Direct Claimant's claim must also have been fixed, liquidated and paid fully by the Indirect Claimant by settlement (with an appropriate full release in favor of the PI Trust) or a Final Order (as defined in the Plan) provided that such claim is valid under the applicable state law. In any case where the Indirect Claimant has satisfied the claim of a Direct Claimant against the PI Trust under applicable law by way of a settlement, the Indirect Claimant shall obtain for the benefit of the PI Trust a release in form and substance satisfactory to the Trustees.
If an Indirect Claimant cannot meet the presumptive requirements set forth above, including the requirement that the Indirect Claimant provide the PI Trust with a full release of the Direct Claimant's claim, the Indirect Claimant may request that the PI Trust review the Indirect PI Trust Claim individually to determine whether the Indirect Claimant can establish under applicable state law that the Indirect Claimant has paid all or a portion of a liability or obligation that the PI Trust had to the Direct Claimant as of the Effective Date. If the Indirect Claimant can show that it has paid all or a portion of such a liability or obligation, the PI Trust shall reimburse the Indirect Claimant the amount of the liability or obligation so paid, times the then applicable Payment Percentage. However, in no event shall such reimbursement to the Indirect Claimant be greater than the amount to which the Direct Claimant would have otherwise been entitled. Further, the liquidated value of any Indirect PI Trust Claim paid by the PI Trust to an Indirect Claimant shall be treated as an offset to or reduction of the full liquidated value of any PI Trust Claim that might be subsequently asserted by the Direct Claimant against the PI Trust.
Any dispute between the PI Trust and an Indirect Claimant over whether the Indirect Claimant has a right to reimbursement for any amount paid to a Direct Claimant shall be subject to the ADR Procedures provided.... If such dispute is not resolved by said ADR Procedures, the Indirect Claimant may litigate the dispute in the tort system pursuant to Sections 5.11 and 7.6....
The Trustees may develop and approve a separate proof of claim form for Indirect PI Trust Claims. Indirect PI Trust Claims that have not been disallowed, discharged, or otherwise resolved by prior order of the Bankruptcy Court shall be processed in accordance with procedures to be developed and implemented by the Trustees consistent with the provisions of this Section 5.6, which procedures (a) shall determine the validity, acceptability and enforceability of such claims; and (b) shall otherwise provide the same liquidation and payment procedures and rights to the holders of such claims as the PI Trust would have afforded the holders of the underlying valid PI Trust Claims. Nothing in this TDP is intended to preclude a trust to which asbestos-related liabilities are channeled from asserting an Indirect PI Trust Claim against the PI Trust subject to the requirements set forth herein.

In In re W.R. Grace & Co. (Gerard v. W.R. Grace & Co., et al., Maryland Casualty Company), 115 Fed.Appx. 565, 568–69 (3d Cir.2004), the Court of Appeals for the Third Circuit noted that claims against MCC arose because its work with Debtors on a dust control system for the Libby mine was as Debtors' worker's compensation carrier. Thus, any liability of MCC with respect to this derived from Debtors' operations and was for injury to the claimants from asbestos. Debtors' indemnification obligation to MCC concerning asbestos liabilities does not pertain to workers' compensation claims.

This court had extended a preliminary injunction to MCC, Adv. No. 01–771, because to pursue actions against MCC would require Debtors' involvement in order for MCC to establish that liability was Grace's, not MCC's. The Court of Appeals upheld our decision at 115 Fed.Appx. 565 (3d Cir.2004). Thus, the issue of whether MCC has independent liability for its part in developing Grace's dust control system at the Libby, Montana, mine remains at issue. We concluded, based on argument at the time, that it appeared that MCC's liability was derivative and for purposes of extending the preliminary injunction to MCC, that was sufficient. For purposes of plan confirmation, to the extent MCC's asbestos liability is derivative of Debtors', particularly because Debtors may have indemnity liability to MCC under various settlement agreements, it is in Class 6.

Debtors and MCC agree that the indemnity provisions of the settlements do not extend to MCC's independent tortious conduct, Doc. No. 24801, if any, but the asbestos-related claims to which MCC's indemnity claims relate are derivative of Debtors' conduct or operations. MCC notes that “if any Third Party Claims against MCC are found to not be asbestos personal injury claims (Class 6) then they should be “treated at least as favorably as Class 9 claims” (General Unsecured Claims). At this time, we are unaware of any such nonasbestos, non-personal injury related indemnity claims. (Again, worker's compensation claims are not at issue.) To the extent MCC proves that it has a claim that is properly in a Class other than Class 6, such a claim will be treated as provided in the Joint Plan for such Class.

Indirect PI Trust Claim is defined as
any Claim or remedy, liability, or Demand against the Debtors, now existing or hereafter arising, whether or not such Claim, remedy, liability, or Demand is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, whether or not the facts of or legal bases for such Claim, remedy, liability, or Demand are known or unknown, that is (x)(i) held by (A) any Entity (other than a director or officer entitled to indemnification pursuant to Section 8.8.9 of the Plan) who has been, is, or may be a defendant in an action seeking damages for death, bodily injury, sickness, disease, or other personal injuries (whether physical, emotional, or otherwise) to the extent caused or allegedly caused, directly or indirectly, by exposure to asbestos or asbestos-containing products for which the Debtors have liability or (B) any assignee or transferee of such Entity and (ii) on account of alleged liability of the Debtors for payment, repayment, reimbursement, indemnification, subrogation, or contribution of any portion of any damages such Entity has paid or may pay to the plaintiff in such action or (y) held by any Entity that is a claim seeking payment, repayment, reimbursement, indemnification, subrogation, or contribution from the Debtors with respect to any insurance settlement agreement, surety bond, letter of credit or other financial assurance issued or entered into by any Entity on account of, or with respect to, Asbestos PI Claims; provided, however, that for the avoidance of doubt, the term “Indirect PI Trust Claim” shall not include or pertain to any Asbestos PD Claim, CDN ZAI PD Claim, Environmental Claim, or Workers' Compensation Claim; and further provided, however, for the avoidance of doubt, Indirect PI Trust Claims shall not be disallowed by the Court under section 502(e) of the Bankruptcy Code on the grounds that such claims were contingent or unliquidated.
Doc. No. 24657, Plan, Exhibit 1 at § 1.1.144.

Direct PI Trust Claims are Asbestos PI Claims which include Indirect PI Claims. Doc. No. 24657, Plan, Exhibit 1 at § 1.1.34.

Montana objects on classification grounds as well. See infra.

BNSF'S plan objection raises the same “restriction on allowed claims” argument that Montana raises. Plan Proponents amended the Joint Plan and Plan documents as of March 19, 2010, Doc. No. 24657, filed 4/22/10, to address BNSF's objections on equal treatment grounds. Section 5.14 was added to the TDP to address BNSF's contractual indemnity claim. No objection to the amendment was raised by BNSF and therefore this objection is resolved. Section 5.14 provides, in essence, that BNSF contractual indemnification claims will be submitted to the Asbestos PI Trust and individually reviewed to determine their validity and amount. Any dispute between BNSF and the Trust regarding the validity and amount of BNSF's claims is subject to ADR procedures provided in § 5.10 of the TDP. See also § 2.5 of the Asbestos PI TDP.
Upon resolution, the claim goes in the FIFO Payment Queue based on the date of agreement or arbitration award. Payment will be made to BNSF in the determined amount multiplied by the Payment Percentage in effect at the time of payment and subject to the Maximum Annual Payment and Maximum Available Payment provisions of the TDP.
If the dispute between the Trust and BNSF is not resolved, BNSF has the option of litigating the claim by filing suit in any federal or state forum that has jurisdiction. BNSF may assert its claim against the Trust there as it could against Grace as if the channeling injunction had not been issued. The Trust is entitled to Grace's claims and defenses. Upon final judgment the claim will be placed in the FIFO Payment Queue based on the date the judgment became final. See also notes 46–48 and accompanying text, infra.

Section 5.6 of the TDP provides that “no Indirect PI Trust Claim may be liquidated and paid in an amount that exceeds what the Indirect Claimant has actually paid the related Direct Claimant.”

There are presumptively valid Indirect PI Claims. Doc. No. 23363, Tr. 9/14/09 at 44. Those indirect claims that do not meet the presumptively valid requirements have other ways to prove their claims. See note 30 and accompanying text, supra. Elihu Inselbuch testified, and we find, that Indirect PI Claimants
will submit their claim to the trustees, and the trustees will either agree with them or they won't agree with them. If they agree with them, so be it. The indirect claimant will then liquidate the claim in the same manner that the claimant could've liquidated the claim. And then the—and be paid at the payment percentage just in the same way the claimant would've been paid. If the trustees do not agree that their claim is an indirect PI trust claim, the indirect claimant, the joint tortfeasor, has the same appellate right, so to speak, as would a claimant can go to ADR and exit to the tort system to resolve the question of whether or not they would be entitled to enjoy the status of an indirect PI trust claim.
Q With respect to the description that you just gave, what, if any, differences between that process and the individual review process for direct claims are there?
A None.
Doc. No. 23363, Tr. 9/14/09 at 44–45.

Garlock objected to the plan but it has filed its own Chapter 11 in the Western District of North Carolina, Case No 10–31607. See note 43 and accompanying text, infra. Accordingly, it will not participate in litigation in the tort system. Any objections raised by Garlock that the Joint Plan in this case alters its state court rights and remedies is moot because Garlock is no longer in the tort system and claims against it will not be addressed there. However, to the extent that other objectors raised similar issues, we address them below.

Garlock cites cases from other jurisdictions as well for the proposition that the right of contribution arises at the time of the tort. See Rowland v. Skaggs Companies, Inc., 666 S.W.2d 770, 772 (Mo.1984); La Ferry v. Ajax Truck Rentals, 161 F.Supp. 707, 710 (E.D.Tenn.1958) ( “The contingent right of a joint tort-feasor to indemnification or contribution, if any, sets up at the same time as the right of the plaintiff against the original defendant”). None of these cases stands for the proposition that a creditor with an asserted right to contribution or indemnification is permitted payment in an amount that exceeds the creditor's out of pocket costs, or that the creditor can collect on its “contingent right” until the contingency is removed by virtue of the creditor's payment of the claim.

To the extent the Crown would be found to be liable on a failure to warn theory and it was determined that it was the Crown's independent liability based on its own conduct and not derivative of Debtors', the Crown would not have a claim against these estates. If its liability would be determined to be derivative of Debtors' asbestos-related conduct, the Crown's claims (which, at present, are, at best, contingent) will be channeled.
The Canadian ZAI Settlement was approved by this court and the Canadian court. The objections to the settlement were overruled in connection with the hearing on the settlement and the objections to plan confirmation based on the settlement are overruled as well for the same reasons.

Garlock attributes to Grace's shareholders and to asbestos plaintiffs an intent to “foist Grace's asbestos liabilities onto the backs of solvent defendants in the tort system.” Phase II Trial Brief of Garlock Sealing Technologies, LLC in Opposition to Confirmation of Proponents' First Amended Joint Plan of Reorganization, Doc. No. 22428, at 24. Garlock itself is now in bankruptcy and no longer a defendant in the tort system. Nonetheless, although this contention appears to be an assertion that the Joint Plan was filed in bad faith, as noted above, there is no evidence of bad faith. Grace's liabilities to asbestos PI and PD claimants are well established in this case and its invocation of the Bankruptcy Code to resolve them is appropriate. Grace is resolving its own liabilities, not those of other tort system defendants, solvent or otherwise.

Garlock contends that it has party in interest standing because there is no court-appointed representative for Debtors' co-defendants and the TDP is “stacked heavily in favor of bodily injury claimants and against co-defendants.” Garlock's Phase II Trial Brief, Doc. No. 22428, at 28. We disagree with Garlock's characterization of the TDP. As stated, if and when Garlock proves entitlement as an Indirect Claimant, the Trust will deal with that claim as it would any other Indirect Claim and all Indirect Claims are treated for distribution purposes just like Direct Claims. There is no merit to Garlock's assertion.
Moreover, § 524(g) is clear, in this respect, regarding who may be protected by the channeling injunction and under what circumstances (e.g., those with liability derivative of the debtor). That Garlock may not meet those standards is not a reason to deny confirmation of the Joint Plan. It is unclear and unproven why alleged co-defendants require a court-appointed representative in any event.

Claims against Montana are based on its failure to warn about asbestos-containing vermiculite produced by Debtors which the Court of Appeals for the Third Circuit has noted, in connection with Adv. No. 01–771 and the preliminary injunction entered in that action, are based on Montana's independent duty. See note 5, supra. If such claims are at some point are found to be derivative of Debtors' asbestos-related conduct, the Joint Plan places them in Class 6, Asbestos PI Claims, and they will be subject to the § 524(g) channeling injunction.

BNSF filed an objection, Doc. No. 25954, to Debtors' motion to approve a settlement with CNA, Doc. No. 25776, asserting, inter alia, that the settlement is ambiguous as to whether policies under which BNSF claims rights as a named insured are covered by the channeling injunction. A hearing on Debtors' motion to approve the settlement with CNA was held on January 10, 2011, and BNSF's objections were overruled.

“The relationship between Debtors and BNSF had a long history. Between 1938 and 1995, BNSF and its predecessor entered into various agreements with the Debtors or their predecessors (collectively, the “Agreements”) relating to the Debtors' mining operations in Libby, Montana. Through these Agreements, BNSF granted Debtors permission to use certain BNSF property or granted the right of way for the Debtors to conduct certain operations across or on BNSF property. Under some of the agreements Debtors agreed to indemnify BNSF and to hold it harmless for liability with respect to injury or death resulting from certain actions associated with the loading and transport of ore from the mine using the BNSF railroad. Debtors also agreed to obtain insurance for BNSF and did so. Specifically, the Debtors mined vermiculite ore from the Libby mine, which was then loaded by Debtors into railroad cars which BNSF employees attached to BNSF trains. The trains transported the ore to various places.
BNSF's predecessor, The Great Northern Railway Company, and certain of the Debtors' predecessors, The Zonolite Company or Universal Zonolite Insulation Company, entered into various agreements between 1938 and 1956. The Zonolite Company assigned all of its rights, title, interest and equity in and to these several contracts to W.R. Grace & Co. in 1973. In 1974, W.R. Grace & Co. and Burlington Northern, Inc. entered into yet another agreement. The final agreement between and among Burlington Northern, W.R. Grace & Co.–Conn., and the City of Libby was entered into in 1995.” In re W.R. Grace & Co., 386 B.R. 17, 23–24 (Bankr.D.Del.2008).
See also
BNSF's Posttrial Brief, Doc. No. 23688, ¶¶ 2–8 at 2–3 (“(2) [b]etween 1938 and 1963, Zonolite and BNSF's predecessors, entered into various quit-claim deeds, right-of-way agreements and leases relating to Zonolite's operations at the Libby mine.... (3) Pursuant to the leases, Zonolite leased the property owned by BNSF adjacent to BNSF's railway tracks.... (4) These leases granted Zonolite the authority to construct, maintain and operate a loading dock, suspension bridge and belt conveyor, as well as a loading platform, steel water pipe, lumber shed, storehouse and parking area.... (5) Zonolite, and subsequently Grace, mined vermiculite ore from the Libby mine, processed it into vermiculite concentrate, and then transported the concentrate over the suspension bridge and conveyor belt located on the Zonolite-leased BNSF property. Zonolite/Grace then loaded it onto railway cars, and shipped the concentrate throughout the country initially on BNSF's railway.... (6) In 1963, Grace's Dewey & Almy Division purchased the business and assets of Zonolite. On April 16, 1963, Zonolite and Grace entered into an agreement, whereby Grace accepted the assignment of the agreements between BNSF and Zonolite.... (7) On April 1, 1974, BNSF's predecessor and Grace entered into a lease for the maintenance and operation of storage tanks, a pumphouse and a loading dock on the railway's right of way.... (8) The terms of the contracts and leases between Grace and BNSF obligate Grace to indemnify BNSF for asbestos-related claims asserted against BNSF. These provisions require Grace to provide full indemnity to BNSF, including providing a defense”) (citations omitted).

In the 1/5/10 transcript, Doc. No. 24181, counsel for the FCR explains the TDP and that § 5.6 thereof deals with common law contribution claims; § 5.13 insurer indemnity claims. The Plan Proponents added § 5.14 to the TDP so that BNSF will have the same treatment regarding its indemnity claims as insurers have. Doc. No. 24181, Tr. of 1/5/10 at 94, et seq.

The evidence establishes that Libby Claimants have no direct right of action against Grace's insurers and are not named insureds under Grace policies.

Libby Claimants also assert rights to non-products insurance coverage and the potential for high jury verdicts to support their contention that they would receive more in Chapter 7 than under the Joint Plan. First, as noted in text, Libby Claimants do not have a right of direct action against Debtors' insurance carriers; they would have to establish the existence and amount of the claims and that Grace was liable for their injuries. Furthermore, in Chapter 7 Debtors would simply be liquidated and the assets distributed pro rata in accordance with the Bankruptcy Code. The time delay alone as each of the many thousands of current claimants liquidated their damages would be adverse to claimants' recoveries in Chapter 7. The possibility that treatment of future demands in Chapter 7 would have to be considered in light of Grossman's definition of “claim” would pose its own unique set of issues that may further delay and reduce distribution to current claimants.

In the Libby Claimants' view, a sale of Grace at $1 billion would increase their distributive share in a Chapter 7 liquidation.

In 1996 W.R. Grace–Conn transferred National Medical Care, Inc. to its then parent, W.R. Grace & Co., n/k/a Fresenius Medical Care Holdings, Inc. The transfer was alleged to be fraudulent. Another series of transfers in 1998 removed the assets, liabilities and stock of Grace's packaging business (Sealed Air) from the reach of creditors, again in an allegedly fraudulent conveyance.

Section 3.1.9(b) of the Joint Plan provides that if the unsecured claim is not an allowed claim as of the Effective Date, it will be paid on the date it becomes an allowed claim or as the parties agree. The principal amount of the Bank Lenders' claim and their entitlement to interest are not disputed, only their assertion of entitlement to default interest.

Debtors filed an Agreed Amendment to § 3.1.9 of the Joint Plan on December 23, 2010, at Doc. No. 25946. On the Effective Date, under the amendment, the Bank Lenders will be paid the principal amount of their General Unsecured Claim as well as any outstanding and undisputed prepetition interest owed under the Prepetition Credit Facilities. In addition, they will be paid postpetition interest calculated at the rate set forth in § 3.1.9(b)(i)(A). This amendment to the Joint Plan resolves the Bank Lenders' plan objections except with respect to default interest. The default interest issue is on appeal. The amount of the Bank Lenders' claim is not objected to and will be paid in full on the Effective Date, with interest, as provided in § 3.1.9 of the Joint Plan. Furthermore, they will be paid postpetition interest, through December 31, 2005, which will be calculated as provided in § 3.1.9(b)(i)(A) of the Plan. The Bank Lenders are not impaired.

We do not determine the nature of Montana's contingent claims at this time as Montana concedes that the contingent event, i.e., any liability of Montana, has not occurred. We note, though, that in In re Combustion Engineering, Inc., 391 F.3d 190 (3d Cir.2004), the debtor argued that the bankruptcy court properly exercised “related to” jurisdiction over independent nonderivative claims of the debtor's affiliates because the estate could be affected by future contribution or indemnification claims. The Court of Appeals rejected the argument because the affiliates had independent liability for their own conduct and products. The Court of Appeals also noted that “[o]ther courts exercising ‘related to’ jurisdiction over personal injury claims against nondebtors based on the potential for indemnification claims against the debtor have similarly involved either express indemnification obligations not present here, ..., or derivative liability.” 391 F.3d at 230 (citations omitted).

CNA also objected to the TAC on the basis of conflict of interest but has settled its differences with Plan Proponents and withdrawn its plan objections.

The ACC dissolves upon confirmation.

Garlock complains because there is no separate FCR for those holding future demands for contribution or indemnification claims. Doc. No. 22428 at 27. Garlock does not meet the requirements for holding a future demand. If anything, Garlock has a contingent claim; it has not filed a proof of claim and holds no current claims. Its contingent claim for contribution or indemnity will depend on its being found co-liable with Grace and paying Grace's liability to a future demand holder. Moreover Garlock has not shown that it will have an obligation to pay a Grace PI liability in the future.
To the extent objectors argue that asbestos personal injury claimants have no “demands” under § 524(g) in light of the Court of Appeals' Grossman's decision, we disagree. In Grossman's the court said “a ‘claim’ arises when an individual is exposed pre-petition to a product or other conduct giving rise to any injury, which underlies a ‘right to payment’ under the Bankruptcy Code.” 607 F.3d at 125. However, the Court of Appeals noted the procedural safeguards provided for unknown “claimants,” i.e., demand holders, in the context of § 524(g) and recognized the distinction between current claims and the concept of demands as addressed in § 524(g). The court acknowledged that the claimants before it did not fall under § 524(g) and remanded for consideration of whether their claims had been discharged.
We note that § 524(g) supplements the discharge in an asbestos case in which a channeling injunction issued. That section provides due process to the “unknown future claimant,” i.e., demand holder, and protects the debtor from what could be, in the asbestos personal injury context, crippling future “claims,” i.e., demands. Section 524(g)(5) defines “demand” as
a demand for payment, present or future, that—
(A) was not a claim during the proceedings leading to the confirmation of a plan of reorganization;
(B) arises out of the same or similar conduct or events that gave rise to the claims addressed by the injunction issued under paragraph (1); and
(C) pursuant to the plan, is to be paid by a trust described in paragraph (2)(B)(i).
That is, future demand holders are those who have been exposed to asbestos but whose disease or other injury, sufficient to prove damages, has not yet manifested. Grossman's recognized that “future claims by presently unknown claimants could cripple the debtor's reorganization,” 607 F.3d at 127, and further recognized that the requirements of § 524(g) are specifically tailored to protect the due process rights of future claimants. For example, a court employing a § 524(g) channeling injunction must determine that the injunction is “fair and equitable” to future claimants, 11 U.S.C. § 524(g)(4)(B)(ii), and must appoint a futures representative to represent their interests. 11 U.S.C. § 524(g)(4)(B)(i). The court must also determine that the plan treats “present claims and future demands that involve similar claims in substantially the same manner.” 11 U.S.C. § 524(g)(2)(B)(ii)(V). Finally, the statute requires that a 75 percent super-majority of claimants whose claims are to be addressed by the Trust vote in favor of the plan. 11 U.S.C. § 524(g)(2)(B)(ii)(IV)(bb). 607 F.3d at 127.
Here, those due process rights are protected. The FCR was appointed to represent, and has actively represented, the interests of this group of individuals who do not yet know that they have an injury because that injury has not manifested. Their treatment by the Trust will be substantially similar to that afforded to current claimants in their class. The class voted by much more than 75 percent to accept the plan and the channeling injunction, which provides for recognition and payment of their claims well into the future, is fair and equitable as to the future demand holders. Thus, § 524(g) and the analysis in Grossman's are satisfied. All objections on the basis of Grossman's are overruled.

Assignment of policy proceeds is not prohibited by anti-assignment provisions of insurance policies, In re Federal–Mogul Global, Inc., 385 B.R. at 567, citing In re Combustion Engineering, Inc., 391 F.3d 190 (3d Cir.2004), and assignment of the policy itself is permissible once the event that gives rise to insurer liability under the policy occurs. 385 B.R. at 567.

The matter was appealed to the Court of Appeals for the Third Circuit where it is pending as Case No. 1–09–cv–2230. On August 6, 2010, the Court of Appeals entered an order holding proceedings in abeyance in Federal–Mogul and other matters before it pending the court's decision en banc in In re: Global Industrial Technologies, Inc. (“GIT”) (Hartford Accident & Indemnity v. Lawrence Fitzpatrick), Case No. 08–3650 (Bankr.W.D.Pa.). Reargument was scheduled in the GIT matter for October 13, 2010. This court decided the GIT plan confirmation issues by order dated September 24, 2007, Doc. No. 7711, Bankr. No. 02–21626. We revised our Memorandum Opinion and Order on November 13, 2007, Doc. Nos. 7886, 7887.

We note that § 4.4 of the PI Trust Agreement, Doc. No. 24657, Exhibit 2, provides that the Trustees, TAC members and the FCR will not have liability except for “breach of trust committed in bad faith or willful misappropriation.” Section 4.6 of that Agreement provides for defense and indemnification by the Asbestos PI Trust of the Trustees, TAC members and FCR in the performance of their duties as permitted for statutory trusts under Delaware state law for conduct pre-Effective Date in connection with formation and funding of the Trust. However, there will be no defense or indemnification for bad faith conduct or willful misappropriation.

In In re Washington Mutual Inc., 2011 WL 57111 *26 (Bankr.D.Del., Jan.7, 2011), the Bankruptcy Court cited PWS Holding in connection with a discussion of the exculpation clause in Washington Mutual. PWS Holding, however, concerned a release. In another Washington Mutual opinion of the same date, 442 B.R. 314, 2011 WL 81549 *39, the court noted that the original exculpation clause in the debtor's proposed plan did not state the correct standard because it sought to excuse even willful misconduct and gross negligence. The court again cited PWS Holding as the standard to be met regarding such clauses. “Exculpate” is defined as “[t]o free from blame or accusation.” Black's Law Dictionary at 648 (9th ed. 2009). “Release” is defined as “[l]iberation from an obligation, duty or demand.” Id. at 1403. Notwithstanding the difference between exculpation and release, in either case willful misconduct and gross negligence are not excused nor is liability for such conduct released.

The exculpation provision applies to Reorganized Debtors, Debtors, Non–Debtor Affiliates, Sealed Air Indemnified Parties, Fresenius Indemnified Parties, the ACC, the Asbestos PD Committee, the creditors' and equity committees, the PI and PD FCRs and their representatives. We note that certain releases are required by the Fresenius and Sealed Air settlements. Section 11.9 implements those releases and, as an exculpation clause with respect to the entities named in § 11.9, does so within the bounds of the law and is proper.

For the same reason, MCC's reliance on In re Congoleum Corp., 362 B.R. 167 (Bankr.D.N.J.2007), and In re Continental Airlines, 203 F.3d 203 (3d Cir.2000), is misplaced as those cases provided that third parties were released with respect to claims brought against them not necessarily related to formulation of the plan and carrying out of statutory duties with respect to the bankruptcy case.

Cryovac was a subsidiary created to receive the assets and liabilities that were the subject of the Sealed Air fraudulent conveyance action. Adv. No. 02–2210, Adv. Doc. No. 1 at 6.

At a hearing on December 13, 2010, counsel for Debtors represented, and was not contradicted, that notice of the settlements went to all parties in interest. The only entity that had objected to the release on notice grounds was One Beacon/Seaton which entered the case after the District Court approved the Fresenius settlement. One Beacon/Seaton settled and its objection is moot. Doc. No. 25928, Tr. 12/13/10, at 22.

The motion to approve the Fresenius settlement defines NMC Defendants as “Fresenius Medical Care Holdings, Inc. and National Medical Care, Inc. (collectively, along with certain non-defendant affiliates identified in the Settlement Agreement)”. The non-defendant affiliates identified in the Settlement Agreement are “FMCH, NMC, and each of their respective present and former subsidiaries, parents, affiliates, officers, directors, employees, partners, trustees, shareholders, beneficiaries, agents, attorneys, predecessors, successors, and assigns, including but not limited to Fresenius Medical Care AG and Fresenius AG, but not including the Estate Parties, Sealed Air and Cryovac.” Adv. No. 02–2211, Adv. Doc. No. 16, § 1.29 at A–7, Appendix A to Exhibit A. FMCH is Fresenius Medical Care Holdings, Inc. Adv. Doc. No. 16, at Exhibit A at 2. “Estate Parties” are “each of the Debtors, the estate of each Debtor, the post-confirmation estate of each Debtor, each of the reorganized Debtors, and any trustee that may be appointed in any of the Debtors' cases under the Bankruptcy Code.” Adv. Doc. No. 16, § 1.12 Appendix A to Exhibit A.

The FCR, David Austern, testified that the settlement value is around $1.1 billion. Doc. No. 23432, Tr. 9/17/09 at 59. The order approving the Fresenius settlement made a finding that the release of the Sealed Air Companies and payment by Fresenius of $115 million resulted in a net economic benefit to Debtors' estates. See Adv. No. 02–2211, Doc. No. 19, Order dated June 25, 2003, at ¶¶ KK(d), WW. Sealed Air agreed to pay $512.5 million in cash plus interest and to transfer 9 million shares of Sealed Air Common Stock. See Adv. No. 02–2210, Doc. No. 729 at 14, ¶ 37, and Exhibit A thereto at 14. See also Order dated June 27, 2005, at ¶ O, Adv. Doc. No. 751 (settlement will result in net economic benefit to Debtors' estates and creditors in the amount of $1.2 billion).

In 2002, Sealed Air commenced a declaratory judgment action against the NMC Defendants in the Supreme Court of the State of New York, County of New York, asserting that Sealed Air was not liable to the NMC Defendants for indemnification or otherwise with respect to claims asserted against the NMC Defendants. See Renewed Motion for an Order Approving, Authorizing, and Implementing Settlement Agreement, Adv. No. 02–2210, Adv. Doc. No. 729, at 11. See also First Amended Settlement Agreement and Release of Claims, Adv. No. 02–2211, Adv. Doc. No. 16, Exhibit A at A–9, ¶ 1.40 referring to “Sealed Air Corporation vs. Fresenius Medical Care AG, Fresenius Medical Care Holdings, Inc.; National Medical Care, Inc.; and Fresenius USA, Inc., (No. 600300/02 N.Y. Sup. Ct.).”

“Grace–Related Claims” are defined as
collectively, all claims (including unknown claims), demands, rights, liabilities and causes of action of every nature and description whatsoever, known or unknown, direct or indirect, whether concealed or hidden, from the beginning of time up to and including the Settlement Effective Date, asserted or that might have been asserted (including without limitation claims for fraudulent conveyance, successor liability, piercing of corporate veil, negligence, gross negligence, professional negligence, breach of duty of care, breach of duty of loyalty, breach of duty of candor, fraud, breach of fiduciary duty, mismanagement, corporate waste, breach of contract, negligent misrepresentation, contribution, indemnification, any other common law or equitable claims, and violations of any state or federal statutes, rules or regulations), which are either Asbestos–Related Claims or that are based upon or arise out of the NMC Transaction, or the conduct or operations of any Grace–Conn Business, including without limitation, any liability or obligation of a Grace–Conn Business under environmental law, but not including any claims based on or arising out of the conduct or operations of the NMC Business or any act or omission of the NMC Defendants in connection with the operation of the NMC Business.
Adv. No. 02–2211, Doc. No. 16, Appendix A to Exhibit A at A–5, § 1.21.
“NMC Transaction” is defined in § 1.33 of the Fresenius Settlement. Adv. No. 02–2211, Adv. Doc. No. 16, Appendix A to Exhibit A at A–7 to A–8, § 1.33. The definition encompasses claims that could be brought against Fresenius based on its relationship to Grace. There is a carve-out for direct claims arising from the NMC business and those are assumed by the Reorganized Debtors. See § 8.5.2 of the Joint Plan.

Successor Claims are defined in the Joint Plan as “any of the S [ealed]A[ir] Successor Claims and/or the Grace–Related Claims.” Doc. No. 24657, Exhibit 1, Plan at § 1.1.213. SA Successor Claims, id. at § 1.1.195, are defined as SA Claims, id. at § 1.1.189:
“SA Claims” shall mean “Claim” as defined in the Sealed Air Settlement Agreement, including any and all claims, whether direct, indirect, derivative or otherwise, including ‘claim’ as the term is defined in section 101(5) of the Bankruptcy Code (except that a right to an equitable remedy shall also be considered an SA Claim whether or not the breach gives rise to a right of payment), remedies, or causes of action, liability, SA Debts, or SA Damages, known or unknown, now existing or hereafter arising, that have been, could have been, may be, or could be alleged or asserted now or in the future by any Entity against the SA Debtors, their predecessors, successors, assigns, or any current or former Affiliate of any of the foregoing, including the Canadian Entities, or the Sealed Air Indemnified Parties, of whatsoever kind or nature, whether alleged or asserted or not, whether founded in law, equity, admiralty, tort, contract, statute, or otherwise, and includes demands, liability, suits, judgments, and all legal or equitable theories of recovery whether arising under the common law or any statute, ordinance, or regulation. Without limiting the generality of the foregoing, SA Claims shall include any and all claims, causes of action, SA Debts, or SA Damages under or attributable to: (I) chapter 5 of the Bankruptcy Code; (ii) successor liability, piercing the corporate veil, alter ego liability, agency liability, transferee liability, or other similar claims or causes of action seeking to hold an Entity liable for the debts or obligations of another Entity; (iii) chapter 176 of title 28 of the United States Code or any other similar statutes; (iv) any debtor-creditor, fraudulent transfer, or fraudulent conveyance statutes; or (v) any other similar claims or causes of action (all such SA Claims, causes of action, SA Debts, or SA Damages under or attributable to (I) through (v), collectively, “SA Successor Claims”).
The Sealed Air settlement defines “Claims” as:
any and all claims, whether direct, indirect, derivative or otherwise, including, without limitation, ‘claim’ as the term is defined in section 101(5) of the Bankruptcy Code (except that a right to an equitable remedy shall also be considered a claim whether or not the breach gives rise to a right to payment), remedies, or causes of actions, liability, Debts, or Damages, known or unknown, now existing or hereafter arising, that have been, could have been, may be, or could be alleged or asserted now or in the future by any Person against the Debtors, their predecessors, successors, assigns, or any current or former Affiliate of any of the foregoing, or the Released Parties, of whatsoever kind or nature, whether alleged or asserted or not, whether founded in law, equity, admiralty, tort, contract, statute, or otherwise, and includes, without limitation, demands, liability, suits, judgments, and all legal or equitable theories of recovery whether arising under the common law or any statute, ordinance, or regulation. Without limiting the generality of the foregoing, Claims shall include any and all claims, causes of action, Debts, or Damages under or attributable to: (I) chapter 5 of the Bankruptcy Code; (ii) successor liability, piercing the corporate veil, alter ego liability, agency liability, transferee liability, or other similar claims or causes of action seeking to hold a Person liable for the debts or obligations of another Person; (iii) chapter 176 of title 28 of the United States Code or any other similar statutes; (iv) any debtor-creditor, fraudulent transfer or fraudulent conveyance statutes; or (v) any other similar claims or causes of action (all such Claims, causes of action, Debts, or Damages under or attributable to (I) through (v), collectively, “Successor Claims”).
Adv. No. 02–2210, Doc. No. 729, at § 1.q.

Fresenius Indemnified Party is defined in the Joint Plan as “Fresenius and each of their respective present and former subsidiaries, parents, Affiliates, officers, directors, employees, partners, trustees, shareholders, beneficiaries, agents, attorneys, predecessors, successors, and assigns, including Fresenius Medical Care AG & Co. KGaA. and Fresenius AG, but not including the Estate Parties and Sealed Air.” Doc. No. 24657, Exhibit 1, Joint Plan at § 1.1(125).

Fresenius Transaction is defined as “the series of transactions that became effective on September 27–30, 1996, whereby, inter alia, (I) NMC distributed approximately $2.3 billion in cash and assumed debt to Grace–Conn; (ii) Grace–Conn distributed 100% of the common shares of NMC stock to Grace New York; (iii) Grace New York contributed 100% of the common shares of Grace–Conn stock to Old Grace Delaware; (iv) Grace New York distributed 100% of the common shares of Old Grace Delaware stock to its shareholders; and (iv) Grace New York merged with a subsidiary of Fresenius Medical Care AG & Co. KGaA., all of which are more fully described in that certain Distribution Agreement dated as of February 4, 1996, among Grace New York, Grace–Conn and Fresenius AG, and that certain Contribution Agreement dated as of February 4, 1996, among Fresenius AG, Sterilpharma GmbH (as defined therein), and Grace–Conn, as that series of transactions is described in, referred to, or contemplated by Form S–4 Registration Statement filed by Grace New York with the SEC under the Securities Act, on or about August 2, 1996, SEC File No. 333–09497, including all attachments, exhibits and schedules thereto.” Doc. No. 24657, Exhibit 1, Joint Plan at § 1.1(130).

Those holding GR Claims who have not filed a proof of claim on or before the Effective Date, may file a GR proof of claim on or before the sixtieth day subsequent to the Effective Date (the “GR Claims Bar Date”). § 8.5.2(b). The Reorganized Debtors will be entitled to assert, and will have the benefit of, all defenses of Fresenius, with respect to all GR Claims timely filed by the GR Claims Bar Date. Id. at (c).

From 1993 through September 28, 1996, Fresenius, certain Debtors, and Cryovac were members of the “Grace New York Group.” As a result, the operations (through and including September 28, 1996) of Grace New York, each such Debtor and Cryovac were included in Grace New York's U.S. federal consolidated income tax return for tax years ending December 31, 1993, December 31, 1994, December 31, 1995, and December 31, 1996. Sealed Air, from the time of its formation in 1996 and ending on September 28, 1996, was also a member of the Grace New York Group and so its operations were included in Grace New York's U.S. federal income tax return for the tax year ending on December 31, 1996. Adv. No. 02–2210 at Adv. Doc. No. 552, at 6, Renewed Motion for an Order Approving, Authorizing, and Implementing Settlement Agreement.
Under the Internal Revenue Code, Grace New York, as parent of the Grace New York Group, and each subsidiary that was a member of the Grace New York Group, including Cryovac and Sealed Air, were liable severally for tax obligations. Id. at 7. Pursuant to a Tax Sharing and Indemnification Agreement of 1996 and a Tax Sharing Agreement of 1998, Grace–Conn was required to indemnify Sealed Air and others for certain tax liabilities. Eventually a settlement was reached with the IRS and approved by the Bankruptcy Court. Id. at 9. Before 2002, however, NMC Defendants had asserted that Sealed Air Defendants were liable for indemnification and contribution with respect to asbestos-related claims and claims related to any tax deficiencies of the Grace New York Group arising out of certain audits “or otherwise.” Id. at 11. In January of 2002 Sealed Air commenced the New York litigation identified supra, at note 69. The Fresenius and Sealed Air settlements resolved all issues.

We also note that except for insurer OneBeacon/Seaton, all parties in interest were involved in the case at the time and no objections to either settlement were filed. The concerns of OneBeacon/Seaton were resolved after that insurer joined the case.

Ms. Zilly was qualified as a financial advisor with respect to restructuring matters. Doc. No. 23531, Tr. of 9/16/09 at 103–04.

AMH also objects to confirmation because there is insufficient evidence of exit financing but there is no requirement that specific documents be executed by a reorganizing debtor to prove feasibility. As noted below, the evidence established that Grace can obtain any necessary financing prior to the Effective Date. This objection is overruled.
AMH also objects because Debtors have not obtained exit financing that the Joint Plan says Debtors “must secure.” The Joint Plan does not require Debtors to obtain exit financing now; paragraph 112 of the Joint Plan states: “Exit Financing” shall mean such financing agreement(s) or commitment(s) as the Debtors may enter into to provide the Reorganized Debtors with appropriate credit availability.” Article I, ¶ 112. Further,; Article 7, § 7.8(h) provides:
The Exit Financing, in an amount and on such terms satisfactory to the Debtors, shall be in full force and effect and available immediately upon the occurrence of the Effective Date and after all necessary parties have executed the documentation relating thereto.
We credit Ms. Zilly's testimony that Debtors will be able to secure necessary financing in time to meet liabilities that must be met on the Effective Date.

Ms. Zilly explained: “... the company still is projecting a very strong financial track record with respect to 2009 and ongoing. Frankly, its growth rate of sales is reasonable when compared to what it has achieved over the last eight to ten years. That same assumption holds true with respect to its core EBITDA, that their expectations with respect to their core EBITDA are reasonable for a number of reason[s]. Number one, what they've managed to achieve in the past; number two, given the productivity programs that have been implemented in the last several years; number three, with respect to the cost cutting measures that this company took in 2008 and 2009, that both the—in my view, the financial projections with respect to sales and its core EBITDA are reasonable projections which would sustain its ability to meet its obligations under the plan.” Doc. No. 23619, Tr. 10/13/09, at 73.

The Asbestos PI Trust shall be funded in accordance with § 7.2.2 of the Plan, Doc. No. 24657, Exhibit 1 (including contribution of cash, stock, warrants, insurance rights, and contributions pursuant to the Sealed Air and Fresenius settlements) and the Asbestos PI Deferred Payment Agreement, Doc. No. 24657, Exhibit 11.

AMH has objected on the basis, inter alia, that Debtors have not provided an estimate of their future liability for traditional Asbestos PD Claims and the Joint Plan does not account for the possibility that Anderson's class claim will be upheld on appeal. The appeal was dismissed on December 14, 2009, in case No. 08–4829. The Bankruptcy Code does not require an estimate of all possible liabilities, only that the plan have a reasonable probability of success. With respect to the second argument, even if Grace's liability for property damage claims would be $1.6 billion, Ms. Zilly testified that the Joint Plan would be feasible. Tr. 10/13/09, Doc. No. 23619 at 77–79. We credit her testimony.

The Joint Plan provides that Reorganized Debtors will fund the Asbestos PD Trust every six months with the amount of the PD claims and demands that become allowed in the preceding six month period. AMH presented no evidence to counter Debtors' financial projections and therefore has failed to establish a basis for a finding that Reorganized Debtors will be unable to meet this obligation. AMH cites a 1995 report by Daniel Rourke, a statistical analysis expert who was engaged by Debtors that year to estimate personal injury and property damage claims related to asbestos. That report included an estimate of property damage costs from the year 2000 on. The estimate is not persuasive evidence of the amount of PD claims now, fifteen years after the report and ten years after the target date of the report, when actual figures are available and when Grace has settled nearly all of its known PD claims during the course of its bankruptcy.

For example, as buildings are renovated, asbestos PD claims may be filed. Whether they will be found to be meritorious is a different question altogether, but the point is, the demands will exist.

AMH argues that the $37 million reserve for pending and future Asbestos PD Claims means that such claims do not have to be channeled and, in order to obtain the benefits of § 524(g), Plan Proponents must show that there are likely to be substantial future demands. We credit Dr. Martin's testimony regarding the likelihood of demands. Because Debtors reserve $37 million for PD claims AMH argues that § 524(g) requirements are not met. Because the property damage claims bar dates have passed (2003 for general PD claims, 2008 for U.S. ZAI PD claims), all known claims are either resolved or in Class 7 which consists of two parts: 7A, traditional asbestos PD claims, and 7B, ZAI (Zonolite Attic Insulation) claims, which settled. Any unresolved U.S. ZAI claims will be addressed by the Asbestos PD Trust pursuant to the terms of the ZAI TDP. See Doc. No. 24657, Exhibit 1, Joint Plan at § 3.1.7(b)(ii). See also id. at Exhibit 33, ZAI PD Trust Distribution Procedures. As noted supra, if property damage demands are made they will have to be addressed. Thus, the provision for PD Demands is prudent and enhances Grace's ability to reorganize. In addition, because the property damage claims and demands must be paid 100 percent, no creditor in this class is adversely affected and the other classes of asbestos creditors voted to accept the Plan.
A pro se ZAI claimant objected asserting that the Asbestos PI Claims cap should be lifted to account for “future claims.” Doc. No. 21531. The claimant's concern was based on the alleged presence of ZAI in his building. To the extent any claimant has a demand for asbestos personal injury, the demand will be in Class 6 and addressed by the Trust. However, Class 6 voted to accept the Plan with the cap. This objection is overruled.

The Crown cites the testimony of the FCR, David Austern, on September 17, 2009, Doc. No. 23532, as supporting the proposition that there is a “possibility” that the Trust will run out of funds before Indirect PI Claimants will be paid. See Doc. No. 21444 at 22–23. That is a mischaracterization of Mr. Austern's testimony which, while admitting the possibility of the Crown's scenario, clearly and repeatedly stated that it was not likely. Doc. No. 23532, Tr. 9/17/09, at 70–71.

In Congoleum the debtors attempted to distinguish the treatment of asbestos claims from the discriminatory treatment that Combustion Engineering rejected, inter alia, based on the fact that in Combustion Engineering there were over 100,000 claimants involved while in Congoleum there were only 131 claimants receiving different treatment.

In number, 99.51 percent of those submitting ballots in Class 6 voted to accept the Joint Plan. Only 0.49 percent in number rejected it. In dollar amount 99.39 percent ($4,098,207,537.00) accepted the plan and 0.60 percent ($25,019,025.00) rejected it. Votes in the amount of $4,235,419,077.00 were counted and only $112,192,515.00 of that amount was excluded. Doc. No. 22706 at 6, Amended Declaration of Kevin A. Martin Certifying Tabulation of Ballots, Ballot Tabulation Report Summary.

The Crown's property damage claims are not in Class 6 and have been addressed through the Canadian ZAI PD settlement.

We also note that the extent stock and the Warrants being contributed can or will result in, in essence, dividends which will inure to the benefit of creditors. Such a benefit will not exist in a Chapter 7 liquidation.

We also note that the Joint Plan contains additional provisions applicable to Libby Claimants. As noted, supra, at note 26, to address Libby Claimants' assertions that their pleural disease is progressive, the Plan Proponents modified the TDP to permit a claimant at a lower level of disease to assert a subsequent claim, not only for the initial development of a malignant disease, but also for the progression of their disease to severe asbestosis or Severe Disabling Pleural Disease. See PP Exh. 277.4, § 5.9. See also Doc. No. 23282, Tr. 9/8/09 at 55, (Inselbuch). See also note 27, supra, discussing provisions for Extraordinary Claims.

Asbestos Insurance Rights are defined in Joint Plan § 1.1(15) as “any and all rights, titles, privileges, interests, claims, demands or entitlements of the Insurance Contributors to any proceeds, payments, escrowed funds, initial or supplemental dividends, scheme payments, supplemental scheme payments, causes of action, and choses in action of any Insurance Contributor with respect to any Asbestos Insurance Policy, Asbestos Insurance Settlement Agreement, Asbestos In–Place Insurance Coverage, or Asbestos Insurance Reimbursement Agreement, including all Asbestos Insurance Actions, whether now existing or hereafter arising, accrued or unaccrued, liquidated or unliquidated, matured or unmatured, disputed or undisputed, fixed or contingent....”
Insurance Contributor is defined as “any of (a) the Debtors, (b) the Reorganized Debtors, and (c) the Non–Debtor Affiliates identified in the Asbestos Insurance Transfer Agreement.” Id. at § 1.1(146).

When Debtors objected to the Bank Lenders' claim for default interest, Doc. No. 18922, the Creditors' Committee filed its own response to that objection, Doc. No. 19072, asserting the Bank Lenders' position but, while acknowledging that the Debtors' objection addressed only the Bank Lenders' claim, argued that, to the extent other commercial creditors have prepetition agreements providing for payment of interest, those creditors were not being provided with postpetition interest under their contracts. The Creditors' Committee also complained because the Joint Plan had no provision for payment of statutory interest rates for those unsecured creditors who may have a right such interest. Doc. No. 19072, n.6 and accompanying text. In the Creditors' Committee objection to Plan confirmation, Doc. No. 21970, it reiterated its support of the Bank Lenders' position and argued that the Plan was not confirmable because it was ambiguous with respect to payment of “the full amount” of postpetition interest on ‘other’ Class 9 Claims whose holders have provisions in their agreements for payment of interest or that may be entitled to state statutory rates of interest in excess of the interest rate provided in the Plan in § 3.1.9 of the Plan. As to the Creditors' Committee arguments on behalf of the Bank Lenders, the Bank Lenders have their own counsel. With respect to “other” Class 9 claimants, the Creditors' Committee has identified no such claimants, there are no objections to the claims of other members of Class 9 and no other Class 9 claimant has objected to the Plan. Thus, the Creditors' Committee objection is speculative and is overruled. Furthermore, modified § 3.1.9 of the Plan contains specific provisions for payment of contract rates of interest and for payment of postpetition interest for “all other General Unsecured Claims,” § 3.1.9(b)(D). It states procedures for resolution of postpetition interest disputes, § 3.1.9(d). Section 3.1.9(e) of the Joint Plan states procedures for determining nondefault contract rate of postpetition interest for Class 9 claimants, other than Bank Lenders, who want to substantiate that they have a contract stating a rate of interest. The Creditors' Committee objection is overruled.