Owens Corning Likely to Stir Substantive Consolidation Debate

The Journal Of Corporate Renewal

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PUBLISHED ON: January 1, 2005

An order entered in the Owens Corning bankruptcy case in Delaware on October 5 could have a significant impact on corporate bankruptcies and reorganizations around the country. Senior U.S. District Court Judge John P. Fullam granted a motion by the Owens Corning debtors and certain creditor constituencies to approve a key element of the proposed reorganization plan—the “substantive consolidation” of the debtors’ assets and liabilities.

Fullam’s order not only is likely to influence other District and Bankruptcy Court judges in the 3d Circuit, where he sits, but also ultimately may be reviewed by the 3d Circuit Court of Appeals. As such, the decision—one of only a handful at present dealing with substantive consolidation as it applies to mega-corporations going through reorganization—will almost certainly be the subject of more legal briefs and judicial decisions in months to come.

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