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LANCASTER, Pa.--Armstrong World Industries Inc. has emerged from Chapter 11 bankruptcy after a reorganization plan resolving its massive asbestos liabilities went into effect Monday.
A federal judge in Philadelphia confirmed a modified version of the plan in August after AWI altered provisions that had initially led to the plan's rejection by the court in 2005.
Under AWI's amended reorganization plan, the Lancaster, Pa.-based building materials manufacturer will create a trust for current and future asbestos claimants funded with $1.8 billion in cash, insurance recovery rights and stock in the reorganized AWI. The plan absolves AWI of further asbestos liabilities, channeling all pending and future claims to the trust.
With the plan now in effect, AWI is no longer owned by former parent Armstrong Holdings Inc.; AWI said it expects to announce plans for the public listing and trading of its own stock next week.
AWI--which has continued to operate during its reorganization and recorded nearly $4 billion in sales last year--filed for Chapter 11 protection in 2000 amid a rising tide of asbestos personal injury and property damage claims. At the time of the bankruptcy filing, AWI faced about 173,000 asbestos injury and wrongful death claims and had paid $500 million to settle similar claims in the preceding three years, court records show.
In February 2005, Philadelphia-based U.S. District Judge Eduardo C. Robreno rejected an earlier version of the AWI plan in a ruling that was later affirmed by a federal appellate panel. Judge Robreno found that a provision of the earlier plan granting AWI stock warrants to Armstrong Holdings improperly favored Armstrong Holdings over higher-priority creditors.
The warrant provision was deleted from the plan that Judge Robreno approved in August and that went into effect Monday.