Efforts to forge a reorganization plan for Manville Corp. face a new obstacle in a disagreement over who should lead the one-time asbestos maker when it emerges from 3 1/2 years of federal bankruptcy court protection.
A hearing on the reorganization plan was postponed Tuesday for two days when lawyers for those with health claims against the Denver-based concern told U.S. Bankruptcy Judge Burton Lifland that they insist on approving the leadership.
“We will hold 80% of the shares in the new company, and that surely entitles us to a voice,” said Leon Silverman, an attorney for future health claimants, in an interview after the hearing in federal court here.
The building and forest products maker filed for bankruptcy court protection in August, 1982, claiming that it could not compensate the 17,000 persons who have claimed health damage from Manville asbestos products.
Meanwhile, Manville announced that it has modified the financial terms of the reorganization plan in a way that will benefit the commercial creditors and health claimants at the expense of the company’s shareholders.
Under the latest revisions, holders of common shares will turn in six shares and receive one share in return. Holders of preferred shares also face a reduction in annual dividends to $2.70 from $3 a share.
The changes have the approval of commercial creditors, preferred stockholders and attorneys for those who have filed health claims. The revisions do not affect the plan’s basic provisions to spend $2.5 billion to $3.5 billion to satisfy present and future health claims and $125 million for property damage claims.
The leadership issue emerged after the Manville board voted Monday to insist that it maintain control over who runs the company. Manville Chairman and Chief Executive John McKinney is due to retire when he turns 70 later this year, and the board would like to replace him with Josh Hulce, the company’s president.
In a statement Monday, McKinney asserted that the company’s current management had proven its effectiveness in the last four years and would be needed to maintain good relations with lenders and customers when Manville emerges from reorganization.
However, Elihu Inselbuch, an attorney for health claimants, asserted that 43-year-old Hulce does not yet have the experience needed to “really open the lines of communication with the banking and investment communities.”
“What we really need is someone with long experience, well known to the corporate world,” Inselbuch said.