Manville Agrees to Major Shake-Up to Satisfy Creditors
Manville Corp., resolving an issue that threatened its carefully crafted bankruptcy court reorganization plan, said Tuesday that it will reshuffle its board of directors and take on a new management acceptable to its creditors.
Chairman John A. McKinney will retire Sept. 1. He will be replaced by George C. Dillon, a 17-year Manville director who is also chairman of Butler Manufacturing Co. of Kansas City, Mo., the company said in a statement.
Manville President Josh T. Hulce resigned effective Tuesday. He was immediately replaced by W. T. Stephens, Manville’s executive vice president and chief financial officer. Stephens is to become chief executive Sept. 1.
McKinney, a 35-year Manville veteran, was at the helm in 1982 when Manville filed for Chapter 11 reorganization under the U.S. Bankruptcy Code, contending that it could not pay off the thousands of suits alleging health injury from Manville asbestos products.
Under the agreement, the 15-member board will include six new appointees who are suitable to both Manville’s management and the company’s creditors, according to Manville.
The new members will include Dillon; Stanley Levy, chairman of the Asbestos Health Litigants Committee; Raymond Troubh, a New York investment banker, and three members still to be named, according to spokesman Raymond M. Gomez.
The reorganization will displace five incumbent directors and leave nine incumbents on the board, Gomez said. He said no decision has been made on which incumbents will be displaced, although the board includes five who are near the mandatory retirement age of 70 and thus would be logical candidates.
The agreement was approved by Manville’s board at a special meeting Monday and announced at a hearing before U.S. Bankruptcy Judge Burton Lifland in Manhattan.
It opens the way for final approval of a reorganization plan that has been in formulation for 3 1/2 years. The plan calls for creation of a $2.5-billion to $3-billion trust fund to pay present and future asbestos victims. Approval of the plan may come early this summer.
Asbestos fibers, until recently in wide use for insulation, are now known to cause lung cancer and other respiratory diseases.
Manville’s top management has been of concern to the creditors because the plan gives management a large measure of autonomy for the first four years after Manville’s emergence from reorganization. Health-injury claimants are awarded 80% of company shares under the plan, but they aren’t entitled to vote those shares for four years after the new company emerges.
Elihu Inselbuch, attorney for persons with health claims against Manville, and Leon Silverman, who represents those who may file health claims in the future, hailed the departures of McKinney and Hulce as “statesmanlike.”
But Inselbuch acknowledged that there has been dissatisfaction among health-injury claimants and commercial creditors with the company’s financial performance.
“The performance has simply not been all it might have,” he said. “And boy, management better be able to generate those dollars, because they’ve got a lot of claims to pay off.”
In a statement, Manville said that McKinney’s departure was “as previously planned” and quoted him as saying that he had pledged three years ago to step down after helping guide its initial reorganization.
As recently as last week, however, a corporate spokesman insisted that McKinney’s departure was not contemplated and was not an issue in creditor demands for a say in management selection.
In the company’s statement, McKinney said Hulce left “for a complex group of personal reasons.”