U.S. District Judge issues new order regarding Congoleum bankruptcy case

On May 7, 2010, U.S. District Judge Joel A. Pisano issued an order in the U.S. District Court for the District of New Jersey regarding the bankruptcy case, In re Congoleum Corp., 09-cv-4371, and the dispute that has been a source of contention in the case over payments to Motley Rice member Joe Rice and Perry Weitz of Weitz & Luxenburg for their role as claimants' counsel in negotiating the global settlement against Congoleum.

Facing liability for asbestos-related injury lawsuits, Congoleum, a New Jersey-based manufacturer of flooring products, filed for bankruptcy in 2003. The resulting bankruptcy case has not been resolved despite 12 failed reorganization attempts, in part due to controversy over payments, meant to cover out-of-pocket expenses throughout the negotiations, made to Rice and Weitz. The insurers argued that these payments were fees and created a conflict. In his recent order, Judge Pisano found no conflict and said that both Rice and Weitz were working "to negotiate a prepackaged plan of reorganization under which asbestos personal injury claimants would likely recover more than they would have if Congoleum had gone into a 'free fall' bankruptcy." Finding that the payments were for expenses, he found them reasonable under the circumstances.

Click here to read Mary Pat Gallagher's article featured in the New Jersey Law Journal.

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