MEMORANDUM OPINION REGARDING OBJECTIONS TO CONFIRMATION OF FIRST AMENDED JOINT PLAN OF REORGANIZATION AND RECOMMENDED SUPPLEMENTAL FINDINGS OF FACT AND CONCLUSIONS OF LAW1

JUDITH K. FITZGERALD, Bankruptcy Judge.

Introduction

Before the court is the confirmation of W.R. Grace & Co.'s ("Debtors")2 First Amended Joint Plan of Reorganization, docketed as Exhibit 1 to Doc. No. 24657 (filed April 22, 2010, with modifications through December 23, 2010 ("Joint Plan")). The Joint Plan was accepted by each class of creditors except Class 9, General Unsecured Creditors. See note 8, infra. A ballot summary is docketed at Doc. No. 22020 and an amended summary at Doc. No. 22706. After trial, consideration of the objections and responses, stipulations, briefs and arguments, we find that the Joint Plan meets the requirements of 11 U.S.C. § 1129(a)(1)-(13), (16), (b)(1), and (b)(2)(B). The following subsections of § 1129 have no relevance to this case: (a)(14)-(15), (b)(2)(A), (b)(2)(C), (d), and (e). The Joint Plan also complies, in all respects, with § 524(g). Because the parties in interest object only to certain provisions in the Joint Plan and Plan Documents3 and have raised no issues concerning whether the Joint Plan complies with the Bankruptcy Code other than as raised in their objections, we do not address each provision of § 1129 or § 524(g). Rather, we address only those alleged not to be satisfied by the Joint Plan and Plan Documents. For the reasons which follow, we overrule all remaining objections and recommend that the District Court confirm the Joint Plan.

The objections to confirmation are summarized on a chart located at Appendix B to Plan Proponents' Updated and Amended Chart (Revised) Summarizing Confirmation Requirements and Remaining Objections to the First Amended Joint Plan of Reorganization, Doc. No. 24549, filed on March 30, 2010. There was a deadline by which objections to the Joint Plan were required to be filed. Approximately 43 objections were filed. Many were resolved or subject to rulings before or during the confirmation hearing and several were the subject of settlement agreements after conclusion of the hearing. In addition, during the course of the confirmation hearing parties had every opportunity to be heard and to raise additional objections therein. See, e.g., Doc. No. 26018, Tr. 1/10/11 (hearing on settlement with the CNA Companies). This Recommendation addresses the remaining unresolved objections. Our recommendations are based upon the evidence and testimony adduced in the Plan confirmation hearing and the Plan modifications and settlements reached thereafter. We find that the Joint Plan as modified through December 23, 2010, and inclusive of settlements through the settlement with the CNA Companies, approved by order of January 22, 2011, Doc. No. 26106, meets the standards and requirements of 11 U.S.C. § 1129 and § 524(g). We find that the Joint Plan is proposed in good faith, is feasible, and is consistent with the best interests of creditors.

Good Faith, Disparate/Unequal Treatment of Indirect Asbestos PI Claims

Most of the objections focus on fair and equitable treatment (11 U.S.C. § 1123(a)(4)), although characterized by the claimants as good faith objections, and on classification. We address the good faith objections under § 1123(a)(4) unless otherwise noted. The inquiry is whether the plan will "fairly achieve a result consistent with the objectives and purposes of the Bankruptcy Code." In re Combustion Engineering, Inc., 391 F.3d 190, 247 (3d Cir.2004).

Various entities challenge the good faith of the Plan Proponents in proposing the Joint Plan. The Joint Plan before us is the result of years of litigation and arms' length negotiations.4 There is no evidence that the Joint Plan was proposed in bad faith. In fact, it is incredible to conclude that the Joint Plan, which is intended, inter alia, to pay asbestos personal injury claimants and to resolve what would otherwise be crippling uncertain tort liabilities, was filed in bad faith. See In re Combustion Engineering, Inc., 391 F.3d at 247, n. 67. We find that the Joint Plan has been proposed in good faith and not by any means forbidden by law.

The Joint Plan was proposed after arm's length negotiations for the purpose of maximizing the value of the Debtor's estates.5 The most significant creditor groups in these cases are Holders of Asbestos PI Claims and Holders of Asbestos Property Damage ("PD") Claims. With respect to the Asbestos PI Claims, the Asbestos Personal Injury Futures Claim Representative ("FCR"), David Austern, made clear in his testimony that the negotiations involving the settlement that led to the Joint Plan were arm's length and made in good faith and we so find. The settlement negotiations took place between Debtors, the ACC, the FCR, and the PD Committee. In addition, there were negotiations and settlements with various insurers. Most PD claims have been resolved through settlements or allowance proceedings. Even the highly contested Zonolite Attic Insulation ("ZAI") Claims, both in the U.S. and Canada, have settled, notwithstanding prior objections.

The first objection we address is that of the Bank Lenders whose underlying complaint is that the Joint Plan does not pay them the contract default rate of interest to which they contend they are entitled. This court previously issued an opinion holding that the Bank Lenders were not entitled, as a matter of law, to default interest. In re W.R. Grace & Co., 2009 WL 1469831 (Bankr.D.Del., May 19, 2009). In that ruling we left open until conclusion of the evidence at the plan confirmation hearing the question of whether the failure of Plan Proponents to provide default interest to the Bank Lenders in the Joint Plan impairs the Bank Lenders, notwithstanding the absence of entitlement to default interest.6 We also left open the question of whether the Joint Plan meets the fair and equitable test of § 1129(b)(1) and the best interest test of § 1129(a)(7), as applied to the Bank Lenders, if the default rate of interest is not paid. Having heard the evidence and considered the arguments and applicable law, we now reject the Bank Lenders' contention that they are impaired7 because the Joint Plan does not pay default interest.8 At the time of the confirmation hearing, the Bank Lenders' undisputed nondefault contract rate of interest was not to be paid on the Effective Date pending resolution of their appeal with respect to the default rate. The Plan Proponents amended § 3.1.9 of the Joint Plan to provide for payment on the Effective Date of all principal and the undisputed portion of the interest in accordance with the Plan provisions,9 pending resolution of the default interest dispute on appeal. See Doc. No. 25956.

Bank Lenders argue for default interest on the basis that Debtors must be presumed solvent because equity is retaining an interest and, when there is a solvent debtor, the default interest rate must be paid if there has been a default. We previously found no default and addressed the Bank Lenders' contention in that regard in our May, 2009, ruling. With respect to the solvency argument, in the context of a preference action, the Bankruptcy Appellate Panel ("BAP") of the Ninth Circuit noted in Sierra Steel, Inc. v. Totten Tubes, Inc., 96 B.R. 275, 277 (9th Cir.BAP1989), that determination of solvency is a finding of fact and, because a debtor is presumed insolvent for the 90 days prepetition, the creditor has to come forward with "substantial evidence of solvency" to overcome the presumption. In the matter before us, although not in a preference context, we agree that a determination of solvency is a question of fact. However, we have been presented with no evidence that establishes solvency or insolvency and there has been no determination of solvency or insolvency.10 Litigation on that issue was voluntarily discontinued by the parties prior to the conclusion of the evidence in the estimation proceeding so there was never a determination of solvency made. Despite repeated threats to resurrect the litigation by different creditors at different times and despite repeated invitations by the court to put on the evidence if relying on solvency, no party in interest sought to reinstate the litigation. Accordingly, there is no basis to support a finding of Debtors' solvency or lack thereof and Bank Lenders' arguments for a presumption of solvency are not supported in the record or by operation of law, under the circumstances before us. Thus, there is no basis for payment of the default rate of interest11 based on solvency.

On the Effective Date the Bank Lenders will be paid the principal amount of their debt plus the amount of interest provided in the Joint Plan (6.09% from the Petition Date through December 31, 2005, and thereafter at floating prime, in each case compounded quarterly through the Effective Date). The parties agree that 6.09% exceeds the nondefault contract rate and that the provision regarding floating prime is the nondefault contract rate. Thus, the Bank Lenders are not impaired under any scenario as they will be paid in full. Section 1129(a)(7)(A)(ii) is met as to the Bank Lenders. 11 U.S.C. § 1124. Indeed, all creditors in this Class (Class 9) will be paid in full with interest on the Effective Date and are not impaired. The objection is overruled.

Next, Anderson Memorial Hospital ("AMH") raises the issue of entitlement to interest for its Class 7A claims (Asbestos PD Claims, excluding U.S. ZAI PD Claims). AMH argues that the Joint Plan impairs Class 7A claims (1) by denying payment of interest on such claims and (2) by denying it the ability to pursue its claim in its chosen forum. However, the Joint Plan does not deny payment of interest on Class 7A claims. The Class 7A Deferred Payment Agreement provides for payment of interest. See Doc. No. 24657 at Exhibit 27, Class 7A Deferred Payment Agreement, at 12.12 Thus, AMH's objection is not well founded in this regard.

Moreover, AMH has stated no basis on which it might be entitled to interest. AMH cites In re PPI Enterprises (U.S.), Inc., 228 B.R. 339 (Bankr.D.Del. 1998), affirmed 324 F.3d 197 (3d Cir.2003), for the proposition that it is entitled to payment of interest on its claim, if allowed. However, according to the court in PPI Enterprises, payment of interest is only required of solvent debtors. As noted, supra, solvency of Debtors in this case was never determined. Although litigation which included the issue of solvency was commenced, the parties chose to terminate that action before the conclusion of the evidence. Accordingly, no finding regarding solvency was ever made.13 Parties cannot, at this late stage, having repeatedly declined to revisit the solvency issue, rely on an unsupported presumption of solvency in order to claim a right to the payment of interest on that basis.

Furthermore, all Class 7A claimants will be paid 100 percent of the allowed amount of their claims and if the court determines that interest is appropriate the PD Trust will pay it. Section 5.3 of the Joint Plan, Resolution of Asbestos PD Claims, provides that "Asbestos PD Claims shall be resolved in accordance with the Asbestos PD Trust Agreement and (a) in the case of Asbestos PD Claims in Class 7A, the Class 7A Case Management Order setting forth procedures for determining the allowance or disallowance of the Unresolved Asbestos PD Claims. . . ." Doc. No. 24657 at 60, § 5.3.14 Thus, this objection to confirmation is without merit and is overruled.

AMH also objects on the basis that the Joint Plan has not been proposed in good faith in violation of § 1129(a)(3), asserting that it has been singled out for disparate treatment in derogation of § 1123(a)(4) because it is deprived of the ability to litigate in its chose forum. Its arguments are set forth in its trial brief, Doc. No. 22437. The Joint Plan provides that the claims in Class 7A, of which AMH is a member, will be resolved in federal court if the claimant has submitted to federal jurisdiction, and that the allowed amount will be paid in full. AMH, which, despite its contention to the contrary, is not the only member of this class of property damage claims,15 clearly has submitted to jurisdiction by filing a claim.16 It also participated extensively in litigation throughout this bankruptcy case.

AMH complains of disparate treatment because, if its motion for certification of a class action claim had been granted, litigation on the claim would occur in the bankruptcy court rather than state court.17 AMH Plan Objection, Doc. No. 21782 at 12, 20. In essence, AMH repeats matters that have already been adjudicated. AMH filed its claim and class action claim18 with this court thereby submitting to jurisdiction here and waiving its right to a jury trial.19 See Langenkamp v. Culp, 498 U.S. 42, 45, 111 S.Ct. 330, 112 L.Ed.2d 343 (1990). See also Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 57-58, 109 S.Ct. 2782, 106 L.Ed.2d 26 (1989). To the extent AMH is asserting disparate treatment because Class 7B, ZAI claims, may have an opportunity for a jury trial, its objection is overruled. AMH's claim is not in Class 7B, which voted to accept the Joint Plan.20 Further, the ZAI claimants settled and the ZAI Trust Distribution Procedures ("ZAI TDP") incorporate the terms of that settlement, including a provision for nonbinding mediation and binding arbitration.21 Moreover, all creditors in this class will receive the same treatment.22

AMH next complains that the solicitation process is tainted because a personal injury bar date has never been set for Class 6 claimants and "any vote by the Class 6 claimants is solely by those claimants who have voluntarily elected to file proofs of claim." Doc. No. 21782 at 17, n.3. Of course, that is not so. The voting procedures did not require a proof of claim as a condition to voting in this class and anyone who met the procedures could vote, not just those who voluntarily filed a proof of claim. Additionally, AMH is a property damage claimant, not a Class 6 claimant, and so has no standing to object on the basis of the treatment of Class 6 claimants, who have voted overwhelmingly to accept the plan. Further, the time to object to solicitation and voting procedures was at the time the motion was pending in 2008. See Doc. No. 19620. We further note that the case AMH cited in its footnote in support of the assertion that the "universe of claimants" has to be defined before there can be a vote, In re Amster Yard Assocs., 214 B.R. 122 (Bankr.S.D.N.Y. 1997), concerned a secured creditor's request for expedited solicitation of votes upon preliminary approval of its disclosure statement. The case is inapplicable.

AMH's assertion that because the Joint Plan provides for 100 percent payment to property damage claims there is no need for a § 524(g) channeling injunction is also without merit. See Doc. No. 21782 at 18-19, AMH Objections to Confirmation. In this regard AMH cites, Barliant, Karcazes & Sherry, "From Free-Fall to Free-For-All: The Rise of Pre-Packaged Asbestos Bankruptcies," 12 Amer. Bankr. Inst. L. Rev. 441, 453 (Winter 2004), for the proposition that "there is no such justification for channeling future claims to a limited trust when a company can afford to pay 100 cents on the dollar to all future claimants as their claims arise." Doc. No. 21782 at 18-19; 12 Amer. Bankr. Inst. L. Rev. at 453. First, the article was referring to personal injury claimants. Second, there is no evidence to suggest that the Debtors can pay 100 percent to all personal injury claimants, present and future. Third, the personal injury claimants have agreed to their treatment under the Joint Plan. Fourth, we address the need for a property damage trust infra at 73.

Next, we address objections of the Libby Claimants who assert that their claims are different from other personal injury claims because the vermiculite mined in Libby, Montana, caused a type of asbestos disease different from asbestos disease in other parts of the country. Accordingly, the Libby Claimants contend that their claims are not substantially similar to other asbestos PI claims in Class 6. See, e.g., Doc. No. 21882, Tr. 5/14/09 at 54-55. In this case, there has never been reliable proof of a disease unique to Libby. The objection is overruled. Libby Claimants also assert that their non-malignant asbestos claims should be in a separate class as they are not substantially similar to others in that the severity and prognosis of pleural disease caused by exposure to "Libby asbestos" is different than elsewhere. Libby Post-Trial Brief at 19-20, Doc. No. 23269. Libby's counsel argued at the plan confirmation hearing that

Tr. 9/10/09 at 28-29, Doc. No. 23262. However, as noted by the court at that hearing:

Id. at 29.

The Libby Claimants offered Exhibit LC-48, Determination and Findings of Public Health Emergency for the Libby Asbestos Site in Lincoln County, Montana, dated June 17, 2009, and published by the Environmental Protection Agency. The EPA study was based in part on a study by Dr. Alan Whitehouse,23 id. at 76, an expert witness for the Libby Claimants. See LC Exhibit 50, EPA Certification of Index of Documents in the Administrative Record for Determination and Findings of Public Health Emergency for the Libby Asbestos Site in Lincoln County, Montana.24 The testimony and evidence at the plan confirmation hearing established that Dr. Whitehouse's study was not reliable and did not follow accepted methodology. Libby Claimants argued that the EPA findings, Exhibits LC 48 and 49, established that the plan treatment of Libby Claims was discriminatory. We rejected that conclusion as the question is whether the Joint Plan treats asbestos claimants in Libby differently from other asbestos claimants and the answer is that there is no difference in treatment. The credible evidence established that residents of Libby were exposed to Grace's asbestos in multiple places (i.e., "exposure roots"), including working in the mine, working in the mill, at home from secondary dust exposure, on the school premises where a running track had been built of rock containing asbestos, etc. The more frequent exposures led to a higher incidence of asbestos diseases in the population when compared to populations not similarly exposed. Thus, proportionately, there may be more claims filed by residents of Libby than by residents of comparably sized population areas without as many exposure sites. Even so, that does not mean that there is different treatment for claimants with the same type of asbestos disease. The Trust Distribution Procedures ("TDP") are uniform regarding treatment, regardless of the geographic area in which the claimant resides. The severity of the diseases has been addressed in the TDP as will be explained. See notes 25-27, infra.

The Libby Claimants assert that:

Doc. No. 21811, Libby Claimants' Objection to First Amended Joint Plan of Reorganization, at 58 (emphasis in original). Libby Claimants base their argument on the premise that the TDP "does not contain medical criteria reflective of reality for Libby Claimants." Id. at 60. However, Libby Claims are asbestos PI claims and, as noted above, their assertions of the existence of a different disease have not been substantiated by credible evidence and have been rejected by this court. The court has reviewed the evidence and the credible expert testimony of Dr. Laura Welch regarding medical criteria that supported the TDP and finds that it is medically reasonable as to all personal injury claimants and demand holders, and that it reflects medically reliable criteria and standards. There is no reason to separately classify each level of personal injury claim to be administered through the Trust. The Trust accounts for these distinctions and the payments differ, depending on the disease level established by the claimants. Libby Claimants have the identical opportunity to establish their diseases as have all other claimants, and the TDP affords all claimants the opportunity to increase their recovery when they prove higher rates of exposure to Grace asbestos than to any other asbestos.25

We agree with the Plan Proponents that "[t]he claim processing mechanisms embodied in the Grace TDP . . . comply with 11 U.S.C. § 524(g), which requires the resolution of asbestos claims and demands on `substantially the same' basis through a trust, and with § 1123(a)(4), which requires that a Chapter 11 plan "provide the same treatment for each claim or interest of a particular class." Plan Proponents' Phase II Post-Trial Brief in Response to Confirmation Objections of the Libby Claimants, Doc. No. 22731 at 9, ¶ 1.17. Furthermore, Plan Proponents explain that

Doc. 22731 at 9-10, ¶ 1.18.26 Regarding the multiple exposure paths, under the Joint Plan asbestos PI claims, whether arising in Libby or elsewhere, are subject to the same criteria for evaluation and payment, as set forth in the Joint Plan and Plan documents.27

Additional objections were filed regarding the Joint Plan's treatment of claims. Various creditors object to their treatment under the Joint Plan, asserting different grounds. Indirect Claimants (Maryland Casualty Company, the State of Montana,28 the Crown, and Burlington Northern Santa Fe Railway ("BNSF")), assert that their indemnity, contribution or subrogation claims resulting from damages paid to an asbestos PI plaintiff are misclassified as Indirect PI Trust Claims.29 Under the Joint Plan, Asbestos PI Claims include Indirect PI Trust Claims, defined as claims for indemnification, contribution, or subrogation for damages paid to a plaintiff in an action seeking recovery for "personal injuries allegedly caused by exposure to asbestos or asbestos-containing products for which the Debtors have liability." Joint Plan, Doc. No. 25647, Exhibit 1, at § 1.1(38). Indirect PI Trust Claims are with respect to the same liabilities as Direct Claims for asbestos personal injuries asserted against Debtors. As such, they are subject to channeling as they derive from "the conduct of, claims against, or demands on the debtor." 11 U.S.C. § 524(g)(4)(A)(ii).

An Indirect Claimant's status depends on its relationship with a Direct Claimant. Section 2.6 of the PI TDP provides that "Indirect PI Trust Claims, if any, shall be subject to the same categorization, evaluation, and payment provisions of this TDP as all other PI Trust Claims." Doc. No. 25657, Exhibit 4 at 10. Section 5.6 of the PI TDP requires that

Doc. No. 25657, Exhibit 4 at 36. Section 5.6 further provides that "To establish a presumptively valid Indirect PI Trust Claim, the Indirect Claimant's aggregate liability for the Direct Claimant's claim must also have been fixed, liquidated and paid fully by the Indirect Claimant by settlement (with an appropriate full release in favor of the PI Trust) or a Final Order. . . ." Id. Thus, the Indirect Claimant's right to recover against the Trust depends on how its claim was established.30 The PI TDP appropriately addresses Indirect PI Trust Claims and the objections are overruled.

Maryland Casualty Company ("MCC") is a Settled Asbestos Insurance Company. As such, asbestos PI claims against MCC arising from, or relating to Debtors, their products and/or their operations will be in Class 6 and channeled to the Asbestos PI Trust. MCC argues that to the extent any claims against it arising from or relating to Debtors' products or operations must be derivative, the initiation or prosecution of any claims against MCC will trigger indemnity rights under the MCC Settlement Agreements. This is true, to the extent that such indemnity claims arise by reason of asbestos claims against Debtors (but not under certain workers' compensation policies).31 Class 6 is the class that addresses these claims. See Doc. No. 23363, Tr. 9/14/09, at 260-63, Testimony of Jay Hughes, Senior Litigation Counsel for W.R. Grace. Claims against MCC found not to be based on asbestos PI claims will not be in Class 6. MCC also contends that the Joint Plan fails to provide fair and equitable treatment to it because, to the extent the channeling injunction will not bar "any and all" claims against it, the Joint Plan thereby misclassifies MCC's claims and otherwise fails to meet the § 1129 standards. MCC is particularly concerned about claims arising from Debtors' vermiculite mining operations in Libby, Montana, as to which it has been alleged to have independent tort liability.32 Under § 524(g), claims against MCC will be channeled to the extent its liability is derivative of Debtors'. To the extent MCC's liability is not derived from Debtors', it will not be channeled. See In re Combustion Engineering, Inc., 391 F.3d 190 (3d Cir.2004).33

MCC asserts that Indirect PI Trust Claims34 are treated differently from Direct PI Trust Claims,35 and because the Code prohibits different treatment based on the timing of claims, the Joint Plan cannot be confirmed. However, MCC misconstrues the Joint Plan. In this Plan, the classification of some claims as direct and others as indirect is not a question of the time the claims arose but of how they arose, and there is no discriminatory treatment. Elihu Inselbuch, an attorney who was a witness for the Plan Proponents and who has had experience as counsel to asbestos creditors' committees, testified that Indirect PI Claimants will

Doc. No. 23363, Tr. 9/14/09 at 44-45. He further testified that there was no difference between the review processes and payment scheme for Direct and Indirect PI Claims and that that process would include the indemnity claims about which MCC is concerned (to the extent they derive from Debtors' asbestos liability). His explanation fits the construct of this Joint Plan and we credit it. The objection is overruled.

Montana and others object because the TDP allegedly will result in adverse disparate treatment36 against Indirect PI Trust Claims (including contribution and indemnification claims) by imposing restrictions or requirements on holders of such claims which are not imposed on other Asbestos PI Claims in Class 6.37 Those additional requirements are, as described by Montana, that (1) the TDP limits the allowable amount of an Indirect PI Trust Claim to the amount paid to the underlying asbestos plaintiff, without allowance for attorneys' fees or other defense costs;38 (2) the TDP requires that for a claimant to assert a presumptively valid Indirect PI Trust Claim, it must obtain a full release from the underlying asbestos creditor; and (3) the TDP provides for a "maximum value" for Asbestos PI Claims which could result in negative disparate treatment to holders of Indirect PI Trust Claims in the event that a judgment is entered against it in an amount in excess of the maximum value for the particular category. Doc. No. 22429 at 31-32. We find that the plain language of the TDP shows that the "additional requirements" are in place so that an Indirect PI Trust Claimant has a procedural mechanism to present its claims. There is no disparate impact.

The TDP provides an appropriate mechanism for Indirect PI Trust Claims to be paid. Indirect PI Trust Claimants may recover no more than the Direct Claimant can recover (maximum value at a certain payment percentage). If the Indirect Claimant does not pay the Direct Claimant the maximum value, the Indirect Claimant can recover only what it paid. Doc. No. 23363, Tr. 9/14/09 at 98. The Trust will treat the claims, all derived from underlying tort liability, the same. There is no discrimination. Furthermore, as explained at note 30 and accompanying text, supra, the TDP provides an alternative for those Indirect PI Claimants who cannot meet the "presumptively valid" standard for Indirect PI Claims (including inability to give a release to the Trust): the claimants can request review of their claims and the TDP provides a mechanism to prove the validity of the Indirect Claim.39 See also Doc. No. 24657, Exhibit 4, PI TDP.

The Crown in Right of Canada ("the Crown") cites to the objection to the Joint Plan filed by Garlock Sealing Technologies, LLC,40 Doc. No. 21795, in support of its argument that the Joint Plan is unconfirmable because the TDP requires that an Indirect Asbestos PI Claimant pay the Direct Claimant first (i.e., before claiming from the Trust), in violation of "state law." Crown Plan Objection, Doc. No. 24144, at 22, ¶¶ 54, 55. Garlock's Plan objection asserts that the TDP violates the Bankruptcy Code because the Trust cannot "allow and settle an Indirect PI Trust Claim before the Indirect Claimant pays the Trust's liability to the Direct Claimant, even though the ability of a co-defendant to obtain adjudication of a joint-tortfeasor's shared liability for a tort claim before paying such claim is a valuable right under applicable state law." Doc. No. 21795 at 3. Garlock's and the Crown's arguments are misdirected.

For the proposition that "the states that recognize a right of contribution acknowledge that the defendant has a right to contribution from the moment the plaintiff sues, and need not wait until after payment," Doc. No. 21795 at 5, Garlock and the Crown refer to Sheetz, Inc. v. Bowles Rice McDavid Graff & Love, PLLC, 209 W.Va. 318, 547 S.E.2d 256, 267 (2001). That case noted the purpose of contribution is to enable all those who contributed to a plaintiffs injuries to be brought into one suit. It does not stand for the proposition that the contribution claim is automatically allowed and payable before adjudication of liability and fault. Paul v. Bier, 758 A.2d 40 (D.C.Ct.App. 2000), noted that "the right to contribution is contingent upon a finding of joint liability," id. at 45, citing Washington v. Washington Hosp. Center, 579 A.2d 177, 187 (D.C.Ct.App.1990), even though the right arises, in inchoate form, at the time the injury occurs. See Ciccone v. Dominick's Finer Foods, Inc., 313 Ill.App.3d 738, 246 Ill.Dec. 784, 731 N.E.2d 312, 318 (2000)(sole issue, however, was whether the contribution cause of action under a state statute arose at the time of injury). Although obligations may arise at the time of the tort, Cole v. Celotex Corp., 599 So.2d 1058, 1072 (La.1992), "the full development of the right to recover contribution ... arises only after payment of an unequally large share of the common obligation." Gemco-Ware, Inc. v. Rongene Mold & Plastics Corp., 234 Va. 54, 360 S.E.2d 342, 344 (1987);41 Minneapolis, St. P. & S.S. M R. Co. v. City of Fond Du Lac, 297 F.2d 583, 585 (7th Cir.1961) ("The right of contribution between joint tortfeasors arises at the time of the concurring negligent acts"). Thus, although the right to contribution may arise as a contingent claim before the third party pays, the claim is not liquidated or matured until payment is made. Nothing in the Joint Plan or Trust documents prohibits or impedes the claimant's ability to liquidate the claim prior to seeking contribution from the Trust. The objection is overruled.

The Crown also objects because it was not part of plan negotiations. See note 5, supra. The underlying facts are these: the Ontario Superior Court of Justice (Commercial List) (the "CCAA Court") appointed counsel to represent interests of Canadian ZAI claimants on February 8, 2006. On September 30, 2008, the CCAA Court, acting pursuant to this Court's Request of Aid and Assistance, heard argument on whether to approve a Settlement with the Canadian ZAI Claimants. At that hearing, the Crown conceded that the CCAA Representative counsel had authority to negotiate on behalf of Canada in respect of Canada's property damage claim, but argued that Representative Counsel did not have authority to "negotiate away" the Crown's Chapter 11 "claims over" against Grace. The Crown asserts, in essence, that the Joint Plan was not proposed in good faith because its claims for contribution and indemnity, in the event it is held liable with respect to personal injury attributable to Grace asbestos, are not Asbestos PI Claims, yet the Joint Plan treats them as Indirect Asbestos PI Claims. This is incorrect as a matter of law. The Joint Plan appropriately places into one class claims based on assertions that personal injury liability derives, directly or indirectly, from Grace's asbestos. As to Debtors, there is no distinction between liability for an injury to the person or to the third party who paid the injured person and is subrogated to the injured person's right to payment.42

Garlock objects, alleging that the TDP discriminates against Indirect PI Trust Claims by abrogating those claimants' state law rights to join Debtors in litigation.43 Garlock has filed its own Chapter 11 in the Western District of North Carolina, Case No. 10-31607. Accordingly, it will not participate in litigation in the tort system. Nonetheless, Garlock contends that its rights and interests are affected in that asbestos PI claimants will try to recover from it the unpaid portions of Debtors' liability when both Garlock's and Debtors' products are implicated. Garlock fails to explain either how it would have liability for Debtors' products or how it would have a right to recover from the Trust in this case with respect to its own products. Further, assuming, arguendo, that Garlock may face more claims for its own conduct or have settled claims against it for more dollars because the pool of companies facing liability for asbestos claims in the tort system is dwindling due to bankruptcy filings, it still has not established party in interest standing in Grace's bankruptcy case.44 Further, the Joint Plan is not unconfirmable, just because other companies have resorted to bankruptcy in an effort to resolve their asbestos debt. Garlock, itself, has chosen that course of action.

The State of Montana, relying on In re M. Frenville Co., Inc., 744 F.2d 332 (3d Cir.1984), which has since been overruled by In re Grossman's, Inc., 607 F.3d 114 (3d Cir.2010), objected, asserting that eventually it may have a nondischargeable claim in the amount of $750 million but contending, further, that it has no claim now. Montana asserted that if and when it has a claim, it will be for contribution or indemnification.45 See Doc. No. 21785, State of Montana Brief in Opposition to Confirmation of the First Amended Joint Plan (Montana Phase II Brief). In Phase II Brief, Montana asserts that any contribution and indemnification claim it may have is not personal injury, property damage or wrongful death and therefore cannot be channeled under § 524(g). Even if its

Doc. No. 21785 at 3.

Montana reassessed its position in light of the change in the law. It now asserts that, under Grossman's, it would first have to be found liable for breach of a duty to warn its citizens of the dangers of Grace asbestos. Doc. No. 23654 at 10. The Court of Appeals' decision in Grossman's does not support Montana's view. Although no judgment for failure to warn has been entered against Montana, it has a contingent claim (assuming, arguendo, a claim based on failure to warn would be determined, in the context of this asbestos bankruptcy case, to be a valid claim against these estates). A contingent claim is a claim for purposes of the Bankruptcy Code. See 11 U.S.C. § 101(5)(A). See also In re First Jersey Securities, Inc., 180 F.3d 504, 510 (3d Cir. 1999) ("The Bankruptcy Code defines a debt as a `liability on a claim.' 11 U.S.C. § 101(12). In turn, the Code defines a claim broadly. A `claim' means: (A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured. 11 U.S.C. § 101(5). Under this broad definition of claim, `all legal obligations of the debtor, no matter how remote or contingent, will be able to be dealt with in the bankruptcy case.' Senate Report at 22, 1978 U.S. Code Cong. & Admin. News 5787, 5808. In addition, as debt is defined as a liability on a claim, it is coextensive with the definition of a claim, and both are construed broadly"). The Bankruptcy Code definition of "claim" is broad enough, and is interpreted as covering, assertions of contingent rights to payment. Thus, to the extent Montana has a contingent asbestos personal injury claim, it is appropriately addressed in Class 6.

Further, the Court of Appeals for the Third Circuit, in determining that actions against the state for failure to warn about the hazards of Grace asbestos were not subject to a § 105(a) injunction issued in this case, noted that "Montana's potential liability [for personal injury arising from Debtors' products or conduct] is based on an independent legal duty that Montana's Supreme Court has decided that the State, as sovereign, owes to its people, namely a governmental duty to warn about hazards at Grace's site." In re W.R. Grace & Co., 591 F.3d 164, 173 (3d Cir.2009). Therefore, it is unlikely that Montana will have an allowed claim against this estate. To the extent it would have such a claim, it would arise out of Debtors' asbestos liability and accordingly be subject to the channeling injunction and properly placed in Class 6, Asbestos PI Claims. Montana's objection is overruled.

One of BNSF's complaints46 is that under the Joint Plan attorneys' fees and expenses it incurs associated with asbestos claims against it based on Debtors' conduct, products or operations will not be paid and therefore it is not being paid the same amount as Direct PI Claimants who are in the same Class (Class 6). However, Class 6 creditors are not awarded attorneys fees or expenses in this Plan. There is nothing in the Bankruptcy Code, and BNSF has pointed to no case law, that indicates that a plan must pay attorneys' fees incurred in connection with the underlying tort claims or the indemnity or contribution claims arising from those torts. BNSF's point seems to be that its claims should not be considered asbestos PI claims because they arise by virtue of various agreements with Grace dating from at least 1950 and based on "applicable state common law for claims asserted against BNSF arising out of Grace's operation of the Libby [Montana] mine together with the transportation of its vermiculite over the BNSF rail network." Objections of BNSF Railway Company to Confirmation of ... Plan, Doc. No. 21769 at 2-3.47 We find that, to the extent any BNSF claim to indemnity or contribution arises from situations that imposed liability on BNSF related to Grace's asbestos, those claims are properly classified in Class 6.

Although BNSF asserts that Direct PI Claimants in Class 6 are being paid 100 percent of their claims while BNSF, as an Indirect PI Claimant, is being paid approximately six percent, the contention is not accurate. BNSF acknowledges that "the direct asbestos claims will be entitled to an award that's the rough justice equivalent of 100 percent of its claim in the prepetition, non-bankruptcy litigation world. It is just the rough justice, it's subject to a cap and subject to a 25 to 35 payment percentage." Tr. 1/4/10 at 269, Doc. 24180. Thus, the entire amount of a Direct PI Claimant's claim is not being paid under the Joint Plan, despite BNSF's contentions, and the PI claimants have agreed to this treatment of payment of a percentage of their claims. BNSF contends that because the Asbestos PI Trust is required to pay only a portion of BNSF's contribution claims, the requirements of the Bankruptcy Code are not met. BNSF is incorrect. The fact that BNSF is paid what the Direct Asbestos PI Claimant would have been paid if the Direct PI Claimant made the demand rather than BNSF shows that claimants in the same class are being treated equally in compliance with the Bankruptcy Code. We note that § 5.6 of the Trust Distribution Procedures ("TDP") addresses Indirect Asbestos PI Claims and provides that if a co-defendant (with Grace) pays an asbestos PI claimant thereby extinguishing the claimant's claim against the Asbestos PI Trust, the co-defendant steps into the claimant's shoes and can pursue the claim against the Trust. In that situation the co-defendant can recover from the Asbestos PI Trust the same amount the claimant could have recovered. See notes 30, 38, supra. Thus, the Indirect Asbestos PI Trust Claims will be paid under the TDP in the same fashion and percentage as what the Direct Asbestos PI Trust Claims are paid.48 The objection is without merit and is overruled.

Best Interests

In light of (1) the nature of the asbestos liabilities at issue in this case, (2) the likelihood that a Chapter 7 liquidation would provide no adequate mechanism for either resolving those liabilities on the merits or realizing the full value of Debtors' estates, (3) the vehicle of the Joint Plan for fixing and paying disputed asbestos liabilities, augmented by the Fresenius Medical Care holdings, Inc. (Adv. No. 02-2211) and Sealed Air Corporation (Adv. No. 02-2210) settlements, and (4) the mandate of § 524(g) to provide for future demand holders, we find that each holder of an impaired claim or equity interest who did not vote to accept the Joint Plan will receive or retain value under the Joint Plan, as of the Effective Date, that is not less than the value that such holder would receive or retain if the Debtors' estates were liquidated under Chapter 7 of the Bankruptcy Code. The Joint Plan therefore satisfies the best interests test of creditors test under § 1129(a)(7)(A)(ii).

The objections, which are all overruled, are as follows: the Libby Claimants contend that the best interests of creditors test is not met because they would receive more in a Chapter 7 than through a reorganization. The credible evidence is to the contrary. In this bankruptcy case, in addition to the current Libby claims that remain to be liquidated, there will be future demands due to the nature of asbestos disease. Those demands are not and cannot be known. See In re Eagle-Picher Industries, Inc., 203 B.R. 256, 275 (S.D.Ohio, 1996) ("it is appropriate to take the value of future Asbestos Personal Injury Claims [demands] into account in determining the Claims that would be required to be paid in a liquidation under Chapter 7 of the Bankruptcy Code"). Without confirmation, the Fresenius and Sealed Air contributions would not be made. That, alone, would remove over $1 billion benefit from this estate.

The Libby Claimants support their argument with the assertion that under Montana law they can pursue Debtors' non-products liability insurers directly.49 However, the cases they cite are automobile accident cases and the liability amount was not at issue. Christensen v. Mountain West Farm Bureau Mut. Ins. Co., 303 Mont. 493, 22 P.3d 624 (2000); Safeco Ins. Co. of Illinois v. Montana Eighth Judicial Dist. Court, 300 Mont. 123, 2 P.3d 834 (2000). Furthermore, Libby Claimants are not named insureds. Thus, before recovering any insurance proceeds, each Libby Claimant would first have to establish Grace's liability to him or her and the amount of each claim.50

Libby Claimants' arguments also do not account for the costs of Chapter 7 administration or for the fact that, if these estates were liquidated, there would be a finite amount available for distribution. In addition, the Libby Claimants are not the only creditors with asbestos personal injury claims against Debtors. Thus, their recovery, as a group, is not the proper gauge of the recovery in a Chapter 7 versus a successful reorganization. See Testimony of Pamela Zilly, Doc. No. 23532, Tr. 9/17/09, at 125-50. Rather, as in any Chapter 7, their claims would be put into a pool of general unsecured creditors to await payment until all the claims in the class were liquidated, all the assets reduced to cash, distribution made, and insurance claims resolved. Because of the nature of asbestos disease and the latency period for some asbestos-related diseases, it is unclear what provisions, if any, might have to be made for future demands, inasmuch as "a prerequisite for recognizing a `claim' is that the claimant's exposure to a product giving rise to the claim occurred prepetition." In re Grossman's, Inc., 607 F.3d at 125. The latency period can be decades and if distribution cannot be made until all claims are liquidated, the entire bankruptcy distribution process could be long-delayed while all claimants and future demand holders proved their claims were liquidated.

The Libby Claimants find fault with the Joint Plan because it does not provide for payment levels consistent with what asbestos PI claimants received in the tort system through verdicts or settlements. There is no requirement in the case law or the Bankruptcy Code that recoveries through reorganization plans equal those in the tort system. The requirement is that Debtors pay at least as much as they would pay in a Chapter 7. 11 U.S.C. § 1129(a)(7)(A)(ii). Here, there has been no evidence supporting the contention that a liquidation of Grace would generate as much for creditors as the Joint Plan provides. This Joint Plan satisfies § 1129(a)(7)(A)(ii).

The Libby Claimants assert that Grace's value in liquidation would be half its value as an operating company.51 We disagree. Libby's view does not account for the testimony of Debtors' feasibility witness, Pamela Zilly, that it is unlikely that Grace could be sold in a Chapter 7 for, as Libby suggests, a billion dollars, due to the nature and amount of its asbestos liabilities. Further, one of the factors Ms. Zilly considered was the benefit to the estates provided by the Fresenius and Sealed Air settlements that are conditioned on confirmation. She also considered the potential liability that would be faced with respect to allegedly fraudulent transfers involved in the Fresenius and Sealed Air transactions if the plan is not confirmed and Debtors are liquidated.52 Doc. No. 23432, Tr. 9/17/09, at 131. David Austern, the FCR, also testified that in a Chapter 7, the contributions to the Trust by Sealed Air and Fresenius, the value of which exceeds $1 billion, would not be made. Id. at 59-60. The Settlement Agreements themselves condition the contributions on plan confirmation and receipt of protection under the injunctions to be issued under the Joint Plan. We credit the testimony of these two witnesses. The objection is overruled.

Bank Lenders argue that creditors' best interests are not served by the Joint Plan because equity interests are retained while the Bank Lenders are not receiving the default rate of interest under their contract. However, Bank Lenders are not entitled to the default rate of interest and, therefore, the absence of that rate in the Joint Plan is not a basis for finding that creditors' best interests are not served. We addressed this issue earlier in this Opinion. See notes 6-11 and accompanying text, supra. Likewise, for the reasons stated above concerning solvency, Bank Lenders' premise that Debtors have conceded solvency because equity retains an interest is without merit. There is nothing in the Bankruptcy Code that provides for "deemed solvency" and Debtors' solvency or lack thereof was never determined. Thus, the objection is overruled.

Classification

Bank Lenders challenged their classification in Class 9 on the ground that there may be other unsecured creditors who do not have provisions in their agreements for default interest. However, as stated, default interest is not in play here and therefore their objection to confirmation on this basis is overruled. The Joint Plan provides that Class 9 creditors will be paid the allowed amount of their claims in full in cash on the Effective Date, with interest.53 Thus, the claims in this Class, including the Bank Lenders' claims, are not impaired.54 11 U.S.C. § 1124; In re Texas Rangers Baseball Partners, 434 B.R. 393 (Bankr.N.D.Tex.2010). The classification objection of the Bank Lenders is overruled.

Montana also argues alternatively that it should be in Class 9 (general unsecured claims) or that there should be a separate class for Indirect Claimants, with BNSF and other similarly situated potential Indirect Claimants. It argues that placing it in Class 6 leaves the State with no assurance of being paid. To the extent that the State has a contribution or indemnity claim that arises from the asbestos liabilities of Debtors, 11 U.S.C. § 524(g)(2)(B)(i)(I), its claim is substantially similar to the Direct Claims and, as an Indirect PI Asbestos Claim, is properly classified in Class 6. 11 U.S.C. § 1122(a). However, if Montana's liability arises from its own conduct (failure to warn), it would not have any claim of indemnification or contribution against Debtors55 and would not be encompassed in any Class. We find that Class 6 is appropriately funded to administer distributions to all claims in that class when they are proven, in accordance with the TDP. See Joint Plan, Doc. No. 24657, Exhibit 1, § 7.2.2 and Asbestos PI Deferred Payment Agreement, Doc. No. 24657, Exhibit 11.

Objections with respect to the Trust Advisory Committee ("TAC")

Garlock and Montana assert that the TAC members have conflicts of interest because they represent asbestos PI claimants as well as serving on the ACC.56 It is alleged that because of this dual role57 they will "often actually advantage or appear to advantage Direct Claimants over Indirect Claimants, thereby generating actual and apparent conflicts of interest." Garlock Plan Objection, Doc. No. 21795, at 11-12. The assertions of conflict of interest and the TAC favoring Direct Claimants over Indirect Claimants are entirely speculative. There is no evidence whatsoever that the TAC members will engage in improper conduct. Furthermore, the Trust has specific parameters and requirements with respect to what and how claims are paid. The Trustees hold fiduciary duties to Trust beneficiaries, including Indirect Claimants.

The testimony of Elihu Inselbuch clarifies the role of the TAC: (1) to facilitate Trust administration by advising the Trustees with respect to how claims are administered and how to deal with them efficiently; (2) to provide a spokesperson for present asbestos claimants if necessary, a role shared by the FCR (as to demand holders), and (3) to keep the asbestos PI law firm constituency nationwide informed of progress. Doc. No. 23363, Tr. 9/14/09, at 35-36. Mr. Inselbuch further testified that the TAC members have no role in the processing and resolution of claims by the Trust but they retain the right to represent individual claimants. Id. at 36-37. In that they have no role in processing or resolution of those claims, we find no conflict of interest.

We agree with Plan Proponents that (1) TACs have been a feature of asbestos PI trusts since the Johns-Manville case, (2) they represent only present claimants, (3) their powers are limited, and (4) their actions are subject to judicial review. Not only is the TAC subject to oversight by the court, the FCR has rights equivalent to those of the TAC members thus balancing the interests of present and future claims. This structure is imposed so that TAC members could not effect an advantage to present claimants over future claimants. Furthermore, withholding of consent to actions by the Trustees by the TAC must be reasonable. The TAC also must provide written explanation to any objections to a course of action recommended by the Trustees and disputes are subject to ADR, with recourse to the Bankruptcy Court.

In performing its duties the TAC represents the interests of all present claimants in the claims liquidation process and its role is to ensure that the interests of all present claimants are not unreasonably impacted by changes to that process. PI claims are subject to payment according to the values set forth in the TDP and the Trustees, not the TAC, determine whether any particular claim satisfies the criteria for payment. There is no evidence that there is a significant or substantial risk that participation in the TAC will materially or adversely affect a lawyer's obligation to his or her clients58 and no client has objected on this basis.

Anti-Assignment Provisions of Insurance Policies

Government Employees Insurance Company ("GEICO"), Republic Insurance Company, and AXA Belgium object to the insurance assignment provisions of the Joint Plan. The bases for the objection are (1) assignment violates anti-assignment provisions of policies and (2) insurers should be permitted to interpose as a defense that the policies had been assigned without its consent. Assignment of rights in policies and of the policies59 themselves was upheld in In re Federal-Mogul Global, Inc., 385 B.R. 560 (Bankr.D.Del.2008), aff'd 402 B.R. 625 (D.Del.2009).60 See also MacArthur Co. v. Johns-Manville Corp., 837 F.2d 89 (2d Cir.1988), cert. denied 488 U.S. 868, 109 S.Ct. 176, 102 L.Ed.2d 145 (1988). Cf. In re Kaiser Aluminum Corp., 343 B.R. 88, 94 (D.Del.2006) (bankruptcy court "had jurisdiction to adjudicate the assignment issues related to the insurance policies as property of the estate"). The objection is overruled.

Insurers argued that the Asbestos PI Trust does not have incentive to fight invalid claims. We disagree with this premise which was not supported by any evidence whatsoever. The Trustees have a fiduciary duty to ensure that only valid claims are paid. No evidence was proffered to suggest, let alone prove, that Trustees will violate that duty. Further, the mere fact that the Trust pays a claim does not bind the non-settling insurer to reimburse the Trust. The insurer retains its rights to object to the claim against it if and when the Trust seeks to recover from the insurer.

Exculpation Clause

AXA Belgium and MCC objected to § 11.9 of the Joint Plan. That section is entitled "Exculpation" and provides:

Doc. No. 24657, Exhibit 1 at 126, § 11.9. AXA Belgium challenges the propriety of § 11.9 as overly broad in that it includes nondebtors such as the Sealed Air and Fresenius Indemnified Parties. Sealed Air and Fresenius are addressed in more detail below in the discussion of objections to the releases provided by the Plan. Suffice it to say at this point that this section of the Joint Plan providing that certain parties will not incur liability for acts or omissions in connection with confirmation, consummation or administration of the Joint Plan unless such conduct constitutes gross negligence or willful misconduct is appropriate with respect to the standard of liability.61 We find this standard to be in accord with the standards for releases set forth in In re PWS Holding Corp., 228 F.3d 224 (3d Cir.2000).62

MCC also challenges § 11.9 under In re Genesis Health Ventures, Inc., 266 B.R. 591 (Bankr.D.Del.2001). Genesis is a release, not an exculpation case. Nonetheless, MCC asserts that Plan Proponents have not met the factors set forth in Genesis Health with respect to those included in § 11.9 Exculpation. Genesis Health required a finding of extraordinary circumstances to approve nonconsensual releases of nonderivative third party claims against nondebtors. Id. at 608. The release in that case, however, applied even to willful misconduct or gross negligence. Furthermore, the release of third parties as to the debtor's lender was not limited to its performance of services to further the reorganization. In the case before us, § 11.9 is, first, an exculpation clause and, second, applies to acts or omissions "in connection with or arising out of the Chapter 11 Cases" and does not excuse, or release, those to which it applies63 from willful misconduct or gross negligence. The extraordinary circumstance requirement of Genesis Health is not applicable to this provision.64

Releases

§ 8.8.7

AMH, AXA Belgium and MCC object to § 8.8.7 of the Joint Plan, contending that the release is too broad. That section provides:

Doc. No. 24657, Joint Plan, Exhibit 1. Some background regarding the Sealed Air and Fresenius settlements is indicated.

Fresenius Medical Care Holdings, Inc., and National Medical Care, Inc., (with certain other nondefendant entities) (the "NMC Defendants," see Adv. No. 02-2211, Doc. No. 19 at 2), and Sealed Air Corporation (along with Cryovac, Inc.)65 were the subject of two fraudulent conveyance adversaries filed by the ACC and the Asbestos PD Committee. Adversary No. 02-2211 was filed by the ACC and the Asbestos PD Committee against the NMC Defendants on March 18, 2002, alleging that in 1996 Grace-Conn transferred National Medical Care, Inc., at the time the adversary was filed known as Fresenius Medical Care Holdings, Inc., one of its most valuable and profitable operating businesses, to its then parent, W.R. Grace & Co., for inadequate consideration in order to place the value of that business beyond creditors' reach. That action and a related action, Adversary No. 02-2210, filed by the same plaintiffs against Sealed Air and Cryovac, also alleging fraudulent transfers, were settled. The Fresenius settlement was approved by order entered June 25, 2003. Adv. No. 02-2211 at Adv. Doc. No. 19. The settlement in the Sealed Air adversary was approved in 2005. Adv. No. 02-2210 at Adv. Doc. No. 751.66

The Fresenius settlement provided that the NMC Defendants67 would make a lump sum payment of $115 million68 in exchange for the benefits of the § 524(g) channeling injunction regarding asbestos-related claims and certain taxes. The settlement also provided that the NMC Defendants would release the Sealed Air Companies for all Grace-Related Claims. Therefore, Debtors would receive the settlement amount of $115 million, reduced by the amount of Indemnified Taxes that the Debtors might otherwise have been able to avoid paying as priority tax claims or as indemnification claims to the NMC Defendants. Another result of the settlement was that the Sealed Air adversary was settled without Debtors having to indemnify the Sealed Air Companies for the contribution and indemnity claims the NMC Defendants would otherwise pursue against those entities in certain litigation referred to as the Sealed Air Indemnity Litigation.69

The Fresenius settlement required, as conditions precedent to payment by the NMC Defendants, that the Joint Plan provide that the NMC Defendants would be released from Grace-Related Claims that could be asserted by the ACC and PD Committee, that the Joint Plan provide that those voting in favor of the Joint Plan or receiving property under it would be deemed to have released each NMC Defendant from all Grace-Related Claims, that injunctions under § 105(a) and § 524(g) of the Bankruptcy Code be issued enjoining actions against any NMC Defendants with respect to any Grace-Related Claim. The Debtors would also hold the NMC Defendants harmless with respect to attorneys' fees and costs should the NMC Defendants have claims filed against them arising from any Grace-Related Claim.

The Joint Plan implements the Fresenius settlement, in relevant part, as follows:

(1) Under § 8.8.7 creditors who receive property under the Joint Plan are deemed to release the Fresenius parties; and (2) under § 8.5, the Successor Claims Injunction, any "GR Claim," i.e., a Grace-Related Claim,70 defined as one that is a nonasbestos Successor Claim71 against a Fresenius Indemnified Party72 arising out of the Fresenius Transaction,73 or a claim for fraudulent conveyance, successor liability, piercing of the corporate veil; a claim arising under Chapter 5 of the Bankruptcy Code; or other similar claim or cause of action, i.e., a claim that predates the alleged fraudulent conveyance, is assumed by the Reorganized Debtors from and after the Effective Date.74 See Doc. No. 25928, Tr. 12/13/10.

The objectors contend that the release in § 8.8.7 does not comport with the dictates of In re Continental Airlines, 203 F.3d 203 (3d Cir.2000), where the court said that "[t]he hallmarks of permissible non-consensual releases [are] fairness, necessity to the reorganization, and specific factual findings to support these conclusions. . . ." Id. at 214. We disagree and find that the settlements are fair and necessary to the reorganization. The net value of the Sealed Air and Fresenius contributions are substantial—over $1 billion. The terms of the Sealed Air and Fresenius settlements provide that without the protections afforded Sealed Air and Fresenius under the Joint Plan their contributions would not be made. By contract,75 these entities have indemnity rights against Debtors that, if exercised, would deplete assets available to pay creditors. See Adv. No. 02-2211, Adv. Doc. No. 19 at 19-21.

AMH cites United Artists Theatre Co. v. Walton, 315 F.3d 217 (3rd Cir.2003), for the proposition that specific factual findings are required to support a third party release, which is to be made only in extraordinary circumstances. First of all, the issue in United Artists was whether the U.S. Trustee's appeal from an order appointing a financial advisor to the debtor, which did not become final until after confirmation, was rendered moot by confirmation of the debtor's plan which contained certain releases. In considering the release provisions, the court in that case noted that

315 F.3d at 227. Here, the District Court made the required findings with respect to the Fresenius Settlement and this court made such findings with respect to the Sealed Air Settlement. See Order Granting Motion to Approve Settlement dated June 25, 2003, Adv. No. 02-2211, Adv. Doc. No. 19; Order Approving, Authorizing and Implementing Settlement Agreement by and Among the Plaintiffs, Sealed Air Corporation and Cryovac, Inc. dated June 27, 2005, Adv. No. 02-2210, Adv. Doc. No. 751. As relevant to confirmation, those findings include the following:

In the Fresenius adversary, Adv. No. 02-2211

Adv. No. 02-2211, Order dated June 25, 2003, Adv. Doc. No. 19.

In the Sealed Air Adversary

Adv. No. 02-2210, Order dated June 27, 2005, Adv. Doc. No. 751.

We also note that the District Court Judge explained that, based on the corporate relationship among Grace, the Sealed Air Companies, and the NMC Defendants, defined on page 2 of his Order, when certain transfers were made, the asbestos committees filed a complaint against the NMC Defendants alleging that the NMC Defendants had successor liability for Debtors' asbestos liabilities and had received fraudulent transfers to avoid that liability. The same allegations were made against the Sealed Air Companies. Because the Sealed Air Companies were members of Debtors' corporate family, the NMC Defendants asserted that the Sealed Air Companies were liable to the NMC Defendants for indemnification and contribution with respect to various claims, including certain tax deficiencies. The settlement involved an agreement to deal with the tax issues, i.e., Debtors would retain control of and responsibility for certain taxes (or to indemnify the NMC Defendants for same), and an agreement by the NMC Defendants to release the Sealed Air Companies for Grace-Related Claims. The District Court concluded that as a result of the agreement, Debtors' estates would realize an economic benefit equal to the amount of the NMC settlement proceeds ($115 million), reduced by certain taxes that Debtors might have been able to avoid paying. The settlement also enabled Debtors to settle the Sealed Air adversary without having to indemnify the Sealed Air Companies for the contribution and indemnity claims that the NMC Defendants would otherwise have pursued against Sealed Air. See Adv. No. 02-2211, Doc. No. 19, Order of June 25, 2003. The resulting benefit to the estates exceeded $1 billion.

We therefore find that the Continental standards have been met—the findings made in the approval of the settlements pertain to confirmation and are incorporated herein by reference as well.76

§ 8.7.1

The Libby Claimants assert that this provision purports to freeze the pre-liminary injunctions entered in this case (e.g., the preliminary injunction in the Chakarian adversary, Adv. No. 01-771, preventing Libby Claimants from pursuing claims against BNSF). Therefore, the Plan allegedly usurps the court's function with respect to preliminary injunctions and is accordingly unconfirmable. We disagree that the court's function is usurped.

Section 8.7.1 provides:

While the Joint Plan was being negotiated BNSF sought a ruling from this court that it could continue to settle claims of Libby Claimants. On the record on July 21, 2008, BNSF made clear that its intent was to continue to settle claims so that the severity of the injuries resulting in the claims would not lead to higher settlement costs later on. The result alleged was that by paying such claims BNSF would be creating indemnity claims against Debtors. This court ruled that if BNSF wanted to settle on its own behalf for its direct liability it was free to do so but it was not permitted to settle claims that would lead to indemnity claims against Debtors unless it would waive any indemnity claims. Doc. No. 19210, Tr. 7/21/08 at 28-36. Therefore, any of the orders imposing injunctions or stays entered during the course of the bankruptcy will remain in effect through the order confirming the Joint Plan and the channeling and other injunctions contained therein to the extent those prior orders (1) enjoin claims against Debtors or claims that are derivative of Debtors' conduct or products and (2) are consistent with the Joint Plan confirmation order. In light of rulings of this court, the Libby Claimants' objection is overruled.

Feasibility

As a condition for confirmation, the proponents of a plan of reorganization must demonstrate that "[c]onfirmation of the plan is not likely to be followed by the liquidation, or the need for further financial reorganization, of the debtor." 11 U.S.C. § 1129(a)(11). The testimony of Debtors' financial expert, Pamela Zilly,77 established that Reorganized Grace will be a financially strong company that will generate steady growth and significant profits for the foreseeable future, and will be able to meet its obligations as they come due. Doc. No. 23531, Tr. of 9/16/09, at 102 et seq., Doc. No. 23532, Tr. of 9/17/09, at 123 et seq., Doc. No. 23619, Tr. of 10/13/09 at 21 et seq. Her testimony established that while in bankruptcy Grace has achieved outstanding performance. Specifically, its sales have approximately doubled between 2000 and 2008, a period that spans most of the time that Grace has spent in bankruptcy and reflects several cycles in the chemical industry. In addition, Grace's Core EBITDA increased by approximately 64 percent between 2003 and 2008, demonstrating the strength of Grace's business and its ability to generate large cash flows. Doc. No. 23619, Tr. 10/13/09 at 66.

Ms. Zilly also testified that Grace has demonstrated that it can obtain exit financing78 that will allow it to pay all obligations that will be due on the Effective Date of the Joint Plan. In July of 2009 during the time the plan confirmation hearing was proceeding, Grace received proposals from lenders for commitment letters. However, to maintain flexibility in its capital structure and in its timing in accessing the market, Grace has decided to negotiate actual exit finance agreements and not to seek commitment letters. At the time of the filing of its post-trial brief, Grace was negotiating exit financing that will allow it to pay all of its obligations due under the Joint Plan upon exit from Chapter 11. Doc. No. 23662 at 12. See also Doc. No. 23619, Tr. 10/13/09 at 68-73 and note 78, supra. Grace estimated that on the plan Effective Date it will have $1.539 billion of liabilities due, which it plans to pay with $589 million of balance sheet cash and $950 million in proceeds from exit financing. Id. at 72.

Ms. Zilly also evaluated Grace's financial projections through 2013 and determined that they are reasonable and conservative in light of Grace's historical performance. Id. at 73. Grace has had a strong financial track record, demonstrated by its growth in sales and Core EBITDA during its Chapter 11 reorganization.79 We credit her testimony.

In light of Grace's past performance, its ability to obtain exit financing, and its reasonable and conservative projections, we find that Reorganized Grace will be able to pay its debts as they come due. Even assuming little or no growth in the years after 2013, Reorganized Grace will be able to make the deferred payments to the Asbestos PI Trust80 and Asbestos PD Trust for ZAI.

AMH81 intimates that Ms. Zilly's feasibility testimony is suspect inasmuch as she has been Debtors' financial advisor since the year the case was commenced and because her firm will be able to seek a $5 million success fee if Debtors successfully emerge from bankruptcy. The fact that the Debtors' financial advisor testifies does not alone make the testimony suspect. A financial advisor like Ms. Zilly, who has worked for Debtors in this capacity for ten years, is in a better position than most to assess a debtor's ability to execute the terms of a plan of reorganization. We have considered and weighed Ms. Zilly's testimony in light of the fact that her firm is permitted to ask for a success fee. Ms. Zilly was retained by Debtors shortly before the bankruptcy was filed, Doc. No. 23531, Tr. 9/16/09 at 111, to review projections, prepare valuation analyses, advising with respect to acquisitions and divestitures in connection with the bankruptcy case, to provide advice with respect to some of the settlements reached in this case, and to work with Debtors regarding exit financing. Id. at 111-12. Thus, she is well positioned to understand and communicate Grace's financial position and to factor its on-going business needs into the future regarding its market share, cash needs, etc. After working with Debtors during their ten years in bankruptcy, the possibility that Ms. Zilly's firm may seek court approval for a $5 million success fee is not a disabling factor to crediting Ms. Zilly's testimony. We find that her testimony is credible.

AMH asserts that the Plan Proponents did not quantify certain liabilities that are to "pass through" the Joint Plan and have not demonstrated that Reorganized Grace will be able to satisfy those liabilities. Debtors prepared a five year projection, as required for plan confirmation, but AMH complains because Ms. Zilly relied on those projections without preparing her own. Ms. Zilly testified that the company was in the best position to develop projections. Doc. No. 23619, Tr. 10/13/09 at 165. We agree. Despite its objection, AMH did not present any additional evidence to challenge the accuracy or reliability of Debtors' projections.82 We find the projections to be reasonable and, together with the other evidence of record, sufficient to establish that the Joint Plan is feasible.

AMH argues that there is little or no evidence that there will be asbestos PD Demands and without PD demands, there is no basis for an Asbestos PD Trust. Debtors' witness, Dr. Denise Martin, testified that, based on historical PD claims against Debtors and what occurred postpetition up to the bar date, there is a substantial likelihood that Asbestos PD Demands wills be made.83 Doc. No. 23619, Tr. 10/13/2009, at 218-24. The postpetition events include the influx of PD claims that were filed right before the bar date (approximately 4,000), the fact that the amount of product that was sold is unknown as is how much product was used per building, the number of buildings that would have been affected, how many of those buildings have removed the product, the degree of owner awareness or concern regarding the presence of the product in their buildings, when awareness might occur and whether, once aware of the presence of the product, there would be concern about it. Thus, depending on these factors and a host of others, it is unknown whether such claims will be filed but she expects PD claims to be filed in the future. Whether they will be allowed is a different question. The fact that Debtors are likely to be subject to future property damage demands is the focus of § 524(g)(2)(B)(ii)(I). See Doc. No. 23619, Tr. 10/13/09, at 222-24.84 The objection is overruled.

Montana contends that the Joint Plan violates § 524(g)(2)(B)(ii)(V) because the PI TDP operates on a first-in-first-out ("FIFO") mechanism, with the result that the first to assert claims could get a higher payout.85 This objection is without merit inasmuch as all Asbestos PI Claims and Demands will be paid according to the procedures established for evaluation and payment, including the medical, causation or exposure criteria and disease values established by the Joint Plan and attendant documents. Moreover, the Trustee is required to reassess the payment percentage to ensure that present claims and future demands are treated in substantially the same manner. 11 U.S.C. § 524(g)(2)(B)(ii)(V). This TDP provides for appropriate periodic review, as required by statute.

Montana cites In re ACandS, Inc., 311 B.R. 36, 42 (Bankr.D.Del.2004), asserting that confirmation was denied, in part, because the court found that the Joint Plan did not comply with § 524(g)(2)(B)(ii)(V) inasmuch as it discriminated between claims based on when they were asserted. However, the plans are not similar. The Plan in ACANDS gave preferred treatment to those claims that were secured by insurance proceeds. The security interests were not based on the claimants' medical condition but on the fact that they were first in line and secured. In the case before us there is no such disparity in payment of asbestos PI claims—whether a claim is first or last, it will be paid on the basis of the criteria (medical, disease level, etc.), not solely on the basis of time. There is also no secured class issue in this case. Therefore, Montana's reliance on ACANDS is misplaced.

Montana also cites In re Congoleum Corp., 362 B.R. 167 (Bankr.D.N.J.2007), with respect to disparity of treatment. In Congoleum, however, the debtor had divided asbestos PI claims into four separate classes which were each paid differently.86 This Plan has no such division.

Absolute Priority Rule

Various parties in interest, the State of Montana, MCC, BNSF, Bank Lenders, and the Crown, objected to confirmation asserting that the Joint Plan violates the absolute priority rule to the extent Asbestos PI Claimants in Class 6 reject the Joint Plan and are impaired. Class 6 voted overwhelmingly87 to accept the Joint Plan.

We note first that Bank Lenders' objection is based on their assertion of entitlement to default interest which has been addressed. Bank Lenders are not in Class 6 and have no standing to object on the basis of treatment of Class 6 claimants.

To the extent that Montana, MCC, BNSF and the Crown have claims, the claims are contingent Indirect Claims. It is impossible to predict whether those contingent claims will ever ripen into claims payable under the terms of the Joint Plan. If that does occur, their Indirect Claims will be treated and paid the same as Direct Claims and, therefore, the Joint Plan is fair and equitable as to these objectors; they are getting the same treatment as all others in the Class.88 This comports with the due process concerns of In re Grossman's, Inc., 607 F.3d 114 (3d Cir.2010).

To the extent Libby Claimants object on the basis that in a Chapter 7 they would get more than under this Plan, there is no evidence supporting that assertion. The effect of a Chapter 7 on payment of claims is addressed earlier in this Memorandum Opinion. In addition, we note that, inter alia, the stock being contributed by Sealed Air, the Warrants issued under the Joint Plan, the funding provision contained in § 7.2.2 of the Plan, and the Asbestos PI Deferred Payment Agreement, Doc. No. 24657, Exhibit 11, provide a vehicle for continuing funding of liabilities.89 Therefore, we find that creditors will get at least as much through the Joint Plan, and, in fact, much more, than in a Chapter 7.90 The Joint Plan is therefore fair and equitable as to each and every creditor of the se estates and in all creditors' best interests. The objections on the basis of the absolute priority rule are overruled.

Asbestos Insurance Entity Injunction

Libby Claimants contend that the Asbestos Insurance Entity Injunction in § 8.4 of the Joint Plan pursuant to § 105(a) protects third parties from claims that cannot be enjoined under § 524(g)(4)(A)(ii). The objection misstates the terms of § 8.4 which is limited to claims based on or arising out of Asbestos PI Claims against Debtors or out of any Asbestos Insurance Rights.91 Therefore, the injunction applies to claims against only those who provide insurance to Debtors or related parties in accordance with § 524(g)(4)(A)(ii)(III) and settled with Debtors. This objection is overruled.

Miscellaneous

Tyco Healthcare Group LP, d/b/a Covidien, complains that the Joint Plan should expressly refer to its stipulation with Debtors regarding a Superfund Site in Walpole, Massachusetts, which was approved by the court in 2008. Tyco wants language added to the Joint Plan that provides that the stipulation is incorporated into the Joint Plan and that its and Debtors' rights are governed by the stipulation notwithstanding any provision of the Joint Plan or order confirming it. The stipulation, approved by this court at Doc. No. 20241 on December 10, 2008, allows Tyco's claim as a general unsecured claim in a specified amount. As such, it will be paid in accordance with its terms. The order approving the stipulation with Tyco resolved all its claims and therefore no additional claims of Tyco remained to be addressed through the Joint Plan. No further language or order is needed. This objection is overruled.

Finally, the Creditors' Committee contends that it cannot be dissolved on the Effective Date of the Joint Plan because the Bank Lenders' claims may still be pending and the committee should be able to take an active role in the litigation that is on appeal regarding the default interest rate. There is no statutory basis for continued existence of the Creditors' Committee post-confirmation for this purpose when the Bank Lenders have their own counsel and the Creditors' Committee's services with respect to its appeal benefit the Bank Lenders but not the other unsecured creditors the Creditors' Committee was appointed to represent. This objection is without merit.92

Conclusion

All objections not addressed herein having been resolved, and the court finding no merit to those addressed herein, the court recommends that the District Court confirm Plan Proponents' Amended Joint Plan. Additional Recommended Findings of Fact and Conclusions of Law and a proposed order will be separately issued.