USG Corporation wins landmark settlement

Client(s) USG Corporation

As bankruptcy and corporate counsel, Jones Day is advising USG Corporation in its landmark settlement of asbestos personal injury liabilities in connection with USG's chapter 11 cases pending since 2001. In connection with that settlement, which USG has incorporated into its plan of reorganization that it expects to present to the bankruptcy court this summer, USG will fund a section 524(g) asbestos personal injury trust with approximately $900 million if asbestos national trust fund legislation passes by the end of the current Congress or $3.95 billion if such legislation does not pass during that Congress. The settlement will resolve approximately 150,000 existing claims, as well as all unknown claims and future demands.

Under the proposed plan of reorganization, USG creditors will be paid in full in cash and shareholders will retain all of their equity interests, which currently have a market value of close to $5.0 billion, a result unprecedented in the history of asbestos chapter 11 cases.

The settlement is being funded, in part, by a $1.8 billion rights offering to existing shareholders backstopped by Warren Buffet's Berkshire Hathaway Inc. The rights offering is the largest of its kind in the history of chapter 11 cases. The backstop commitment of Berkshire Hathaway also is unique both inside and outside of chapter 11 because of its "hell or high water" nature.