Lancaster, Pa.—There is finally a light at the end of the tunnel for Armstrong World Industries in terms of actually being on the verge of getting the asbestos gorilla off its back.

On Aug. 15, U.S. District Court Judge Eduardo Robreno confirmed the company’s “Fourth Amended Plan of Reorganization, as Modified,” thus opening the door for the manufacturer to emerge from Chapter 11 and being embattled in the asbestos situation.

One more hurdle remains for Armstrong to actually walk through the door—a formal confirmation order needs to be entered into the district court, which is based in Philadelphia.

The company expects this process to be done shortly, meaning Armstrong should be able to take the shackles off this year, sometime in the fourth quarter, ending a six-year stay in Chapter 11. To resolve its liability for asbestos personal injury claims, Armstrong filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code in Delaware on Dec. 6, 2000.

“I am grateful for the support of our employees, customers, suppliers and other business partners during the reorganization process,” said Michael Lockhart, Armstrong’s chairman and CEO. “Consistent with our purpose in seeking relief under Chapter 11, the plan provides the company with a binding resolution of its asbestos liability.”

According to the reorganization plan, Armstrong will establish a trust with a value of approximately $1.8 billion to satisfy all current and future asbestos personal injury claimants.

The company will fund this trust by making a one-time contribution of a combination of cash, notes and common stock of the reorganized Armstrong. Those assets will be administered by the trust’s trustees and used to pay asbestos claims in accordance with the provisions of the plan. The reorganized Armstrong will have no role or responsibility in the administration of the trust.

In Laymen’s Terms

Put simply, all present and future asbestos personal injury claims must be asserted against the trust, and all asbestos claimants will be permanently enjoined from pursuing their claims against reorganized Armstrong. Meaning, after years of legal battles and countless dollars spent, the company will be free and clear of the asbestos litigation, allowing it to focus on what it does best—manufacturer, market and sell floor coverings, ceilings and cabinets.

The new Armstrong, said Dorothy Brown Smith, vice president of corporate communication, will have an approximate net worth of $3 billion.

In addition, the new company will be in a good position financially as it will emerge from Chapter 11 with less debt than when it entered—and having completely resolved its asbestos liability.

“Going forward,” she explained, “we will be able to focus on growing the business and improve profitability and market share while being the best company we can be. We will have a solid capital structure and strong financial footing.”

Frank Ready, president of Armstrong Floor Products Americas, pointed to the company’s first-half results, confirming Smith’s assertion about the mill’s financial strength. Sales were up more than 5% and the company showed an increase of nearly 10% in margin.

“We have been focused for the last six years developing great products and programs and our focus will not change,” he concluded. “We are seeing the results of all our efforts.”

For more information on the complete reorganization plan, visit www.armstrong.com.