PRINCETON, N.J.—For the first time in a long time, all indications point to Congoleum’s emergence from the Chapter 11 bankruptcy it entered into six- plus years ago. Roger Marcus, president and CEO, told FCNews a week ago he believes the company will be confirmed out of bankruptcy sometime this summer.
Marcus noted Judge Joel Pisano of the U.S. District Court for the District of New Jersey has set a confirmation hearing for the end of May. “As these things go, it could be delayed slightly, but the probability is that the hearing will take place,” he said. “We are now dealing directly with a district judge. This has led me to be more confident [of our emergence] than I’ve been since the day we went into bankruptcy.”
Although the emergence will have little visible impact in day-to-day operations, it certainly will remove a distraction that has been in place for quite some time. “I don’t think from an operational standpoint, or how the company handles itself, there will be a noticeable difference,” Marcus said.
In addition, he noted that the company has continued to invest in itself throughout the bankruptcy, citing research and development, new products, merchandising, etc. “For example, between the fourth quarter of 2009 and second quarter of 2010 we will have introduced three major, new product lines. Each involves substantial investments in sampling, development and inventory. We will have done in those 270 days as much as we have done in any other year.”
The only change, Marcus said, is that instead of working 50 or 60 hours a week, which he did before the company entered bankruptcy, it has been now 75. “Before the bankruptcy I didn’t have to take work home every weekend. Other than for our CFO, there has been minimal burden on any part of the management team.”
When Congoleum emerges, one thing that will change is the ownership structure, which will be comprised predominantly of bondholders and asbestos litigation plaintiffs, with the plaintiffs holding controlling interest. Marcus, however, does not plan on going anywhere. “I’ve already made a commitment, and part of the exit plan is based on me staying with the company.” He added while the board of directors will change, “operationally we will continue on the course for which we are currently chartered.”
Long time coming
Congoleum never thought it would take this long to emerge. When it filed for bankruptcy protection on Dec. 31, 2003, the company initially believed it would emerge with- in months. But the landscape of asbestos prepackaged bankruptcies changed within the U.S court system, and Congoleum found itself caught in the middle.
The coming out party couldn’t happen soon enough. While it has been business as usual for the last six years, the bankruptcy proceedings have been a financial burden. “We’ve spent over $100 million in legal fees. To think the company has survived in the past few years paying those legal fees on top of the tremendous economic burden speaks volumes about the resolve of the people within Congoleum, the relationships with our key customers and distributors, and the wonderful support we’ve had from our suppliers. Whoever came up with the phrase “nice guys finish last” [has no concept of reality] when one considers this situation.”