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OFFICIAL COMMITTEE OF ASBESTOS CLAIMANTS OF G-I v. HEYMAN

March 19, 2004.

OFFICIAL COMMITTEE OF ASBESTOS CLAIMANTS OF G-I HOLDING, INC., Plaintiff, -against- SAMUEL J. HEYMAN, Defendant


The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge

OPINION

Defendant Samuel Heyman ("Heyman") has moved pursuant to 28 U.S.C. § 1412, or in the alternative, pursuant to 28 U.S.C. § 1404(a), to transfer this action to the District of New Jersey. For the reasons set forth below, the motion is denied.

 Parties

  Plaintiff, the Official Committee of Asbestos Claimants of G-I Holdings, Inc. (the "Committee"), is a creditors committee appointed by the United States Trustee pursuant to 11 U.S.C. § 1102 (a). The Committee is made up of persons who assert claims against G-I, as successor to GAF Corporation ("GAF"), by reason of personal injuries or wrongful death caused by asbestos-containing products.

  Heyman is the former chairman and chief executive officer of GAF and is a citizen of the State of New York.

 Prior Proceedings and Background

  The facts discussed herein are discussed in greater detail in Official Committee of Asbestos Claimants of G-I Holdings, Inc. v. Heyman, 01 Civ. 8539, 2003 WL 22790916 (S.D.N.Y. Nov. 25, 2003) ("Heyman II") and Official Committee of Asbestos Claimants of Page 2 G-I Holdings, Inc. v. Heyman, 277 B.R. 20 (S.D.N.Y. 2002) ("Heyman I"), familiarity with which is presumed.

  This action, brought pursuant to 11 U.S.C. § 544(b) and 550(a) of the Bankruptcy Code, arises out of the Chapter 11 reorganization proceeding of G-I Holdings, Inc. ("G-I") currently pending in the District of New Jersey, seeks to set aside an allegedly fraudulent transfer and to recover for breaches of fiduciary duty. G-I filed for bankruptcy on January 5, 2001, as a result of a flood of personal injury and wrongful death claims.

  As of December 31, 1996, GAF was the top-tier holding company in a corporate group that contained two principal operating businesses: (1) ISP, a manufacturer of specialty chemicals and mineral products; and (2) Building Materials Corporation of America ("BMCA"), a manufacturer of roofing and building products. GAF was a privately held company at the time. It later merged with G-I.

  The transactions challenged in this action took place in January 1997, when GAF owned 100% of a company named ISP Holding, Inc. ("ISPH"), which in turn owned approximately 83.5% of the ISP stock. The remaining ISP stock was publicly held.

  With effect as of January 1, 1997, GAF distributed to GAF'S shareholders, for no consideration, 100% of the capital stock of ISPH (the transaction will be referred to as the "ISP Spin-off"). Page 3 Heyman received approximately 96% of the shares, and the minority shareholders of GAF received the remaining 4%. At ISP's closing price on December 31, 1996, the stock that GAF disposed of in the transfer was worth about $1 billion, $988,391,250 of which Heyman received directly or indirectly.

  Before G-I filed for bankruptcy, individual creditors filed three different fraudulent transfer suits against Heyman in New York based on the spin-off of ISP. Two of these, Nettles v. Heyman, No. 00 Civ. 0035, filed January 3, 2000 and Stewart v. Heyman, filed on December 26, 2000, were filed by asbestos claimants in the Southern District of New York.*fn1 The third predecessor action, was filed in the Supreme Court for the County of New York on September 18, 2000 by the Center for Claims Resolution, Inc. ("CCR"), a consortium of asbestos defendants of which GAF was a former member. CCR v. Heyman, Index No. 604002/2000 (Sup.Ct.N.Y. County).

  Heyman moved to dismiss the Committee's complaint on December 13, 2001. This Court denied the motion on April 8, 2002. See Heyman I. The Legal Representative of Present and Future Holders of Asbestos-Related Demands (the "Legal Representative") Page 4 was granted leave to intervene pursuant to Fed.R.Civ.P. 24 on November 25, 2003. See Heyman II.

  The Committee is simultaneously litigating another proceeding pending before the Honorable William G. Bassler in the District of New Jersey that also grows out of the G-I bankruptcy. In the action, styled G-I Holdings, Inc. v. Bennett, Civ. No. 02-2626 (WGB) (D. N.J.) (filed Feb. 7, 2001) (the "BMCA Action"), G-I seeks a declaratory judgment that BMCA, its indirect subsidiary and sole operating company, has no liability for asbestos claims under any theory of successor liability or alter ego. Joined as ...


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