Free Remark - District Court of Delaware - Delaware

Case 1 :05-cv-00217-JPF Document 3-6 Filed 04/13/2005 Page 1 of 3
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
IN RE: : Chapter 11
OWENS CORNING, et al., Case N0. 00-3837 (JKF)
Debtors. (J ointly Administered)
Hearing Date: 2/28/05 at 10:00 a.m.
Related to Docket N0. 14184
DEBTORS’ RESPONSE TO CSFB’S MOTION
FOR DETERMINATION OF CORE OR NON—CORE STATUS
Owens Corning and its subsidiary debtors and debtors-in-possession (collectively, the
"Debtors"), by and through their undersigned attorneys, hereby respond to CSFB’s Motion For
Determination of Core or Non—Core Status Pursuant to Local Rule 5011-l (the "Core/Non-Core
M0tion") as follows:
Background
On January 12, 2005, CF SB filed a motion to withdraw the reference of its Motion for
Order Authorizing CSFB to Commence an Adversary Proceeding on Behalf of Debtors’ Estates
Against Certain Physicians Who Falsely Reported X—Ray Readings as Positive for Asbestos-
Related Impairment (the "Motion to Commence an Adversary Proceeding”). By the Core/Non-
Core Motion, CFSB now seeks a determination from this Court that the Motion to Commence an
Adversary Proceeding "involves both "core" and "non-core" issues." (CSFB Brief at 1). If
granted, such an order would implicate this Couit’s right to issue a final order as well as the
standard of review to be employed by the District Court. See Centennial &Allcheny Univ.
Hospitals-Ettst Tenet Healthsystern Phila., Inc. v. Nat'l Union of Hosp. & Health Care
Employees., (ln re Allegheny Health, Educ. and Research Foundation), 383 F.3d 169, 175 (3d
Cir. 2004).

Case 1:05-cv—00217-JPF Document 3-6 Filed 04/13/2005 Page 2 of 3
Response
While the Debtors believe that either this or the District Court is well—qualitied to decide
the Motion to Commence an Adversary Proceeding, CFSB has cited no cases and no support for
the proposition that the existence of state law claims in a proposed underlying action transforms
a determination of derivative standing into a mixed core/non-core proceeding. Instead, CSFB is
bootstrapping what may come later — a determination of which court should adjudicate the action
they seek to bring — with what is currently before this Court: a preliminary determination on
derivative standing.
It is clear that this preliminary determination — whether or not to grant derivative standing
to sue in the Debtors’ stead -— is a core proceeding under 28 U.S.C. § 157, regardless of whether
the potential underlying action implicates state law. In re G-I Holdings, Inc. 313 B.R. 612, 621
(Bankr. DN.] . 2004) (a motion for derivative standing involving underlying state law claims is a
core proceeding). Indeed, bankruptcy courts routinely issue final orders —— something they cannot
do unless the proceeding is core — on motions for derivative standing involving underlying state
law claims. See, eg., Infinity Investors Ltd. IK Donald Kingsborough (In re Yes ! Entertainment
Corp.), 316 B.R. 141 (D. Del. 2004) (holding that the bankruptcy court could have granted
creditor the approval required for derivative standing, where the underlying action included a
state law claim for breach of fiduciary duty) 1; In re G-I Holdings, Inc., 313 B.R. 612 (granting
creditors’ committee derivative standing to file a suit involving a state law fraud claim); In re
iPCS, Inc., 297 B.R. 283 (Banlcr. N.D. Ga. 2003) (granting creditors’ committee derivative
1 CSFB cites In re Yes! Entertainment Corp., for the test for derivative standing, but notably included only the
first two requirements set forth in the decisionr unjustifiable refusal to bring the claim and that the claim is
colorable. The decision set forth a third requirement not mentioned by CSFB -- "the permission of the
bankntptcy court to initiate the action." In re Yes! Entertainment Corp., 316 BR at 145.
2

Case 1:05-cv—00217-JPF Document 3-6 Filed 04/13/2005 Page 3 of 3
standing to file a suit involving state law claims for mismanagement, waste and breach of
contract).2
CONCLUSION
For the reasons stated above, the Debtors respectfully request that the Court determine
that CSFB’s Motion to Commence an Adversary Proceeding is a core proceeding, and grant such
further relief as the Court deems just and proper.
Dated: February 11, 2005 Respectfully submitted,
SAUL WING LLP
By;
No L. Pernick (No. 2290)
J. Kate tickles (No. 2917)
222 Delaware Avenue
P.O. Box 1266
Wilmington, Delaware 19899-1266
(302) 421-6800
Counsel to Owens Corning, et al.
-and..
DEBEVOISE & PLIMPTON LLP
Roger E. Podesta
Mary Beth Hogan
919 Third Avenue
New York, New York 10022
(212) 909-6000
Special Counsel to Owens Corning, et al.
2 While Bankruptcy Courts can issue fmal orders in non-core proceedings if the parties have consented, there is
no indication in these cases that the parties consented to the Bankruptcy Cou1t’s jurisdiction.
3