By Rick Archer

Law360 (April 7, 2020, 3:46 PM EDT) -- The Delaware bankruptcy judge overseeing the Chapter 11 case of an Owens-Illinois spinoff on Tuesday moved a hearing on the appointment of an examiner and a representative for asbestos claimants back a month to buy time to work around COVID-19 lockdowns.

U.S. Bankruptcy Judge Laurie Selber Silverstein granted Paddock Enterprises LLC's request to push the hearing from April 17 to next month and rejected an argument from the U.S. Trustee's Office that the examiner motion is too urgent for delay and should be heard separately on the original date.

"My understanding is the issues are intertwined between the motions," she said.

Paddock filed for bankruptcy protection in January to deal with its legacy asbestos liability, stemming from pipes Owens-Illinois made in the 1940s and 1950s, after having paid out more than $5 billion over the decades.

The trustee has asked for the appointment of an examiner to investigate Owens-Illinois Inc.'s decision to transfer assets from and asbestos liabilities to Paddock before putting the subsidiary into Chapter 11, and the exact extent of Paddock's asbestos exposure.

The trustee has also argued Paddock jumped the gun in seeking to appoint James L. Patton Jr. as the representative for future asbestos claimants and has put forth his own candidates for the position.

A hearing on the two issues and the retention of other bankruptcy professionals had been scheduled for April 17, but Paddock, with the support of the asbestos claimants committee, had asked Judge Silverstein to push the hearing back to May.

At Tuesday's hearing, Paddock counsel Jeff Bjork said it appeared it would be an all-day hearing with at least six witnesses who are currently stuck at home in six different states. He said the month's delay would allow time either for the COVID-19 restrictions to lift sufficiently to allow a live hearing or for the refinement of remote hearing technology and procedures.

"This is a very big hearing and we should put ourselves in the best position," Robert Brady, a counsel for Patton, said.

The trustee's counsel, Richard Schepacarter, said he did not object to moving the hearing on the asbestos representative motions to May, but that the appointment of an examiner was a time sensitive issue and that the hearing should be held remotely in April.

"The examiner appointment process would have to begin immediately," he said.

Bjork, however, argued the issues are too interconnected for that to work, arguing the trustee's asbestos representative motions made reference to the examiner motion.

"We need to have a single hearing where we can put on the entirely of the case," he said.

Judge Silverstein ultimately decided to hear all the motions on May 20, saying she was basing her decision on her experience with the three video hearings she has had so far.

"They work. They are not ideal, and they take some planning," she said.

Paddock is represented by John H. Knight, Michael J. Merchant, Brendan J. Schlauch and Sarah E. Silveira of Richards Layton & Finger PA and Jeff Bjork, Chris Craige, Helena Georgia Tseregounis, Lisa K. Lansio and Amy C. Quartarolo of Latham & Watkins LLP.

The asbestos claimants committee is represented by Kevin C. Maclay and Todd E. Phillips of Caplin & Drysdale and Marla R. Eskin, Mark T. Hurford and Kathleen Campbell Davis of Campbell & Levine.

Patton is represented by Robert S. Brady, Edwin J. Harron, Sharon M. Zieg and Sara Beth A.R. Kohut of Young Conaway Stargatt & Taylor LLP.

The Office of the U.S. Trustee is represented by Richard L. Schepacarter.

The case is In re: Paddock Enterprises LLC, case number 20-bk-10028, in the U.S. Bankruptcy Court for the District of Delaware.

--Additional reporting by Vince Sullivan. Editing by Alyssa Miller.

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