Robins Agrees to Strong Guidance During Chapter 11

RICHMOND, Va. —  A. H. Robins Co. on Thursday agreed to a federal motion that a director with unusual authority be named to guide the company through bankruptcy proceedings sparked by Dalkon Shield damage claims.

William C. White, the federal trustee overseeing the pharmaceutical company’s efforts to reorganize, is to name the director.

Robins said it is gratified that an “innovative approach on addressing the concerns expressed in the U.S. government motion for a trustee has been developed.”

“This approach, if approved by the court, will return the focus of the company’s Chapter 11 case to the development of a plan of reorganization fair to all creditors, claimants and shareholders,” spokesman Roscoe E. Puckett Jr. said.

Approval Sought

Assistant U.S. Atty. S. David Schiller has asked U.S. District Judge Robert R. Mehrige Jr. to approve appointment of the trustee and hold in contempt any Robins officials found responsible for making $7 million in various unauthorized payments after the company filed for protection under Chapter 11 of the U.S. Bankruptcy Code on Aug. 21.

He said the trustee is needed to direct Robins operations since the company clearly “was out of control.”

After it was revealed that Robins had violated court instructions by making the payments, the company fired the San Francisco law firm that specialized in bankruptcy proceedings.

That firm, Murphy, Weir & Butler, has been replaced by the New York law firm of Skadden, Arps, Slate, Meagher & Flow.

In papers filed Thursday in U.S. Bankruptcy Court, Schiller said that appointment of the director “affords all necessary relief sought by the trustee and contempt motion at this time.”

Early consideration by Mehrige of the proposed order appointing the director “will avoid unnecessary delay in this case and will operate to the benefit of all interested parties.”

The director would be assigned to put together a reorganization plan that will involve payment to the company’s creditors, including the women who have legitimate claims from their use of the Dalkon Shield intrauterine device.

He also would guide Robins’ efforts to recover all property transferred by the company, including the $7 million, of which $1.7 million was deferred bonuses and other compensation to top members of the company’s management.