U.S. District Court Judge Joseph Farnan, Jr. on October 16 approved a $36.5-million settlement resolving class action lawsuits alleging securities laws violations against the bankrupt Columbia Gas System (CGS).The lawsuits were filed by various security holders against CGS, its independent public accountants, the underwriters of its 1990 stock offering, and certain officers and directors. CGS's portion of the settlement amounts to $16.5 million, with the remainder shared among the insurance carriers of various defendants. CGS's contribution is subject to bankruptcy court approval as part of the reorganization plan. Payments to security holders would be made after CGS emerges from Chapter 11 bankruptcy.
Meanwhile, CGS noted that preliminary ballots indicate that the separate reorganization plans filed by CGS and Columbia Gas Transmission Corp. (CGT) have been accepted by the necessary majorities of each company's creditors and the corporation's shareholders. Also, the Internal Revenue Service has ruled that payments CGT will make to producers under its reorganization plan are deductible in the year in which the payments are made. That favorable ruling was a condition of both companys' reorganization plans.
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