Prudential-Bache Securities Inc. has been ordered to appear in court on Friday to explain why it didn't seek court permission before submitting a plan to bring A.H. Robins Co. out of bankruptcy.
The order, which was sought by Robins, also applies to the Wall Street brokerage firm's counsel, Hartke & Hartke of Falls Church, and to former senator Vance Hartke (D-Ind.) and his son, Wayne.
Prudential-Bache and the Hartkes filed the plan, which had been outlined earlier this year to some participants in the bankruptcy, as a friend-of-the-court brief in U.S. Bankruptcy Court in Richmond last Wednesday.
Robins sought the show-cause order Thursday, and U.S. District Judge Robert R. Mehrige Jr., who is presiding in the 23-month-old Chapter 11 case, signed it the same day.
The Bankruptcy Code provides a 120-day "exclusivity period" in which only the debtor -- Robins, in this case -- is permitted to file a reorganization plan. Robins won several extensions of its deadline. The last deadline, , approved by Mehrige in February, was indefinite -- "until further order of the court," Mehrige said.
Prudential-Bache had no immediate comment. The Hartkes did not return a reporter's phone call.
In the brief, Prudential-Bache said that its plan would preserve Robins' independence while making $2 billion in cash available in a matter of months to thousands of women who show that they were harmed by the Dalkon Shield. The shield was the Robins intrauterine contraceptive device used by more than 3 million women worldwide in the early 1970s.
In addition, the brief said, an estimated additional $500 million would be made available later to Dalkon Shield claimants.
Prudential-Bache "would underwrite the whole plan," under which Robins "would be recapitalized, not thrown into deep debt," the brief said.
Under a merger plan approved by Robins' directors early Friday, the 121-year-old company would become a division of Rorer Group Inc., and $1.75 billion would be put into two trust funds for Dalkon Shield claimants. The trusts would be funded mainly with a letter of credit or a loan from Rorer's bankers.
A $1.75 billion cap for claimants was also part of earlier proposals by American Home Products Corp., Rorer, and Robins itself.
Before Rorer made its second bid, which would pay $200 million more to Robins shareholders than earlier offers, the Bankruptcy Court had set July 21 for a hearing on the reorganization plan that Robins proposed on May 1. But the directors' approval of the new Rorer offer is expected to trigger a dispute over whether Robins can amend the plan that was to have been the subject of the hearing.
Prudential-Bache said in the brief that it had made the filing "in the interest of justice ... . There is no reason for ignoring a plan that provides the highest offer to the victims of the Dalkon Shield."
The brief said that Robins would "continue under the present management" and "operate in its usual manner without the Dalkon Shield claims on its back."
Also, Prudential-Bache's brief said, there would be "very little, if any, permanent economic dilution" of the stock, of which Chairman E. Claiborne Robins, President E. Claiborne Robins Jr., and their family own 42 percent