One of the longest records of bankruptcy in the history of the United States coming to an end after 12 years.
The dust asbestos-laced vermiculite mine owned by WR Grace & Co. contaminated properties and injured thousands of people in and around Libby, Montana from 1963 to 190, when the factory closed. After generating billions of asbestos liabilities and more than 65,000 lawsuits involving nearly 130 000 asylum, Grace asked for Chapter 11 bankruptcy in 01.
As part of its reorganization plan, chemical company based in Maryland has agreed to fund two bankruptcy trusts to compensate owners and asbestos victims.
thereNearly two years, a federal bankruptcy court approved the bankruptcy reorganization plan. But the bankruptcy proceedings dragged while the company attempted to resolve appeals filed by some of its creditors before bankruptcy. In December, WR Grace announced an agreement for $ 129 million to settle the last remaining call.
If a federal court approves the settlement, Grace could emerge from bankruptcy before February.
Company prospered during the bankruptcy
Like many companies with huge asbestos liabilities, Grace took advantage of a special provision of the Bankruptcy Code of the United States that allows some asbestos defendants continued to seek protection against further litigation. Under this provision, the federal court can "press pause" and halt proceedings if a company agrees to fund a trust to compensate victims of the current and future asbestos.
Asbestos Victims advocates welcomed the trust system as a way to ensure that future victims can receive at least a corporate compensation that would otherwise have folded before being able to compensate their victims. But asbestos victims are not the only ones who responded favorably to the asbestos trust system. Companies like Grace were able to thrive while going through bankruptcy reorganization.
According to Reuters, Grace was able to "suspend debt repayments, survive two recessions and take advantage of [increased] demand for its fine powder catalysts that help refiners convert crude oil .... "during the reorganization process.
Scott Baena, a lawyer who helped negotiate settlements with grace on behalf of Libby owners, says that "the bankruptcy was a great place [for Grace] to hide. "Over the three years prior to March 2013, with shares more than tripled. The company has also obtained new companies, including a $ 500 million contract for the acquisition of Dow Chemical unit in December 2013.
But companies undergoing bankruptcy reorganization must meet other parties in addition to asbestos victims. They must also reach agreements to settle debts before bankruptcy with creditors. These creditors input throughout the reorganization process. If they are not satisfied with the plan approved by the court, they may be able to appeal the court decision.
If Grace, the final appeal arguing its bankruptcy exit involves a group of banks that claim the company owes $ 185 million of pre-bankruptcy debt. According to a deposition by Grace with the Securities and Exchange Commission in the US he agreed to pay the lenders of $ 129 million in addition to $ 971 million it has already agreed to pay as part of the reorganization plan. If the court agrees with the settlement, lenders have agreed to withdraw their appeal, clearing the way for Grace to exit bankruptcy.
What the output means for victims
The process used to Grace vermiculite mine for use in the released insulation asbestos fibers through Libby and regions . The plaintiffs accused the company not only failing to properly contain asbestos but also hiding the dangers. They also argued that officials of the State of Montana failed to monitor adequately the mine safety and warn residents about the risks of asbestos.
Thanks closed the mine in 190. But thousands of people had been injured and the owners have had to deal with contaminated properties and values down real estate.
Some victims of the Libby asbestos have already been awarded a settlement of $ 4 billion for the pre-bankruptcy proceedings against grace. In 2011, more than 1,300 plaintiffs reached a settlement of $ 43 million with the state of Montana. The federal government has set up programs to clean up the contamination of asbestos in the region and to ensure continuous medical monitoring for residents.
But hundreds of people died of exposure to asbestos in and around Libby and many more are expected to develop related injuries serious asbestos, such as mesothelioma, during decades to come. As part of the bankruptcy reorganization plan, Grace agreed to fund an asbestos bankruptcy trust that will compensate future plaintiffs injuries. The plan also establishes a trust that will compensate the claims of owners who have had to deal with damage caused by the contamination of asbestos from the values of the mine and the decline of the property.
Grace and its main creditor, head of Halcyon Asset Management, is optimistic about the settlement. According to a report by the Financial Times, "WR Graceto capacity advantages emerge from bankruptcy everyone with an interest in the future of society." Insofar bankruptcy has ensured that future victims will receive at least some compensation for their injuries, victims may also see the reorganization of favorable bankruptcy.
However, the Financial Times also reported that the company believes it could have faced a "significant number" of additional claims over the last 12 years, if the court had not stayed dispute.
