More than twelve years after filing for bankruptcy protection, specialty-chemical firm W.R. Grace formally emerged from Chapter 11 on February 3. When the company sought protection in 2001, there were more than 129,000 personal-injury lawsuits outstanding from individuals who became sick as a result of work-related asbestos exposure. Approximately 120 of the lawsuits were filed by victims of the famously asbestos-plagued Libby, Montana, where Grace once ran a mine and processing mill.
On February 5, as part of a bankruptcy reorganization plan, the United States Department of Justice (DOJ) received approximately $54 million from Grace to reimburse the Environmental Protection Agency for liability claims in 21 states. In addition, two trusts worth $4 billion have been established to compensate victims, with funding coming from cash, warrants to buy Grace common stock, deferred-payment obligations, insurance proceeds, and payments from companies Grace owned and sold.
During the bankruptcy period, Grace continued to grow, with revenue growing from $1.6 billion in 2000 to $3.2 billion in 2010. “The emergence from Chapter 11 for the company does not represent a new direction,” said Rich Badmington, the company’s vice president of global communications. “We’ll continue to grow the business as we have over the last twelve years.”
Caplin & Drysdale attorney Peter Van N. Lockwood, who represented the committee of personal-injury claimants, acknowledged that neither side was entirely pleased with the outcome. “Probably neither side is totally satisfied, but that’s what compromises are for,” he said. “I can’t say we got everything we wanted or thought we were entitled to, but on the other hand, I can say W.R. Grace and its shareholders felt like we got a lot more than we were entitled to.”
Asbestos exposure is the primary cause of mesothelioma, and although widespread asbestos use has been banned since the 1970s, approximately 3,000 mesothelioma diagnoses are still made each year.