Clapper, Patti, Schweizer and Mason

W.R. Grace & Co. is a specialty chemicals manufacturer.  Many of its products contained asbestos.  Grace filed for Chapter 11 bankruptcy protection on April 2, 2001, in the face of mounting asbestos-related claims. Asbestos lawyers had filed many claims on behalf of their clients for diseases such as mesothelioma and lung cancer. Grace must set up a fund to pay the claims in order to emerge from bankruptcy protection.

Grace filed a reorganization plan in January 2005 along with the Official Committee of General Unsecured Creditors and the Official Committee of Equity Holders as co-proponents. That plan caps asbestos liabilities at $1.6 billion, to be paid for through a trust. That plan was opposed by several parties.  As a result, in July of 2007 Judge Judith K. Fitzgerald, the U.S. bankruptcy judge presiding over the case ended Grace's exclusive control over its reorganization. The decision allows creditors to file competing plans.

Now, committees representing current and future asbestos-related claimants have proposed a reorganization plan that estimates Grace’s asbestos liability to be "at least" $4 billion. The Official Committee of Asbestos Personal Injury Claimants and the Future Personal Injury Claimants filed a joint plan in the U.S. Bankruptcy Court in Wilmington, Del. This plan proposes that the company set aside cash and equity to settle claims of at least $4 billion.
 
The two sides have yet to agree how big a fund needs to be to cover Grace’s liabilities. An expert hired by the creditors earlier this year estimated Grace's liability to be between $4.7 billion and $6.2 billion.  An expert hired by the Grace estimated liabilities at between $385 million and $1.3 billion. Ultimately, the court - not Grace - will decide which reorganization plan to implement.

Jack K Clapper
Clapper, Patti, Schweizer & Mason
415-332-4262
800-440-4262