Claimants Offer W.R. Grace New Proposal

Committees representing current and future asbestos-related claimants have proposed a reorganization plan for W.R. Grace & Co. that estimates the Columbia, Maryland-based company’s asbestos liabilities to be “at least” $4 billion, notes an article in the Baltimore Sun.

Legal experts say this is most likely the first of many proposed plans that will be presented to the company now that the courts have ended Grace’s exclusive control over its post-bankruptcy reorganization plan. Once all plans are presented, the courts will decide which one to implement.

The article in the Sun notes that the decision by the courts to end the asbestos mining company’s control over their future “opens the possibility that the creditors could reach an agreement with a third party to buy the company and settle its claims.” There has been speculation that Dow Chemical Co. may consider purchasing the embattled W.R. Grace, whose asbestos-tainted vermiculite mine in Libby, Montana has sickened thousands and already caused hundreds of deaths.

The newly-presented plan, which proposes the company set aside cash and equity to settle claims of at least $4 billion, differs greatly from the plan filed by W.R. Grace in 2005, the article points out. That plan caps asbestos liabilities at $1.6 billion and proposes that claimants be paid through a trust fund.

“Setting up a fund to pay claims is a hurdle Grace must clear to emerge from bankruptcy protection,” the article notes. “But the two sides have been unable to agree how big that fund should be.”

Estimates seem to depend on which side is studying the issue. Earlier this year, an expert hired by Grace’s many creditors estimated the company’s liability to be between $4.7 billion and $6.2 billion. Another hired by W.R. Grace gave a much lower estimate of between $385 million and $1.3 billion.

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