The fate of Columbia, Md.-based W.R. Grace and Company, the corporation whose asbestos-tainted vermiculite mine has already killed hundreds in Libby, Montana and throughout the country, now lies with a U.S. bankruptcy judge in a Delaware courtroom.
According to an article in Forbes, the trial will begin on January 14 and the decision made by the judge will reflect the dollar amount that will be “the core of Grace’s Chapter 11 exit plan.”
The size of that number will determine who maintains control of the company, explains the article. “If the answer from U.S. Bankruptcy Judge Judith Fitzgerald is $700 million or a little more, Grace and its shareholders are safe and on their way out of bankruptcy, with enough value to cover the asbestos damage bill and have something left over for shareholders,” explains the article.
However, if asbestos liabilities are estimated to be $2 to $3 billion or more, Grace will probably become the property of the thousands who have filed asbestos claims against the company and stockholders will be left holding the bag.
Experts believe the true number in regards to asbestos liabilities is about $3.7 billion. “If the asbestos experts are even close to right, then the equity in this company is severely at risk, or it will simply be wiped out,” said Roger Frankel, a lawyer for asbestos creditors.
Investors, however, believe that many of the claims are “phony” and are hoping that these false claims are soon exposed.
Grace is one of dozens of major corporations that were forced to file bankruptcy due to an abundance of asbestos claims. Most have already exited bankruptcy but Grace is the only company to insist on estimation proceedings that resemble a mass tort trial.
“Grace is the last circumstance in which a bankruptcy court has the ability to say which claims are good and which claims are bad,” said asbestos attorney David Bernick.