Financial Reorganization
On April 2, 2001, W. R. Grace & Co. voluntarily filed for Chapter 11 reorganization
in response to a sharply increasing number of asbestos claims. In 2000, asbestos-related
claims against the company increased 81 percent, with an even higher rate of increase
during the first three months of 2001.
Though Grace was financially strong at the time it filed under Chapter 11 – and remains
so today – Grace believes that a federal court-supervised reorganization offers
the best forum available for achieving a fair resolution of its asbestos-related
claims.
Over the past five years, Grace has remained a financially strong enterprise. The
company has continued to invest in its business and make small, easily integrated
acquisitions with the support of the creditors committees and the Bankruptcy Court.
Grace's asbestos liabilities largely stem from commercially purchased chrysotile
asbestos that was added to some of its fire protection products. When Grace filed
under Chapter 11, the company faced in excess of 129,000 personal injury claims.
Of those, only 120 stemmed from the company's operations in Libby, Montana.
On January 13, 2005, Grace filed an amended plan of reorganization with the Bankruptcy
Court that proposed the establishment of a trust under Section 524(g) of the Bankruptcy
Code from which to pay all allowed pending and future asbestos-related claims. The
trust will be funded with cash and stock from Grace and third parties. The plan
is supported by committees representing general unsecured creditors and equity holders,
but is not supported by committees representing asbestos personal injury claimants
and asbestos property damage claimants.
Grace has requested the Bankruptcy Court conduct an estimation hearing to determine
the amount that would be necessary to satisfy the estimated liability for all classes
of asbestos claimants as well as trust administration costs and expenses. Estimation
hearings are expected to take place in 2007.
Additional detail is provided in the company's most recent Form 10-K filed with the
Securities and Exchange Commission, available here.