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 11 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, about 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 was supported by committees representing general unsecured creditors and equity holders, but not supported by committees representing asbestos personal injury claimants and asbestos property damage claimants. On November 5, 2007, the committee representing asbestos personal injury claimants and the representative of future asbestos claimants filed their own proposed plan of reorganization.

Grace requested the Bankruptcy Court to conduct an estimation hearing to determine the amount that would be necessary to satisfy all pending and future asbestos-related personal injury claims. The estimation hearing, which began on January 14, 2008, was suspended on April 7, 2008 when an agreement-in-principle to settle such claims was announced.

The agreement-in-principle was reached with the Official Committee of Asbestos Personal Injury Claimants, the Future Claimants Representative and the Official Committee of Equity Security Holders.

On September 19, 2008, Grace filed a joint plan of reorganization and an accompanying disclosure statement with the U.S. Bankruptcy Court in Delaware. The Official Committee of Asbestos Personal Injury Claimants, the Representative for Future Asbestos Personal Injury Claimants, and the Official Committee of Equity Security Holders are co-proponents of the Plan. The documents are consistent with the terms of the previously announced asbestos personal injury settlement. The plan supersedes plans of reorganization previously filed by Grace, and jointly by the asbestos personal injury committee and future claimants’ representative, respectively.

On February 27, 2009, Grace filed a first amended joint plan of reorganization and an accompanying disclosure statement with the U.S. Bankruptcy Court in Delaware. The Official Committee of Asbestos Personal Injury Claimants, the Representative for Future Asbestos Personal Injury Claimants, and the Official Committee of Equity Security Holders are co-proponents of the Plan. The documents are consistent with the terms of the previously announced asbestos personal injury settlement. The plan supersedes plans of reorganization previously filed by Grace, and jointly by the asbestos personal injury committee and future claimants’ representative, respectively.

On January 31, 2011, the Joint Plan of Reorganization was confirmed by the United States Bankruptcy Court for the District of Delaware. In her opinion, Judge Judith Fitzgerald resolved all outstanding objections to the Joint Plan in favor of Grace and its co-proponents. The Joint Plan was next considered for confirmation by the United States District Court for the District of Delaware, a necessary step before Grace may exit Chapter 11. On January 31, 2012, the District Court denied all objections and confirmed the Joint Plan in its entirety.

The Joint Plan establishes two asbestos trusts to compensate personal injury claimants and property owners. Funds for the trusts will come from a variety of sources including cash, warrants to purchase Grace common stock, deferred payment obligations, insurance proceeds and payments from successor companies. The trusts’ assets and operations are designed to cover all current and future asbestos claims.

The plan of reorganization and disclosure statement are available here. Additional detail is also provided in the company's most recent 10-K filed with the Securities and Exchange Commission.