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.