Bankruptcy settlement ensures funding for victims of Libby mine
A federal bankruptcy court has approved a reorganization plan by W.R. Grace & Company that will ensure funding of two trusts created to compensate thousands of people who have sued the company for asbestos-related illness.
W. R. Grace filed for bankruptcy protection in 2001, citing 110,000 personal-injury claims by workers and residents in Libby, Montana, where the company operated a mine that produced millions of tons of vermiculite asbestos.
The plan approved by the U.S. District Court of Delaware included a settlement of the Libby Medical Plan Trust, a $19.5 million fund for the families of people who have died or those who are currently ill due to asbestos exposure from the defunct plant in Libby. The agreement requires Grace to turn the Libby Medical Program, which the company voluntarily created in 2000, into a locally administered trust.
Jon Heberling, an attorney representing Libby claimants, told the The Daily Inter Lake, a Montana newspaper, that Grace could have shut down the Libby Medical Plan Trust at any time, but that the reorganization “removes that uncertainty.”
Grace said the trusts will be funded by a variety of sources, including cash, the sale of stock options, deferred payment obligations and insurance proceeds and payments from third parties.
While Tuesday’s ruling is considered a major step toward ending more than a decade of court supervision of the company, court challenges to the reorganization plan could still arise. But Fred Festa, Grace’s chief executive officer, said in a statement that he was optimistic the company will emerge from bankruptcy “in the near future.”
“It is time to put the joint plan into effect so that money can begin to flow to claimants who have been waiting for more than a decade to be compensated, and Grace can move forward as well,” Festa said. “I look forward to Grace emerging from Chapter 11 as a vibrant, growing company with a great future.”
Grace shut down its Libby mine in 1990. But in 2005, a federal grand jury indicted the company and seven current and former Grace executives for knowingly exposing the town’s 100,000 residents to asbestos for decades, resulting in more than 200 deaths and 1,000 illnesses.
The indictment alleged that Grace learned of the dangers of asbestos in its defendants, beginning in the late 1970's, obtained knowledge of the toxic nature of asbestos in its vermiculite mine, but failed to turn the information over to the Environmental Protection Agency on accordance with the Toxic Substances Control Act. The indictment also charged Grace officials with attempting to obstruct efforts by federal officials to study health conditions at the Libby mine in the 1980s.
Grace and the executives were acquitted in 2009, although the company voluntarily paid millions of dollars in medical bills for 900 Libby residents.