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Two Firms Near Bankruptcy Exit

Reorganization: Chemtura and Tronox reach agreements that could soon end court supervision

by Marc S. Reisch
September 6, 2010 | A version of this story appeared in Volume 88, Issue 36

Credit: Tronox
Tronox produces titanium dioxide in the U.S. and at this plant in Botlek, the Netherlands.
Credit: Tronox
Tronox produces titanium dioxide in the U.S. and at this plant in Botlek, the Netherlands.

Agreements with claimants by specialty chemical maker Chemtura and titanium dioxide producer Tronox have brought each company close to an exit from bankruptcy reorganization.

In Chemtura’s case, the firm has agreed to pay $50 million to settle 347 claims brought by individuals who allege that the diacetyl butter flavoring ingredient the firm supplied is responsible for causing a lung disease. For its part, Tronox has reached an agreement with key creditors and filed an amended reorganization plan. Both firms have Sept. 16 court approval hearings set.

According to documents filed with the Securities & Exchange Commission, Chemtura reached agreement with Humphrey, Farrington & McClain, a law firm that represents more than 90% of individual diacetyl claims, mostly on behalf of microwave popcorn factory workers. Still pending are another 19 individual claims and seven others brought by firms that distributed butter flavoring.

The specialty chemical company also reached a separate agreement with insurers that had earlier denied diacetyl coverage. Chemtura had previously reached an agreement with EPA and the Department of Justice to settle environmental liabilities for $26 million. The firm originally filed for bankruptcy reorganization in March 2009, at the low point of the global credit crisis.

Tronox filed for bankruptcy protection in January 2009 because it was unable to pay environmental liabilities inherited from former parent Kerr-McGee. According to Tronox’ court filing, the reorganization plan calls for it to contribute $270 million in cash, up from $145 million in the previous plan, to a trust that will settle government environmental claims.

In May 2009, Tronox sued Kerr-McGee and its owner, Anadarko Petroleum, over the environmental liabilities, contending that the liabilities set Tronox up for failure. The reorganization plan calls for Tronox to contribute 88% of any money recovered to the environmental trust.

Like Chemtura, Tronox expects to emerge from bankruptcy in the coming months. “We are confident that we are taking the appropriate steps to position Tronox as a financially strong competitor,” says CEO Dennis L. Wanlass.



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