W.R. Grace & Co

W.R. Grace wins dismissal of California property damage claims

W.R. Grace & Co., the chemical maker nearing the end of a seven-year-old bankruptcy, was spared from having to pay $130 million to repair damage to 16 California government buildings allegedly contaminated with asbestos.

U.S. Bankruptcy Court Judge Judith Fitzgerald dismissed those claims and 93 others filed by governmental agencies in California. The agencies, including both state university systems, claimed that Grace's asbestos-containing products were partly responsible for damaging dozens of government properties.

Fitzgerald ruled that the state agencies waited too long to file their claims.

The “claims are barred by the statue of limitations,” Fitzgerald wrote in an opinion released Oct. 10.

Grace, based in Columbia, Maryland, filed for bankruptcy in 2001 to help it deal with 130,000 claims by victims of asbestos used in fire-proofing products. The company also faced billions of dollars in claims that its products damaged properties.

In April, the company reached an agreement with creditors to pay as much as $1.8 billion into a trust for people harmed by its asbestos-related products. The fund would first collect $250 million, then an additional $1.55 billion from 2019 through 2034, guaranteed by 50.1 percent of Grace common stock.

Under Grace's proposed plan of reorganization, creditors would be paid in full with interest. The company must first send the plan to creditors for a vote and then win approval from Fitzgerald.

Grace has said it expects to exit bankruptcy in the first quarter of next year.

(Published by Bloomberg- October 14, 2008)