W.R. Grace stakeholders file report, stress resolution of personal injury claims

By Jeff Pines

Washington, June 22 - All the stakeholders in W.R. Grace & Co.'s bankruptcy have filed the status reports requested by the judge earlier this month and all agree the personal injury claims have to be resolved. The question is how.

The reports were filed with the U.S. Bankruptcy Court for the District of Delaware Monday.

Grace, a Columbia, Md.-based building products and chemical company, said in order to resolve the matter, it believes the court could either approve pre- or post-confirmation litigation to the claims. In a post-confirmation scenario, a trust would battle the plaintiffs and the plan would focus on non-personal injury issues.

The official equity holders committee agrees with Grace.

The insurers said that if frivolous claims of the unimpaired could be eliminated there would be enough money to take care of legitimate claims. They do oppose any plan provisions that would require them to make a full pay-out to any post-confirmation trust without being able to scrutinize individual claims or pay claims without being able to examine them first.

Zonolite attic insulation claimants argued that it would cost $3 billion to $5 billion to remove zonolite from the roughly 1 million homes that may have it. Grace said zonolite contains only trace amounts of asbestos and is not harmful.

The asbestos property damage claimants recommended the court approve a proof of claim form and establish a bar date for the personal injury claimants. Before the claims date, the court should decide what method it will use to determine how much the claims will be for.

The Libby, Mont. claimants, who worked in Grace's vermiculite mine, want the right to sue third parties and equitable treatment in the company's reorganization plan. Grace ran the mine from 1963 to 1990. The vermiculite itself is not toxic, but the ore contained tremolite asbestos and the mill operators knew about the asbestos, the claimants said. By 1999, at least 97 former Libby workers died of asbestos-related causes.

Grace filed for bankruptcy on April 2, 2001 to gain protection from asbestos claims. Its Chapter 11 case number is 01-1139.

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