Heather Isringhausen Gvillo Feb. 7, 2014, 4:10pm

COLUMBIA, Md. (Legal Newsline) - After 13 years in bankruptcy due to costly asbestos lawsuits and cleanup efforts, W.R. Grace & Co. exited bankruptcy protection earlier this week.

The company emerged from Chapter 11 bankruptcy on Monday, one of the longest in U.S. history, when its Joint Plan of Reorganization became effective, establishing two independent trusts to compensate asbestos personal injury claimants and cleanup efforts.

Together, the two trusts are funded by more than $4 billion from a variety of sources including, cash, warrants to purchase Grace & Co. common stock, deferred payment obligations, insurance proceeds and payments from former affiliates, the company explained in a statement issued Monday.

"All allowed claims of non-asbestos creditors will be paid in full," the statement explained.

Grace & Co's liability rose to $4 billion due to administrative costs and claims, plus interest.

Vice President of Global Communications with Grace & Co. Rich Badmington said the company is pleased to move forward.

"We're pleased that all remaining objections to the Joint Plan of Reorganization and its centerpiece third-party trusts have been resolved and that the trustees now can move forward to address actual claims. We have been focused on this outcome since the day, many years ago, when the parties to the bankruptcy became co-proponents of the Plan," Badmington said.

Grace & Co., a specialty chemicals and materials company employing 6,500 people worldwide, and 61 affiliates voluntarily filed a Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Delaware in April 2001. The cases were consolidated for administrative purposes, leaving Grace with the role of operating their businesses and managing their properties as debtors in possession.

At the time of its bankruptcy filing, the company was crippled with more than 100,000 asbestos-related personal injury claims.

After roughly seven years for Grace & Co., its shareholders and representatives of asbestos claimants agreed on a settlement.

On Dec. 20, 2007, the parties reached a settlement agreement and the order approving of the agreement was signed in June 2008, ending the litigation battle over Grace & Co's liabilities.

The order laid out individual payments for each contamination claim, which were deemed "allocated towards all past, present and future claims with respect to response costs or natural resource damages for the Liquidates Sites, whether to address matters known or unknown, for which a claim of any kind or nature has been or could be asserted against the debtors."

Three years later, Grace submitted its plan for reorganization in the Delaware bankruptcy court in 2010.

It took a little more than three more years for the reorganization plan to be finalized, ending the process this month.

A large portion of Grace & Co's asbestos liabilities stemmed from environmental damages and contamination such as the vermiculite mining operation in Libby, Mont. Vermiculite, a mineral used for insulation, was mined in Libby for more than 30 years, exposing residents and miners to dangerous levels of asbestos daily.

According to the bankruptcy settlement order, Grace & Co. was found liable under the Comprehensive Environmental Response, Compensation and Liability Act "for response costs and natural resource damages incurred and to be incurred by the Settling Federal Agencies in the course of responding to releases and threats of releases of hazardous substances into the environment."

In response to the environmental damage and contamination, the Environmental Protection Agency filed claims against the company in March 2003 for past and future cleanup efforts at locations contaminated by vermiculate, asbestos and other toxic substances.

As part of its settlement agreement, Grace & Co. was required to pay the EPA and the Department of Justice $34 million for cleanup costs at 32 Superfund sites across the country, according to the EPA's website.

"Superfund" is the term given to sites where Grace & Co. is environmentally liable pursuant to the Comprehensive Environmental Response, Compensation and Liability Act.

However, the settlement paid to the EPA and the Department of Justice satisfies its liability with respect to sites Grace & Co. does not own. The company is still liable for all property it currently owns.

According to the Wall Street Journal, despite Grace & Co's bankruptcy, it has thrived over these past 13 years, increasing share price from $1.52 to more than $90 per share.

From Legal Newsline: Reach Heather Isringhausen Gvillo at asbestos@legalnewsline.com

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