ELMWOOD PARK, N.J. (Legal Newsline) - A New Jersey bubble wrap manufacturer paid $930 million in cash into two asbestos trusts as part of W.R. Grace & Co's bankruptcy settlement agreement.
In addition to the $930 million settlement, Sealed Air Corporation agreed to pay 18 million shares of Sealed Air common stock.
The company stated in a press release from Feb. 4 that it intended to fund most of the asbestos trust payments using available cash "with the remainder from our committed credit facilities."
"This is very positive news for Sealed Air, as the completion of the settlement has been anticipated for some time and now brings finality to a matter after more than a decade of preparation," said Jerome Peribere, CEO of Sealed Air. "We will no longer incur interest on the settlement, which amounted to $48 million in 2013. Additionally, we anticipate meaningful cash tax benefits over the next several years."
Sealed Air's payments settle a claim resorting from its $4.3 billion purchase of Cryovac from Grace & Co. in 1998. Grace & Co. filed for Chapter 11 bankruptcy in April 2001. Sealed Air's settlement agreement was held up by Grace & Co.'s bankruptcy litigation, which ended last week.
Grace & Co. emerged from its bankruptcy on Feb. 3, 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 asbestos 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.
Sealed Air originally agreed to pay $512 million to settle its current and future asbestos-related, fraudulent transfer and successor claims against the company in its bankruptcy settlement agreement in 2001, which took place in the United States Bankruptcy Court for the District of Delaware.
Sealed Air's payment grew to $930 million due to interest, which was set at 5.5 percent per annum and was compounded annually.
According to the settlement agreement, Sealed Air and Cryovac, Inc. received the full benefit of an injunction of the bankruptcy code, forbidding future debtors from filing asbestos-related claims in the future.
The injunction "shall be in form and substance reasonably acceptable to Sealed Air Corporation and Cryovac, Inc. and which injunction shall include, without limitation, provisions enjoining any and all persons from taking any and all legal or other actions ... or making any demand ... for the purpose of, directly or indirectly, claiming, collecting, recovering , or receiving any payment, recovery or any other relief whatsoever from any of the Released Parties with respect to any and all Asbestos-Related Claims," the settlement agreement states.
The settlement also makes it clear that the agreement does not constitute guilt or wrongdoing on Sealed Air's behalf. Rather, the company simply sealed its "peace."
"Neither this agreement nor any of the transactions contemplated hereby is, or shall be construed as, an admission of liability, fault or wrongdoing by the released parties, who have denied and continue to deny any liability, fault, or wrongdoing, but, instead, is a compromise settlement of disputed claims, made in order to avoid the further substantial expense, burden, and inconvenience of protracted litigation and appeal that may occur in further proceedings relating to these actions or any future actions, but which the released parties have forever bought their peace," the agreement states.
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