Of 74 U.S. companies forced into bankruptcy by asbestos lawsuits, Columbia-based W.R. Grace & Co. is among a handful that stand to gain the most from congressional efforts to set up a trust fund to compensate those sickened by exposure to the deadly fibers.
Legal experts and some critics of legislation moving through the Senate say Grace, which employs about 1,200 in Maryland, could see its asbestos liability slashed by as much as 87 percent, potentially freeing the company from bankruptcy and resulting in more than $1 billion in savings.
Just as important, some analysts say, a federal asbestos trust fund would put Grace one step closer to shedding its past and reforming a 150-year-old corporate image tarnished by allegations that it left a trail of sick workers and environmental contamination stretching from Montana to New Jersey.
The company, which makes chemicals used in everything from oil refining to construction materials, has been named as a defendant in 129,000 personal injury lawsuits related to asbestos products it produced decades ago.
"I hesitate to use the word windfall, but it would definitely be a favorable outcome for them," said Crystal Skinner, who tracks asbestos legislation for Susquehanna Financial Group. She pegs the odds of the bill passing this year at 30 percent.
Grace won't realize any of those savings if it emerges from bankruptcy before the bill passes, experts said. The company's reorganization plan requires it to create its own asbestos compensation fund, which the company says would be capped at $1.6 billion. Once that fund is established, the company is stuck paying that amount instead of the $500 million or less that it would pay under the proposed federal legislation.
"No one will say it publicly, but I think a majority of the larger asbestos cases have been stalled due to the efforts in Washington on the federal [asbestos] bill," said Peter Kelso, a senior editor for Asbestos Bankruptcy and International Asbestos Report newsletter. "Obviously, it is going to benefit them greatly, so the longer they play it out ... the more it will benefit them."
The asbestos-fund legislation faces intense opposition from some consumer advocates and asbestos attorneys, who say the fund is a bailout for the bankrupt companies and will leave too little for victims.
