A U.S. Bankruptcy Court judge in New York recently ruled that Anadarko Petroleum Corporation could owe as much as $14.17 billion to an environmental trust and other creditors of Tronox Incorporated, a paint materials company that Anadarko spun off in 2005. Anadarko’s attorneys disagreed with the ruling and said that Anadarko’s liabilities should be between $850 million and $1.76 billion.
The suit comes as part of a Chapter 11 bankruptcy filing by Tronox. At the time of filing bankruptcy, Tronox also sued Anadarko and Kerr-McGee, which Anadarko had purchased three years prior. Tronox claimed in the suit that the two companies had fraudulently saddled the new company with environmental liabilities that it couldn’t meet.
Tronox’s attorneys said that Anadarko’s response to the judge’s findings were “tortured” and inaccurate. Tronox said that 88 percent of any judgement will go to an environmental trust that was set up to compensate victims of pollution generated by the company. The remaining 12 percent will go to numerous other creditors. The environmental trust had been seeking $25 billion to clean up more than 2,000 polluted sites in the United States.
Bankruptcies can often be complicated by former spinoffs, mergers, acquisitions and strategic partnerships. It is often difficult to determine who is responsible for which liability. An experienced business bankruptcy attorney could help a business protect its interests in either its own bankruptcy or the bankruptcy of a former partner that is seeking to share liability. The attorney may need to call on witnesses and financial and accounting experts to represent the business’s interests in court or in settlement negotiations.
Source: Reuters , “Anadarko says may owe $850 million, not $14.2 billion, on Tronox“, Jonathan Stempel, January 14, 2014by