U.S. District Court Approves W. R. Grace Bankruptcy Plan of Reorganization and the Creation of a $3 Billion Trust

02.05.12

Washington, D.C. - Orrick’s restructuring team advised on the development of W.R. Grace’s reorganization plan, which was approved by the U.S. District Court for the District of Delaware on January 31, 2012. Orrick’s restructuring lawyers have been involved in this bankruptcy – one of the largest asbestos-related bankruptcy cases ever filed –  since 2004, serving as counsel to David Austern, the fiduciary appointed by the federal Bankruptcy Court to protect the interests of unknown future asbestos claimants against W. R. Grace. The Court-approved plan preserves the value of Grace’s operating companies as on-going profitable businesses and creates a $3 billion trust to pay present and future asbestos claims.

The Bankruptcy Court confirmed the plan in January 2011, after two weeks of trial and thousands of pages of briefs. Eleven objecting parties appealed to the federal District Court. Earlier this week, the District Court rejected all objections to the Plan in a 200-page opinion, ruling that the Plan was fair and equitable, and affirming the Bankruptcy Court’s confirmation order.

Orrick's restructuring team worked diligently to fend off other proposed plans which severely disadvantaged future asbestos victims, then crafted a settlement and negotiated with a number of parties to develop a plan that preserved value and appropriate benefits for future victims, and finally litigated confirmation of that plan, overcoming all objections in front of two federal courts.

The plan provides for a long-term trust for the benefit of the constituency Mr. Austern was appointed to represent. This trust – one of the largest ever created to compensate asbestos victims – is funded with over $3 billion of cash, stock, warrants, insurance proceeds and deferred payments from Grace, its insurers and third parties.

The Orrick team includes Washington, D.C., restructuring partners Jonathan Guy, Roger Frankel and Rick Wyron, counsel Mary Wallace, senior associates Debbie Felder and Kate Orr, and managing associate James Burke, with substantial assistance from Washington, D.C., insurance recovery counsel Peri Mahaley and associate Inessa Mirkin, San Francisco corporate partner Richard Smith and senior associate Zach Finley.