Grace Under Investigation for Hiding Assets to Avoid Liability for Asbestos Claims
LIBBY, MONTANA—June 14, 2002—On behalf of the Environmental Protection Agency, the U.S. Department of Justice has filed a motion to intervene in a bankruptcy action involving offshoot companies of W.R. Grace, a major asbestos defendant. The government charges that just prior to bankruptcy filing, W.R. Grace transferred funds to spin–off companies to hide assets and avoid liability for asbestos claims (Daily Inter Lake Newspaper, Kalispell, Montana, May 27, 2002). The company and 61 domestic subsidiaries had filed for bankruptcy reorganization under Chapter 11 of the United States Bankruptcy Code in April, 2001.
W.R. Grace is the manufacturer of construction materials and chemicals and the former owner of an asbestos–contaminated vermiculite mine in Libby Montana. Vermiculite is an ore resembling mica that is used in housing insulation, soil conditioners, and fertilizers.
The United States is a Grace creditor and hopes to recover expenses for the environmental cleanup of Libby, which has been declared a Superfund disaster area. The company has received over 325,000 asbestos personal injury claims from Libby and elsewhere, according to a press release.
Asbestos Insulation and Fireproofing
One W.R. Grace product, Zonolite insulation, often contains vermiculite that is contaminated with tremolite asbestos and derived from the Libby mines. The Environmental Protection Agency is removing Zonolite from homes in Libby, although it has no immediate plans to eliminate the insulation from millions of other residences nationwide..
Grace is also the maker of Monokote fireproofing spray. This product contained dangerous levels of tremolite asbestos, a fact that the company chose to hide from consumers, according to a N.Y. Times report (see W.R. Grace Was Silent About Asbestos in Monokote).