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In re: Asarco LLC (S.D. Tex)
Tailing piles at Colorado Smelting and Refining Co., Mountain View operation., 1906. Courtesy of the National Archives.
At the time of its filing, the Asarco case was the largest environmental bankruptcy case in history with total environmental liabilities in the billions of dollars. On August 9, 2005, Asarco LLC filed a chapter 11 bankruptcy case in the Southern District of Texas. Asarco LLC, and its predecessor and related companies, the Debtors, were involved in active mining, smelting and refining operations for more than 100 years. The Debtors’ mining and operational activities resulted in extensive contamination at over 100 sites in nineteen states across the country.

In addition to the liabilities identified by the United States at 38 sites, environmental liabilities were asserted by nineteen state governments and several private parties. State governments actively involved in the bankruptcy included the States of Alabama, Arizona, Arkansas, California, Colorado, Idaho, Illinois, Indiana, Kansas, Missouri, Montana, Nebraska, New Jersey, New Mexico, Ohio, Oklahoma, Texas, Utah and Washington.

There were numerous and extensive proceedings in the Bankruptcy Court related to the environmental claims. These proceedings included extensive discovery, significant legal briefings, and evidentiary hearings involving both disputed estimation amounts and disputed approvals of settlement agreements. Over the course of more than 2 years of active litigation and negotiation, Asarco entered into a series of settlement agreements resolving its potential environmental liabilities to the United States, individual states, and private parties. The Bankruptcy Court eventually approved settlements for a mix of allowed unsecured claims, specific cash payments, and other relief.

Two of the largest Sites addressed in the bankruptcy were the Omaha Lead Site in Omaha, Nebraska and the Bunker Hill Superfund Facility located in the Coeur d’Alene Basin in northern Idaho. In addition, the Court approved settlements establishing custodial trusts for approximately 23 owned sites and funding of $261.3 million for cleanup and administration.

The bankruptcy case featured intense disputes between the Debtor and its parent entity, affiliated with Grupo Mexico, as well as between various creditors’ constituencies which include asbestos creditors, bondholders, and tort claimants. Moreover,  the United States was involved not only with establishing the appropriate amount of Asarco’s environmental liabilities but was also involved in working with Debtor to achieve the successful marketing of the company’s assets.

In December 2009, following  Court approval of a Plan of Reorganization wherein creditors were to be paid the full value of their claims, plus all post-petition interest,  approximately $1.79 billion was paid to fund environmental cleanups and restoration.

 

Last Updated: November 2010