Analysis: Tronox, Anadarko fight over cleanup costs may be just getting started

Sun Dec 15, 2013 9:07am EST
 
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By Nick Brown

NEW YORK (Reuters) - A court ruling that holds Kerr-McGee Corp liable for billions of dollars in environmental cleanup costs brought to a close a months-long trial over its spinoff of Tronox Inc, a paint materials maker that later went bankrupt.

But with an appeal on the way, along with litigation over the size of damages, the real fight is just beginning, and claimants may wait years for any payout.

U.S. Bankruptcy Judge Allan Gropper on Thursday held that Kerr-McGee acted with "intent to hinder" when it spun off what became Tronox in 2005, saying it was liable for between $5.15 billion and $14.17 billion in environmental cleanup.

Shares of Anadarko Petroleum Corp, which bought Kerr-McGee in 2006, fell as much as 12 percent, but partially recovered, closing on Friday down 6.4 percent at $78.30. The U.S. Justice Department, a plaintiff in the case, hailed the ruling as the "the largest award ever in a bankruptcy for governmental environmental claims and liabilities."

But the sides still have to face off over where in the judge's range the damages should fall before Gropper can enter a final judgment in the case, a process that could take months.

Once a judgment is entered, Anadarko has vowed to appeal both the judgment itself, and the question of whether Gropper has the authority to enter a judgment to begin with, which could take years to resolve.

All told, the litigation could go "into 2016, if not 2017," said a professional involved in the litigation, who declined to be named because he was not authorized to speak to the media.

After Tronox filed for bankruptcy in 2009, it filed a lawsuit in the U.S. Bankruptcy Court in Manhattan accusing Kerr-McGee of knowingly setting up Tronox to fail by spinning off assets with heavy environmental liabilities.   Continued...