Earlier today, April 3, 2014, the U.S. Department of Justice announced its largest ever environmental enforcement recovery case involving a $5.15 billion settlement, $4.4 billion of which will go to environmental cleanup and claims. The settlement, with Kerr-McGee Corporation and certain of its affiliates, along with their parent company Anadarko Petroleum, arose from the 2009 bankruptcy of Tronox, Inc., and a December 2013 ruling by the federal bankruptcy court finding a fraudulent transfer of assets to avoid paying environmental cleanup obligations.
The case stems from the transfer of assets from old Kerr-McGee into a new entity, new Kerr-McGee, without the transfer of the legacy environmental liabilities which were retained with the old company which was re-named and spunoff as Tronox. Tronox was unable to satisfy its environmental liabilities and filed for bankruptcy protection in 2009.
As noted in the DOJ’s press release today, “In its decision, the court found that Old Kerr-McGee transferred assets with the intent to hinder or delay creditors, in particular environmental creditors, and also transferred those assets for less than their fair value, which left Tronox insolvent, unable to pay its debts when they came due, and undercapitalized.”
A copy of the Settlement Agreement can be found here.
A copy of DOJ’s Fact Sheet can be found here.
A copy of DOJ’s Settlement Proceeds Chart can be found here.
A map of Kerr-McGee’s Environmental Sites can be found here.