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Asbestos Suits Prompt Grace Bankruptcy Filing

April 03, 2001|Bloomberg News

W.R. Grace & Co. filed for bankruptcy protection after being swamped by asbestos lawsuits from workers who say the 150-year-old chemical maker's products caused lung cancer and other illnesses. The Columbia, Md.-based company, whose shares had plunged 87% in the last year, had set aside $1.1 billion to handle claims linked to an asbestos-laden fireproofing material it once made. The material has been linked to a type of lung cancer and other ailments that can surface years after exposure. Grace said bankruptcy court offered the best hope for "predictability and fairness" in coping with suits. The company was founded in the mid-19th century by William Russell Grace, who became mayor of New York City. His grandson, J. Peter Grace, ran the company from 1945 until 1992. Asbestos suits have pushed at least nine building materials makers into Chapter 11 since February 2000. In a related development, ABB Ltd. of Zurich, the biggest maker of electrical equipment, said it faces 66,000 personal-injury claims related to asbestos in the U.S., and damages may exceed its established reserves. Grace's stock, which traded as high as $87 in 1998, fell 78 cents to close at $1.52 on the New York Stock Exchange. In documents filed in U.S. Bankruptcy Court in Delaware, Grace listed $2.5 billion in assets and $2.57 billion in debts. The company has more than 6,000 employees in about 40 countries. Among the 61 units also filing for bankruptcy were Grace Chemical Co. of Cuba, Grace Europe Inc., Grace Offshore Co. and Grace Petroleum Libya.

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