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W.R. Grace emerges from bankrutpcy

W.R. Grace, the Columbia-based chemical giant whose odyssey through the courts turned into one of the longest bankruptcy reorganizations in business history, announced Monday evening that that it had emerged from Chapter 11 protection after almost 13 years.

The chemical company said in a news release that its Joint Plan of Reorganization had gone into effect, marking the end of bankruptcy.

The announcement had been anticipated for months, and the timing was roughly as the company had predicted.

The reorganization plan involves two independent trusts to compensate asbestos personal injury claimants and property owners, according to the announcement. The trusts will be funded with more than $4 billion from a variety of sources.

It was the weight of asbestos claims that forced Grace into bankruptcy in 2001.

“We’ve weathered a very difficult chapter,” Rich Badmington, a company spokesperson, said Monday evening. “And we have a near-term focus on growth.”

Grace experienced growth, even throughout its bankruptcy. Most recently, it acquired a unit of business from Dow Chemical Co., in a $500 million deal that closed in December.

Soon after that deal closed, the company announced that it projected a bankruptcy emergence date of Jan. 31, 2014.

Grace filed for bankruptcy on April 2, 2001, as thousands of asbestos-related lawsuits against the company began to pile up. It had moved its headquarters from Florida to Maryland in 1999, although it had connections with Maryland dating back to 1832, to the chemical company founded in Baltimore by William T. Davison. Grace bought Davison in 1954, and its operating segment was called Grace Davison until 2012.

W.R. Grace employed 1,085 Maryland residents as of Jan. 1, 2014.

According to Grace’s website, it faced more than 129,000 personal injury claims when it filed for Chapter 11 protection. The company was financially strong at the time, but saw bankruptcy as the only way to deal with the increasing claims while protecting the value of the business.

In 2008, W.R. Grace reached a settlement of the personal injury claims.

Under an agreement with the Official Committee of Asbestos Personal Injury Claimants, the Future Claimants Representative, and the Official Committee of Equity Security Holders, Grace would establish two independent trusts to compensate personal injury claimants and property owners in the asbestos-related cases. All pending and future asbestos-related claims would be channeled to those trusts, and all claims from non-asbestos creditors would be paid in full once Grace emerged.

The bankruptcy court confirmed the company’s plan of reorganization in 2011, and the U.S. District Court in Delaware confirmed it in 2012. The plan included the condition that Grace would not be required to pay its lenders the interest rates chargeable to a solvent company.

However, the lenders appealed that decision, arguing that Grace was a solvent company.

On Dec. 23, 2013, Grace announced that it had come to a settlement with the lenders on that appeal, jumping the last hurdle toward bankruptcy emergence. It has since been taking the final steps to make it official.

“Technically speaking , the biggest change is getting governance,” said Badmington. “We are no longer obviously needing to go through the courts for our business decisions, so we have more flexibility — and a very significant distraction removed.”

W.R. Grace made its Monday announcement after the market’s close. Its stock finished on the New York Stock Exchange at $92.28, off $2.04 or just over 2 percent.

It stock price has been hovering just below $100 since November. In the early days of bankruptcy, its stock went almost four years without topping $4 a share.