US court approves $1.35bn Lyondell environmental settlement

23 April 2010 21:36  [Source: ICIS news]

HOUSTON (ICIS news)--A US bankruptcy court on Friday approved a $1.35bn (€1bn) environmental settlement between LyondellBasell and US and state regulators, the company said.

The settlement, part of Lyondell’s bankruptcy hearing in the US bankruptcy Court of the Southern District of New York, stemmed from contamination of several LyondellBasell sites.

Company spokesman David Harpole said the settlement was “fair and equitable and in the best interests of all parties. It was negotiated over the course of many months with federal and state authorities and balances the priorities of environmental law with bankruptcy law.

“It provides a fair and equitable resolution of claims against the entities in bankruptcy as well as provides remediation funding that otherwise would not exist,” Harpole said.

The US operations of LyondellBasell filed for bankruptcy protection under Chapter 11 in 2009.

Earlier in the bankruptcy process, state and federal regulators had filed several claims against the company seeking roughly $5.5bn, the company said.

Under the settlement, Lyondell would allow the regulators to have $1.18bn in unsecured claims. The amount recovered under the claims would be established during the bankruptcy process. 

In general, creditors recover only a portion of their unsecured claims.

Lyondell would also establish a trust that would own several pieces of contaminated property. The trust would receive $108.4m from Lyondell, which would go towards cleaning up the land.

In addition, the company would pay $61.6m to settle allegations made by the US and by regulators in California.

Broken down, the $61.6m total was made up of a $53.6m payment to US regulators and an $8m payment to California regulators.

The total size of the settlement came to $1.35bn, including the $1.18bn in unsecured claims, the $108m given to the trust and the $61.6m payment.

The money would pay to clean up at least 15 sites in eight states, based on a statement by the US Attorney's Office.

Some regulators could receive more money if Lyondell were to receive proceeds from pending insurance claims.

Three members of Michigan’s Congressional delegation had voiced concern that the settlement would short change efforts to clean up a section of the Kalamazoo River, which had been contaminated with polychlorinated biphenyls (PCBs).

($1 = €0.75)

Additional reporting by Al Greenwood

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By: Brian Ford
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