U.S. chemical company Chemtura and its Canadian arm expect to come out soon from under creditor protection now that a New York court has approved their reorganization plan.
The Connecticut-based parent went into Chapter 11 protection on Aug. 8, followed by Chemtura Canada on Aug. 11, as an Ontario Superior Court judge granted it a stay of proceedings and recognized the U.S. filings as a “foreign main proceeding.”
In the Canadian ag sector, the company is best known in the fruit, tobacco, turf and ornamental sectors, for which it makes a number of herbicides, fungicides, insecticides and plant growth regulators.
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The filings followed a slew of claims dating back to 2001 against the parent firm over allegations of damages due to exposure to diacetyl, a chemical the company made at its Ontario facilities.
Diacetyl, according to a company affidavit, is a food additive used to give foods such as margarine and microwave popcorn a buttery flavour. The claims were filed by workers in six U.S. states who said they contracted lung ailments from exposure to diacetyl vapours.
Chemtura Canada stopped making diacetyl in 2005 but remains a respondent in some of the U.S. lawsuits. There are no diacetyl-related suits in Canada, the company said.
Chemtura, in a release Thursday, said it has pre-funded about US$750 million in exit financing, now held in escrow to be released when the company comes out of Chapter 11 protection, to be used to pay “all undisputed claims in cash and/or stock.
Chemtura on Wednesday announced it would extend the escrow period on its exit financing to Nov. 25.
Chemtura, which morphed out of U.S. firm Crompton and Knowles, in recent years took over the Canadian operation formerly known as Crompton Co. and until 2000 as Uniroyal Chemical.
Its Canadian sites include its facility at Elmira, Ont., where it makes and distributes crop protection products and other chemicals such as urethane and ingredients for making plastic and rubber.
It also operates a Toronto plant making petroleum-based products, an office at Pickering for its pool and spa products business, and a research centre at Guelph.
Chemtura’s Elmira operation recently made headlines starting Sept. 27 when the plant suffered a release of about 4,200 kg of a chemical used to make rubber and plastic products.
According to local media reports, much of the tarlike chemical vented out of a storage tank onto company property, but also spattered homes, lawns, cars and other property in Elmira.
