Judge Approves Anadarko's $5.15 Billion Settlement -- Update

By Dow Jones Business News, 
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By Patrick Fitzgerald

A federal bankruptcy judge Wednesday approved Anadarko Petroleum Corp.'s$5.15 billion settlement of fraud claims from a 2006 acquisition, the largest environmental settlement ever won by the U.S. government.

Judge Allan L. Gropper said he would approve the deal at a hearing in U.S. Bankruptcy Court in New York, said John Hueston, a lawyer for a trust created to benefit creditors of Tronox Inc., a chemical maker once owned by an Anadarko subsidiary. The decision is subject to final approval by a U.S. District Judge. Mr. Hueston said he plans to take steps to speed up getting the case before a judge for approval.

Most of the settlement's proceeds, about $4.5 billion, are earmarked for cleaning up thousands of sites around the country contaminated by creosote and uranium debris. The rest will pay for legal claims filed by people who got sick from the pollution.

The settlement is the largest won by the Justice Department for cleaning up pollution. It exceeds the $4.5 billion BP PLC paid in 2012 to settle criminal charges related to the fatal Deepwater Horizon rig explosion and oil spill.

Nearly $1 billion of the settlement will go to the Environmental Protection Agency to pay to clean up uranium mines in and around the Navajo Nation's territory in the southwestern U.S. Another $1.1 billion is earmarked for a trust that pays for remediation at a former chemical manufacturing site in Nevada that contaminated Lake Mead. Some $450 million will go toward the cleanup of Superfund sites in New Jersey.

The deal spares Anadarko from further litigation involving Tronox and the U.S. Department of Justice. Tronox and federal prosecutors claimed that Kerr-McGee Corp. spun off its chemicals unit into Tronox just before being acquired by Anadarko. They alleged this move unfairly saddled Tronox with liabilities that ultimately bankrupted it in 2009 and allowed Anadarko to skirt environmental obligations.

Tronox creditors argued the spinoff was a fraudulent transfer. In bankruptcy proceedings, a judge can find certain loans to be fraudulent if a company was insolvent when taking on new liabilities.

Last year Judge Gropper sided with Tronox creditors and found Anadarko liable for between $5.2 billion and $14.2 billion, a ruling that jolted settlement discussions into high gear, according to analysts and people involved in the case.

Under the terms of the deal, the trust and Kerr-McGee have agreed to mutually release claims against each other. The U.S. government and Kerr-McGee have each provided mutual covenants not to sue.

Tronox Ltd., the entity that emerged from Tronox's bankruptcy, won't receive any of the proceeds of the settlement but has said it stands to benefit from income tax deductions in the amounts spent by the trust in the litigation.

Daniel Gilbert contributed to this article.

Write to Patrick Fitzgerald at patrick.fitzgerald@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires


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  05-28-141534ET
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This article appears in: Energy

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