The trial between Anadarko Petroleum Corp. and creditors of Tronox Inc. has been put on hold for a week so the two sides can reboot settlement talks in Tronox's $25 billion environmental lawsuit stemming from its spinoff from Kerr-McGee Corp.
The trial has been adjourned to let the parties "participate in settlement discussions through mediation," according to a notice Thursday in U.S. Bankruptcy Court in New York.
The disclosure came in the midst of a trial that kicked off in May over Tronox's mammoth lawsuit seeking to assign blame for its "toxic past."
Lawyers for Tronox couldn't be reached for comment. An Anadarko spokesman declined to comment.
Tronox's creditors, joined by the U.S. government, are pursuing former parent company Kerr-McGee and Anadarko, claiming that Tronox's former parent saddled it with massive environmental liabilities as part of a 2006 spinoff, setting the chemical company on a path to bankruptcy.
Tronox, which makes titanium dioxide, a whitening pigment used in everything from paper to toothpaste, filed for Chapter 11 in early 2009. Anadarko purchased Kerr-McGee for $19 billion after it spun off Tronox.
In August 2009, the U.S. filed claims against Tronox seeking to recoup environmental-cleanup costs and other damages. The following year, the U.S. and Tronox settled.
As part of the chemical company's plan to exit Chapter 11, Tronox created five environmental-response trusts to handle the cleanup of more than 1,000 potentially contaminated sites.
The new company, Tronox Ltd., emerged from Chapter 11 bankruptcy protection in February 2011. As part of its exit, the Oklahoma City company's Chapter 11 plan created the Anadarko litigation trust to pursue Tronox's lawsuit against Anadarko and Kerr-McGee. Tronox has transferred an 88% share of its interest in the lawsuit to the federal government.
Standard & Poor's credit analyst Carin Dehne-Kiley recently held off on raising Anadarko's credit rating due to uncertainty surrounding the lawsuit.
"Any kind of reasonable settlement of the Tronox litigation, we would view as favorable," she said in an interview Friday.
Anadarko has taken $525 million in contingent settlement charges, a fair estimate, Ms. Dehne-Kiley said. She added that Anadarko could absorb up to a $3 billion Tronox settlement and still see an upgrade in its credit rating.
Lawyers for Anadarko have long denied that they set up Tronox to fail and have argued that the company, its creditors and the government were attempting "to rewrite history."
Anadarko's stock was up Friday at $68.16 a share. Tronox shares were up as well at $111.49 near midday.
Barring a deal, the trial is expected to restart July 24 and continue into next month.
Copyright (c) 2012 Dow Jones & Company, Inc.
WHAT DO YOU THINK?
Click on the button below to add a comment.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
More from this Author
Most Popular Articles
From the Career Center
Jobs that may interest you