The company that was spun off from DuPont is a "bankruptcy waiting to happen" because of liabilities related to lawsuits and cleanups related to the toxic chemical C8, according to a new report from a firm that tracks financially troubled companies.
Citron Research said in its report released late last week that the spinoff company - Chemours - is "the most morally and financially bankrupt company that we have ever witnessed."
"While chemical giant DuPont has spent 60 years dumping waste around its facilities, they have spent the past 11 months dumping this 'toxic spinoff' on Wall Street," the report said.
Chemours was formed last July, creating what company officials said was a new firm with thousands of employees around the world and businesses that generated sales of about $6 billion in 2014. Chemours was to operate 37 production facilities in a dozen countries.
Activist groups and lawyers for local residents in Wood County, though, have remained greatly skeptical about the spinoff. They are worried that Chemours does not have the resources to cover a variety of liabilities it is inheriting from DuPont, especially those related to the toxic chemical C8, which DuPont made and used for years at its Washington Works facility.
C8 is another name for perfluorooctanoate acid, or PFOA. In West Virginia, DuPont has used C8 since the 1950s as a processing agent to make Teflon and other nonstick products, oil-resistant paper packaging and stain-resistant textiles. DuPont settled a major class-action case that left it liable for potentially hundreds of millions of dollars in medical monitoring costs, and citizen groups are concerned about liability for thousands of follow-up personal injury cases and for toxic cleanups related to C8.
A $1.6 million verdict was returned against DuPont in the first of those personal injury cases. A second case settled for an undisclosed sum. Trial in a third case began in federal court in Ohio last week.
In a prepared statement, Chemours said it "strongly" disagrees with the Citron Research report. It said Chemours was created "to build on fundamental strengths," and is "making major investments in key growth initiatives."
While the federal court lawsuits are against DuPont, the formation of Chemours, through DuPont's spinoff of its performance chemicals unit, included an agreement for Chemours to cover liabilities for such cases. Presumably, under that agreement, if DuPont loses any of the lawsuits, it will pay the plaintiffs, and then seek to have Chemours reimburse DuPont.
Lawyers for residents in the personal injury cases over C8 have continued to raise questions about who owns the liability in those suits, and what will happen if the proposed merger of DuPont and Dow is finalized.
Among other things, lawyers for the Mid-Ohio Valley residents suing over C8 exposure noted in recent court documents that Chemours said in May that if DuPont loses those cases and seeks to have Chemours cover any damages, "disputes ... may arise" over the terms of the agreement between DuPont and Chemours and who is supposed to pay.
Reach Ken Ward Jr. at kward@wvgazettemail.com, 304-348-1702 or follow @kenwardjr on Twitter.