Wednesday, August 31, 2016

Maxus Energy Defends Environmental Settlement With Parent

$130 million deal with YPF triggers protest from OxyChem over responsibility for cleaning New Jersey river.

Maxus Energy Corp. is defending a $130 million settlement with its corporate parent over responsibility for the cleanup of New Jersey’s contaminated Passaic River.
Maxus was one of dozens of companies tagged with blame for discharging hazardous substances into the river decades ago. The company filed for bankruptcy in June after striking a bargain with owner YPF SA over its corporate parent’s alleged liability for the cleanup.
Maxus’s deal with YPF, Argentina’s state-owned oil company, triggered a protest from Occidental Petroleum Corp. ’s chemical subsidiary, known as OxyChem, which has been sparring with YPF for years over who should be on the hook for cleaning up the river.

Lawyers for Maxus on Monday acknowledged the settlement “has engendered controversy” but maintained it was the best option “when compared to the risks of losing everything at trial and garnering no value for the debtors’ creditors.”
“A fixed settlement payment of $130 million, along with funding of the costs of these bankruptcy cases, was of greater value to the debtors’ estates than the uncertain prospect of potentially recovering nothing at all,” Maxus lawyers said in a filing with the U.S. Bankruptcy Court in Wilmington, Del.
A New Jersey state court has ruled that Maxus and an affiliate were responsible for dumping dioxin, a highly toxic chemical and suspected carcinogen, into the river in the 1950s and 1960s.
Under the deal, which requires court approval, YPF has agreed to provide Maxus with $130 million in return for Maxus dropping any “alter ego” claims it may have against its parent for cleaning up the river.
OxyChem contends that YPF is legally responsible as an alter ego for the environmental liabilities owed by its subsidiary, Maxus. Maxus filed for bankruptcy in June, just days before OxyChem was slated to head to court over litigation seeking to put YPF on the hook for Maxus’s environmental obligations.
OxyChem, which purchased part of Maxus’s business in 1986 and sold it to YPF a decade later, has called the proposed settlement a “highly choreographed multiyear process” through which YPF is seeking to sidestep its environmental obligations.

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