Court Awards Tronox $5B to $14B

12/18/2013

The federal bankruptcy court in New York City announced its ruling in the Tronox v. Kerr-McGee (Anadarko) matter on December 12, 2013.  The matter involved an alleged fraudulent conveyance case in which Roux Associates’ client (Tronox) was seeking damages from its former corporate owner (Kerr-McGee, a portion of which was then acquired by Anadarko) that would be used in part for the assessment and cleanup of about 3,000 sites across the U.S.  Former site operations included:

  • Wood Treating
  • Uranium Mining
  • Precious Metals Mining
  • Uranium and Thorium Processing
  • Petroleum Refining, Storage and Distribution
  • Natural Gas Processing and Distribution
  • Perchlorate Manufacturing
  • Agricultural/Pesticide Manufacturing and Distribution
  • Titanium Dioxide Production

Roux Associates opined that future cleanup costs for this portfolio of environmental legacy sites would amount to ~$1.5 billion to $1.7 billion.  Roux Associates used several cost estimating methods consistent with ASTM guidance (E 2137-06, Standard Guidance for Estimating Monetary Cost and Liabilities for Environmental Matters) including “Most Likely Value” (MLV) and a Range in Values.  The court used Roux Associates’ lower end estimate ($1.5 billion) and rejected the opposing expert’s estimate of $376M, which relied entirely on a probabilistic approach.  The court ruled that Tronox was entitled to $14,166,148,000 or $5,150,490,000 plus attorneys' fees and costs to the extent appropriate.

During the course of this case, Roux Associates’ prepared two expert reports and a final written direct court testimony.  Neil Ram, Ph.D., LSP, CHMM, was deposed twice and was then cross examined for a full day in court.  The trial lasted 34 trial days and included the testimony of 28 witnesses (14 experts) using 6,100 trial exhibits.

The court ruled that the Roux opinion “is the only comprehensive valuation in the vast record of this case” and that the opposing expert’s opinion “did not purport to be a comprehensive analysis…” and was, therefore, “a major failure of proof.”  The court further ruled that “Ram exercised his judgment and used another approach [referring to MLV] recognized as valid by the ASTM.”

The final amount within the above range is yet to be determined, and Anadarko has indicated that it plans to appeal the decision.  To read the full court's ruling regarding Tronox v. Kerr-McGee (Anadarko), click below.

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