Imerys Talc America files for Chapter 11 protection

April 2019 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

April 2019 Issue

In a move designed to position itself for future growth, Imerys Talc America, Inc., along with its subsidiaries Imerys Talc Vermont, Inc. and Imerys Talc Canada, Inc., have filed for Chapter 11 bankruptcy protection.

The companies have filed for Chapter 11 in the US Bankruptcy Court for the District of Delaware after evaluating a range of strategies to safeguard their long-term business interests and address their historic talc-related liabilities in the US.

The Chapter 11 process will allow the filing companies the time and protection to negotiate a global agreement with creditors, primarily representatives of current and future claimants in cosmetic talc-related litigation, while defining a path forward for the impacted talc businesses.

A leading talc producer on the American continent, with operations in Montana, Vermont and Texas, Talc America supplies premium-quality, talc-based solutions to a wide variety of industrial applications including paints, plastics, ceramics, rubber, paper, agriculture, adhesives and sealants, building products, cosmetics and pharmaceuticals. Imerys Talc Canada operates in Timmins and Penhorwood.

The filing companies have confirmed that their operations will continue as normal throughout the Chapter 11 process.

Furthermore, they will continue to deliver high-quality products to customers and intend to meet their obligations to employees and trade partners while maintaining a focus on safety. The Chapter 11 filing immediately suspends all outstanding US talc-related litigation against the filing companies. As a result, it is expected that normal operating cash flow will be sufficient to satisfy all of the filing entities’ operating obligations during this period.

“This is an important, meaningful, strategic step for our business,” said Giorgio La Motta, president of Imerys Talc America, Imerys Talc Vermont and Imerys Talc Canada. “After carefully evaluating all possible options, we determined that pursuing Chapter 11 protection is the best course of action to address our historic talc-related liabilities and position the filing companies for continued growth.

“The safety of talc has been confirmed by dozens of peer-reviewed studies, as well as regulatory and scientific bodies, and the litigation is entirely without merit,” he continued. “However, it is simply not in the best interests of our stakeholders to litigate these claims in perpetuity and incur millions of dollars in projected legal costs to defend these cases.”

In July 2018, a Missouri jury ordered Johnson & Johnson (J&J) – Imerys Talc America is a key supplier of talc used in J&J baby powder – to pay a record $4.69bn to 22 women who said asbestos in talc caused ovarian cancer. J&J is appealing that verdict. Imerys Talc America settled for an undisclosed amount prior to the trial. Imerys and J&J have repeatedly denied the allegations, stating that numerous studies and tests by regulators worldwide have shown their talc to be safe.

Nevertheless, the multibillion-dollar verdict against J&J and the ensuing media attention have been cited by Imerys Talc America as the main factors that led to the Chapter 11 filing.

In the meantime, Imerys Talc America and its subsidiaries have stated their intention to continue to work towards an efficient resolution of the Chapter 11 and expect to emerge in the first half of 2020. They are being advised in this endeavour by Latham & Watkins LLP and Alvarez & Marsal.

Mr LaMottta concluded: “By deciding to file for Chapter 11 protection, we have laid the groundwork to efficiently resolve our historic talc-related liabilities and focus on our continued success in the industry.”

Fraser Tennant