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A creditors committee represented by a Miami attorney in the ongoing W.R. Grace & Co. bankruptcy case has settled a claim against Sealed Air Corp. for more than $800 million in cash and stock. The settlement shields Saddle Brook, N.J.-based Sealed Air, which purchased the assets of a Grace subsidiary in 1998, from any W.R. Grace asbestos-related liability. Scott L. Baena, a senior partner at Bilzin Sumberg Baena Price & Axelrod in Miami who represents the creditors committee, called it the largest bankruptcy court settlement he’s ever been involved in. The committee he represents consists of asbestos claimants who were suing W.R. Grace and Sealed Air. In April 2001, Maryland-based W.R. Grace filed for Chapter 11 protection from creditors in U.S. Bankruptcy Court in Delaware. The chemical company sought bankruptcy protection after being swamped by asbestos lawsuits from workers claiming the company’s products caused their illnesses. In April of this year, Grace claimants, led by Baena and attorney Elihu Inselbuch of New York City sued Sealed Air, alleging that the package materials company should be liable for asbestos-related damages because it assumed Grace’s liability when it bought a Grace subsidiary in 1998. The assets transferred to Sealed Air were from Grace’s profitable bubble wrap maker, Cryovac. According to the complaint, the transfer was “calculated to place the value of the packaging business beyond the reach of [Grace's] asbestos victims and other creditors.” Investors of Sealed Air cheered news of the settlement, bidding up the stock price by as much as 44 percent. On Monday, Sealed Air shares were trading for about $36. “This agreement in principle provides Sealed Air with finality and certainty as we put the Grace-related issues behind us. We believe that reaching this timely and manageable settlement is in the best interest of our shareholders and our business,” said William V. Hickey, president and CEO of Sealed Air. The settlement is for $512.5 million in cash plus 9 million shares of Sealed Air stock. W.R. Grace said the settlement removes a major burden in its ongoing Chapter 11 reorganization plan. “These settlements would stop the need for a costly and time-consuming trial and would remove a significant hurdle that was blocking us from making progress in the development of a plan of reorganization,” said Grace chief executive Paul Norris. The committee represented by Baena consists of asbestos property damage claimants, mostly real estate and property management companies dealing with asbestos-contaminated buildings. The lawsuit was brought by Baena’s property damage claimants and by a committee of asbestos personal injury claimants represented by Inselbuch, a partner at Caplin & Drysdale. In total, there are four creditors committees in the W.R. Grace bankruptcy case. In addition to the property damage and personal injury committees, there is a general unsecured creditors committee and an equity committee representing shareholders of the company. The legal theory was that it was a “constructive fraudulent transfer.” The claimants alleged that the transfer was fraudulent because it was made by W.R. Grace to Sealed Air without receiving a reasonably equivalent value. Baena said Grace received about $1.25 million in value in the transaction when Cryovac was should have been valued in the neighborhood of $3.8 billion to $4.5 billion. According to Baena, the settlement was reached the night of Nov. 27 after daylong negotiations in U.S. District Court in Newark, N.J. Trial had been set for Monday. The W.R. Grace bankruptcy, along with most of the other asbestos-related bankruptcies, is being handled by U.S. District Senior Judge Alfred M. Wolin. Wolin presides in federal court in Newark. Despite the fact the case is in bankruptcy court in Delaware, the hearings were held in Wolin’s courtroom in New Jersey. “Last Wednesday, Judge Wolin literally told us we were under house arrest,” said Baena. “He said we couldn’t leave until he said so.” Baena, who worked on the settlement with Bilzin Sumberg partners Mitchell E. Widom and Robert Turken, said he flew back to Miami on Thanksgiving Day. Baena said the cash and stock will go into a trust to pay asbestos claims. “We did not bring this lawsuit to give Grace more working capital,” said the attorney, who added there is no telling when the chemical company will emerge from Chapter 11 bankruptcy.

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