Asarco creditors object to environmental claim settlement, seek plan process protections

By Caroline Salls

Pittsburgh, April 6 - Asarco LLC's official committee of unsecured creditors filed an objection Monday to the company's proposed environmental claim settlement, arguing that Asarco is attempting to force through the settlement of $1.1 billion in claims with no regard for a court-approved detailed dispute resolution procedure, according to a filing with the U.S. Bankruptcy Court for the Southern District of Texas.

According to the objection, the procedural safeguards were "the hallmark of the court-approved estimation process."

The committee said the proposed settlement also attempts to bypass creditor protections afforded by the plan-confirmation process.

"The motion seeks approval of the settlements in each category on a lump basis without the benefit of rigorous investigation and oversight mandated by the case management order entered in this case on March 23, 2007," the committee said in the objection.

The committee said the case management order allowed it and other parties in interest to obtain enough information to form an opinion on the reasonableness and fairness of the 19 environmental settlements that were approved by the bankruptcy court under the management order.

In addition, the committee said Asarco's motion does not contain any facts needed to support the proposed $261 million administrative claim treatment of custodial trust site claims, the $736 million proposed unsecured claim and $14 million administrative claim treatment of residual site claims and the proposed $100-million-plus unsecured claim treatment of miscellaneous federal and state site claims.

According to the objection, the proposed settlement of the custodial trust site claims is "substantially in excess" of the company's expert's estimated clean-up cost, and the settlement of $187.5 million of the residual claim relating to the Omaha site does not consider the government's own report that invalidates the remedy it used to clean up the site for which it now seeks compensation from Asarco.

Asarco, a Tucson mining company, filed for bankruptcy on Aug. 9, 2005. Its Chapter 11 case number is 05-21207.

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