Hercules Chemical Co. announced that, on Friday, Aug. 22, 2008, it filed a petition for bankruptcy relief under Chapter 11 with the United States Bankruptcy Court for the Western District of Pennsylvania.
Hercules Chemical Co., a century-old manufacturer and marketer
of chemical and specialty products for the commercial plumbing and heating
industry, announced that, on Friday, Aug. 22, 2008, it filed a petition for
bankruptcy relief under Chapter 11 with the United States Bankruptcy Court for
the Western District of Pennsylvania.
President and CEODavid Siegalsaid that the petition was filed for the sole purpose of facilitating a comprehensive
resolution of more than 7,000 outstanding lawsuits that had been filed against
the company seeking damages for personal injuries allegedly arising from
contact with one of Hercules’ products produced prior to 1983 that contained a
small amount of fully-encapsulated asbestos fibers. Siegal emphasized that absent
its asbestos difficulties, Hercules is a highly successful firm.
Hercules is a 100 percent employee-owned
(ESOP) company with approximately 85 salaried and hourly workers. All of
its products are distributed under an arrangement with Oatey Supply Chain
Services Inc., a Cleveland–based national sales and marketing organization handling
a wide variety of PHC brands and products. Hercules has had discussions
concerning its Chapter 11 filing with Oatey and fully expects the relationship
to continue unabated.
Leonard Ruvolo, vice
president and CFO, stated that the company had agreed to a debtor-in-possession
financing arrangement with Wachovia Bank that will enable it to continue its
operations during the Chapter 11 without interruption. According to Ruvolo, in
addition to the debtor-in-possession financing, the company has significant
unrestricted cash reserves that it intends to use to support a plan of
To support its operations, Hercules has
filed several “first day” motions with the Bankruptcy Court seeking authority
to make payments to employees as well as its suppliers and service providers in
the normal course of business. The
court is expected to rule on those motions within the next few days.
Ruvolo also noted that Hercules
has been in discussions with several law firms representing asbestos plaintiffs
and fully expects to be in a position to propose a plan of reorganization that
will channel all existing and future asbestos-related claims to a trust.