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, August 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 CEO David Siegal said 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% 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, 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 reorganization.
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
was expected to rule on those motions by the end of August.
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.