In re FCX, Inc.

No. S-85-01574-5 (Bankr. E.D.N.C. October 17, 1990)

The court approves a settlement agreement that resolves a Chapter 11 debtor's liability to the United States and North Carolina under the Comprehensive Environmental, Response, Compensation, and Liability Act (CERCLA). The agreement requires the debtor to pay $ 2 million to a trust that will be used to reimburse the governments for response costs at the debtor's two former pesticide distribution centers. The court holds that the decree is fair, reasonable, and in the best interests of the estate.

[A previous decision in this litigation is published at 19 ELR 20849.]

Attorney for Debtor
William H, McCullough
Adams, McCullough & Beard
One Exchange Plaza, P.O. Box 389, Raleigh NC 27602
(919) 828-0564

[21 ELR 20666]

Small, J.:

Order Approving Settlement

The matter before the court is the Motion of the United States for Entry of Proposed Settlement Agreement filed on behalf of the United States Environmental Protection Agency on August 23, 1990. A hearing was held in Raleigh, North Carolina, on October 3, 1990.

The settlement proposes to resolve the chapter 11 debtor's liability to the United States and the State of North Carolina under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq., at the debtor's sites at Statesville and Washington, North Carolina. The debtor's estate is to pay$ 2,000,000 of which $ 1,750,000 is being paid to resolve its liability at the Washington site and $ 250,000 is being paid to resolve its liability at Statesville. (Agreement P7). The $ 2,000,000 is to be paid into a trust and, notwithstanding the allocation between Statesville and Washington, the governments may apply the entire $ 2,000,000 plus accrued interest toward the performance of response actions at either site.

Notice of the proposed agreement was published in the Federal Register and three sets of comments were received by the United States during the subsequent 30-day comment period. The only objection to the motion to settle was filed by Fred Webb, Inc.

No one appeared at the hearing to oppose the settlement with the exception of Fred Webb. That objection, however, was withdrawn when the governments agreed that Fred Webb would have standing to object to the provisions of the trust agreement which governs the disbursement of the $ 2,000,000 fund.

The other three comments, including the comment of Fred Webb, received as a result of the notice in the Federal Register have been adequately addressed by the EPA memorandum filed with its motion. Additionally, the settlement has the support of the committees representing unsecured creditors and the debenture holders.

The court finds that the settlement is fair, reasonable, and in the best interest of the estate.

Previously, this court has held that the governmental response costs incurred at the Washington site were entitled to administrative expense priority subject to a limit of $ 1,750,000. The court also ruled that $ 250,000 was to be set aside for environmental response actions taken at the Statesville site. The settlement in essence parallels the court's rulings. Accordingly, the motion is ALLOWED and the settlement is APPROVED. The trust agreement which is provided for in the settlement agreement shall having standing to object and to be heard concerning the trust agreement to be proposed by the parties.

SO ORDERED.