On April 3, 2014, the Anadarko Litigation Trust and the United States reached an historic $5.15 billion settlement with Anadarko Petroleum Corporation to resolve the lawsuit that Kirkland & Ellis filed and successfully prosecuted challenging Kerr-McGee Corporation’s spin-off of Tronox in 2005 as a fraudulent transfer. This is the largest environmental enforcement recovery ever by the Department of Justice. On December 12, 2013, Judge Allan Gropper of the U.S. Bankruptcy Court for the Southern District of New York issued a 166-page opinion finding Kerr-McGee liable for actual and constructive fraudulent transfer.
Kirkland filed the case on behalf of Tronox in 2009. The complaint alleged that Kerr-McGee stripped all of Tronox’s valuable assets and then spun-off an insolvent entity that was destined to fail given the massive environmental, tort and retiree liabilities for which Tronox became responsible following the spin-off. The firm represented Tronox, and later the Anadarko Litigation Trust, through years of litigation and months of trial, which took place in the summer of 2012.
The proceeds will be distributed through the Anadarko Litigation Trust to environmental and tort creditors that were harmed by decades of environmental damage left behind by Kerr-McGee and will benefit environmental clean-up efforts across the country and on the Navajo Nation.
“The settlement is an historic agreement that will help to right a wrong that has gone uncorrected for far too long. At long last, the real victims of Kerr-McGee’s fraudulent transfers—the communities and individuals harmed by the environmental and tort damage—will see a major recovery, without waiting through years of additional litigation and appeals,” said partner David Zott.
Kirkland partners David Zott, Andrew Kassof and Jeffrey Zeiger represented the Tronox Litigation Trust at trial. During the bankruptcy, Kirkland’s litigation team worked with Tronox General Counsel Michael Foster and other company personnel to begin investigating and prosecuting the claims. Once the claims were transferred to the litigation trust, Kirkland worked with litigation trustee John Hueston of Irell & Manella, LLP. The United States filed a parallel lawsuit. Robert William Yalen of the U.S. Attorneys’ Office in Manhattan and Katherine Kane of the U.S. Department of Justice Environment and Natural Resource Division in Washington, D.C. represented the United States at trial.
The lawsuit is Tronox Inc. v. Anadarko Petroleum Corp. (In re Tronox Inc.), 09-1198, U.S. Bankruptcy Court, Southern District New York (Manhattan). For additional information regarding Kirkland’s work on the case, please click here.