TPC GROUP FILES FOR BANKRUPTCY AS LAW SUITS CONTINUE
TPC GROUP FILES FOR BANKRUPTCY AS LAW SUITS CONTINUE
TPC Group has filed for bankruptcy protection with the bankruptcy court in Delaware. TPC Group is a privately held entity, so little has been known publicly about their financial situation since the multiple explosions ripped through their Port Neches, Texas Butadiene plant the week of Thanksgiving 2019. Thousands of homeowners were subject to a mandatory evacuation as a result of the explosion and ensuing fire and toxic emissions from the facility, as it essentially burned to the ground over the next few days. That facility was never rebuilt and serves now as a “product terminal” with the only operational facility remaining in Houston.
TPC Group was inundated with evacuation and property damage claims from residents and business owners from the area as well as personal and emotional injury claims associated to the tragedy. Several thousand of claims were settled early on but TPC Group quickly exhausted their limited insurance coverage policies and were left to fend off the majority of remaining claims in civil court filings in Jefferson County. TPC Group and their lawyers were quick to request the Texas Supreme Court to temporarily halt that flood of lawsuits and send all cases associated to the explosion to one central court. Subsequently the Multi-District Litigation Panel acted by sending the cases to Judge Courtney Arkeen to preside over in neighboring Orange County. Over 5,000 cases have been pending there in consolidated discovery proceedings since then.
Plaintiff law firms and their experts engaged in investigating the incident ultimately determined that an engineering firm and a company involved in setting the blend formulas for the butadiene had potential liability for the incident and added them to the cases, along with a number of “parent” owners and investors to the TPC entity. All have denied liability for the incident. Plaintiff counsel have been well aware of the unstable financial condition of TPC Group for a long time and retained bankruptcy experts many months ago to further investigate their solvency and engage in contingency planning for any potential future bankruptcy. Protective orders had prevented any public disclosure of the weak financial stability of TPC until the bankruptcy filing.
“We have been concerned from the very beginning that TPC Group didn’t have the requisite insurance coverage in place for a tragedy of this magnitude and would not be able to cash flow their way out of it or borrow against the assets in a manner to buy their way out of this litigation. As a consequence, we hired experts in corporate bankruptcy and refinancing many months ago to help prepare for this contingency. As a result, we have done all we can do to best protect our clients’ interests moving forward. We have already filed responses to the TPC Group filings and will request the Court to oversee the operations of TPC Group in some manner to reduce the risk of further dilution of the value of the TPC assets so that eventually our clients can still get the restitution they deserve. In the meantime, we have also filed the necessary documentation with the bankruptcy courts to consider a creditors committee of our clients in that bankruptcy for any future financial decisions, and to release the stay so that the cases can continue against the parent corporations and investors of TPC Group and other defendants we believe we can continue to move towards a trial date with” says Brent Coon, one of the lead lawyers for the plaintiffs in the case.
“Our firm and other plaintiff counsel met with TPC Group representatives early and often in this litigation to go over the status of their financial situation while at the same time engaging our due diligence to a full understanding of what happened to cause the explosions and uncover all potential sources of culpability. We were aware that TPC Group had other insurance coverage claims they had brought against carriers for their own business interruption from the explosions as well as coverage for payment to rebuild as a result of the damages to the plant. Unfortunately, what they have been recovering to date has not been utilized to pay any claims or put in reserve to pay them, but instead has been going back into restoration and renovation of their other facility, payment of notes owed to investors in their business, and other operational costs. It was clear to us they had no real intention of using those proceeds to pay claims caused by the damages they owed others from the explosions. As a consequence, we have helped push this to a head before they exhausted the rest of those coverages and we have a better chance of getting some of it earmarked to paying our clients at some point.”
“We have had experience in dozens of other corporate bankruptcies and refinancing plans all over the county the last 30 years and at this juncture will now shift our focus to what we can salvage in assets for clients in the bankruptcy courts while at the same time continuing to put on a full court press with the rest of the defendants in the civil litigation that will continue to be running at a very high level of activity until we can get trials or get a fair settlement,” said Mr. Coon.