WR Grace Bets the Farm; Profit-Hungry Speculators Stand By

W. R. Grace is a name that will live in infamy when it comes to asbestos injuries. It is well known that their Libby, Montana, operation and the product which was mined from the surrounding mountains was responsible for the death of thousands of people. W.R. Grace–now in Chapter 11 bankruptcy and under federal indictment for conspiracy to conceal information about the health risks of asbestos–is preparing to gamble on the decision of a single U.S. bankruptcy judge in the corporate-friendly state of Delaware.

On 14 January, Judge Judith Fitzgerald, who also presided over the AC and C bankruptcy proceedings, began hearing arguments regarding the amount of the corporation’s liability, which asbestos experts estimate at nearly $4 billion. Despite the fact that W.R. Grace has been in bankruptcy for six years, its stock has sold for as much as $32.80 per share in the last year, and was trading at around $22 per share when the trial started. Should she limit the corporation’s liability to no more than $700 million, Grace will survive, and shareholders could profit handsomely if its stock recovers.