Source: Law360, January 18, 2013
By: Juan Carlos Rodriguez
A federal bankruptcy judge on Thursday approved a settlement between Eastman Kodak Co. and South Carolina that gives the state only a tiny fraction of the $30 million it had sought for cleanup costs at a former chemical company site.
The $42,000 settlement comes after the South Carolina Department of Health and Environmental Control in July asserted a $30 million claim in Kodak’s bankruptcy proceedings alleging that Kodak arranged for the disposal of hazardous substances at the Philip Services Corp. site in Rock Hill, S.C., and that those hazardous substances originated at the Eastman Business Park in Rochester, N.Y.
“SCDHEC alleges that it has incurred and will incur direct and indirect costs at the PSC site in responding to the release or threatened release of hazardous substances and that Kodak is potentially responsible for such costs pursuant to the Comprehensive Environmental, Response, Compensation and Liability Act and the South Carolina Hazardous Waste Management Act,” the settlement agreement said.
The agency also alleged that other individuals or entities are also potentially liable for the direct and indirect costs that it has incurred and will incur at the site pursuant to CERCLA and SCHWMA.
The settlement agreement said a group has been formed among other potentially responsible parties to perform or fund the remediation at the PSC site and resolve certain SCDHEC claims.
“The parties have engaged in good faith, arms-length negotiations and wish to resolve their differences in their entirety with respect to the claim,” the agreement said. “The parties agree that the claim shall have a stipulated amount of $42,000 and shall be treated as an allowed general unsecured claim against Kodak.”
In exchange for the settlement, the SCDHEC and the PRP group agree not to file any civil action or take any administrative or other action against any Kodak unit under CERCLA, SCHWMA, or any other applicable federal or state law, rule, ordinance or regulation with respect to the contamination at the site.
The onetime photography giant is in the process of trimming its business after a failure to sell some of its digital patents, coupled with intense competition from new technologies, forced the Rochester, N.Y.-based company to file for Chapter 11.
A New York bankruptcy judge on Jan. 11 approved Kodak’s $525 million sale of its digital imaging patents portfolio to Apple Inc. and other top technology companies, a significant step in the company’s efforts to emerge from bankruptcy.
U.S. Bankruptcy Judge Allan L. Gropper greenlighted the transaction, which was announced in December and includes buyers like Amazon.com Inc., Microsoft Corp. and Samsung Electronics Co.
Kodak is represented by Andrew G. Dietderich of Sullivan & Cromwell LLP.
The SCDHEC is represented by Kelly D.H. Lowry of Johnson Smith Hibbard & Wildman LLP.
The bankruptcy is In re: Eastman Kodak Co., case number 1:12-bk-10202, in the U.S. Bankruptcy Court for the Southern District of New York.
–Additional reporting by Maria Chutchian. Editing by Richard McVay.