State AGs object to legal shield for Carrier Global in PFAS bankruptcy
19/05/2025 22:25
By Dietrich Knauth May 19 (Reuters) - Seven U.S. states on Monday objected to fire protection company Kidde-Fenwal's bankruptcy plan, saying that the proposed settlement improperly attempts to shield its owner Carrier Global from lawsuits related to toxic PFAS chemicals in its firefighting foam products. Carrier, which is not bankrupt, is attempting to use Kidde-Fenwal’s bankruptcy to avoid its own separate responsibility for lawsuits over the so-called "forever chemicals" in a way that violates that U.S. Supreme Court precedent, the states alleged in court filings in Delaware bankruptcy court. Carrier previously agreed to pay $540 million to Kidde-Fenwal and its creditors as part of a Chapter 11 plan that would resolve lawsuits by local governments, companies and individuals who have claimed that Kidde-Fenwal’s firefighting foam products contaminated drinking water and soil with PFAS near airports and military bases around the U.S. But that deal cannot be used to cut off states’ ability to sue Carrier directly over the alleged PFAS contamination, according to two separate objections filed by the Democratic attorneys general of New York, California, Colorado, Connecticut, Delaware, Maine, Vermont and the District of Columbia. They cited a Supreme Court ruling last year, in the bankruptcy of Purdue Pharma, that sharply scaled back a court's ability to wipe away legal claims against entities that have not filed for bankruptcy themselves. Carrier did not immediately respond to a request for comment. Kidde-Fenwal filed for bankruptcy in May 2023, after being named as a defendant in more than 4,400 PFAS lawsuits over its chemical firefighting foam products. It was the first company to go bankrupt as a result of PFAS litigation, but experts have said that more companies could follow. Dubbed "forever chemicals" because they do not easily break down in the human body or environment, per- and polyfluoroalkyl substances, or PFAS, are a group of roughly 15,000 known chemicals used in hundreds of consumer and commercial products including firefighting foams, non-stick pans, stain resistant clothing and cosmetics. Kidde-Fenwal’s bankruptcy plan does not explicitly contain the type of "non-debtor releases" that were shot down in the Supreme Court last year. Instead, it characterizes the PFAS liability as an "estate claim," a type of legal claim that Kidde-Fenwal can bring against its parent company and that only Kidde-Fenwal’s bankruptcy estate can settle or litigate. The states argued that Kidde-Fenwal's plan is using "word games" to "obscure the underlying reality" of the settlement, which will take away creditors' ability to sue Carrier over PFAS contamination. The states said Carrier has "vast liability" for the contamination, which presents significant and persistent risks to human health and the environment. New York, for example, said that Kidde-Fenwal's chemical have contaminated soil and water at approximately 35 locations. The state has already spent more than $100 million to address the contamination, with ongoing annual costs of more than $3 million, according to the objection. Carrier has a market capitalization of $64.8 billion, and it sells heating, air conditioning and refrigeration services. Kidde-Fenwal intends to split Carrier’s $540 million contribution, along with future insurance recoveries and other assets, among PFAS creditors. Under Kidde-Fenwal’s proposed bankruptcy plan, states would receive 30% of the settlement funds, local water providers would receive 30%, and individuals with personal injury claims would receive 22%, with smaller amounts reserved for firefighter training and damage to airports, businesses, landfills and personal property. Kidde-Fenwal, which sold its assets to private equity firm Pacific Avenue Capital Partners earlier in its bankruptcy, intends to solicit creditor votes on its Chapter 11 plan beginning in June. Water providers in the U.S. have reached large settlements in their PFAS litigation, including a $10.3 billion settlement with 3M and a $1.19 billion settlement with DuPont, Chemours and Corteva. The case is Kidde-Fenwal Inc, U.S. Bankruptcy Court for the District of Delaware, No. 23-10638. For Kidde-Fenwal: Brian Glueckstein and Justin DeCamp of Sullivan & Cromwell For the creditors' committee: David Molton of Brown Rudnick Read more: Carrier reaches $730 mln settlement over fire protection unit PFAS claims Fire protection company Kidde-Fenwal files for bankruptcy citing PFAS lawsuits Litigation over 'forever chemicals' is growing: Is your company the next defendant? EPA to rollback 'forever chemical' rule, extend timelines (Reporting by Dietrich Knauth in New York)