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NERA Provides Liability and Damages Analysis in Tronox Inc. v. Anadarko Petroleum Corp.

19 December 2013

New York—NERA Economic Consulting, a leading global provider of economic advice and analysis in business, legal, and regulatory matters, provided economic expert analysis on behalf of Tronox Inc. in the Tronox Inc. v. Anadarko Petroleum Corp. bankruptcy lawsuit.

The case centered on allegations of fraudulent conveyance – specifically, that Tronox’s former parent company, Kerr-McGee Corporation, had deliberately spun off the chemical company with the intent to defraud creditors. In doing so, Kerr-McGee executives removed billions of dollars of oil and gas assets and left Tronox insolvent, with 85 years of environmental, tort and retiree liabilities unrelated to the chemical business. Tronox filed suit in 2009 to recover the value of assets that were fraudulently conveyed during Tronox’s IPO and spin-off from Kerr-McGee. Anadarko Petroleum now owns Kerr-McGee.

NERA was retained by Kirkland & Ellis LLP, counsel for Tronox, to prepare a personal injury and property damages analysis report to be submitted to the Court. NERA Senior Vice President, Dr. Denise Martin, studied former Kerr-McGee sites that were potential candidates for future litigation as a result of environmental exposures, and estimated the cost of future claims (and litigation defense costs) related to those sites.

On 12 December 2013, Judge Allan Gropper of the US Bankruptcy Court of the Southern District Court of New York ruled in favor of Tronox Inc. The damages awarded by Judge Gropper will range from $5.1 billion to $14.1 billion in a final judgment to be entered in spring 2014. This the largest award ever in a bankruptcy for governmental environmental claims and liabilities. Judge Gropper cited Dr. Martin’s analysis in his decision, finding “her conclusions as to liability were far more credible,” than those of the opposing expert witness.

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NERA Economic Consulting (www.nera.com) is a global firm of experts dedicated to applying economic, finance, and quantitative principles to complex business and legal challenges. For over half a century, NERA's economists have been creating strategies, studies, reports, expert testimony, and policy recommendations for government authorities and the world’s leading law firms and corporations. We bring academic rigor, objectivity, and real world industry experience to bear on issues arising from competition, regulation, public policy, strategy, finance, and litigation.

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