Exide Holdings Inc. got court approval of its bankruptcy plan, allowing the battery manufacturer to sell its overseas assets and avoid paying for a full cleanup of a former recycling facility in California over the state’s objections.
The plan, which was amended four times before it was approved Friday, incorporates a global settlement Exide reached with its creditors, purchasers of the overseas assets, the U.S. Environmental Protection Agency, and ten state environmental agencies. California’s was the only environmental agency that rejected the settlement agreement.
California Gov. Gavin Newsom (D) called the plan approval “dangerous” and said the state would appeal it.
“I am outraged that the federal bankruptcy court let Exide and its creditors off the hook today and decided that lead exposure does not pose an imminent or immediate harm to the public,” he said in a statement Friday.
The Chapter 11 plan allows Exide to sell its European and overseas assets to a group of existing lenders in a $559 million credit bid, preserving 5,000 jobs.
The company also will wind down its involvement at former sites in the U.S. that still need environmental remediation.
After filing for bankruptcy in May, it sold its North American business operations to an affiliate of Atlas Holdings LLC for $178.6 million.
The settlement incorporated into the plan creates a $10 million multi-state environmental trust that would manage future environmental cleanup at former Exide sites. California would receive $2.6 million for a former battery recycling facility in Vernon, Calif., if the state signs onto the agreement.
The state has until Oct. 30 to decide whether it will participate in the trust. Exide may choose to abandon the site after that date, said Judge Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware said at a hearing Friday.
“The plan is interesting. I’ve never seen anything like it,” Sontchi said in approving the plan.
Responsible for Cleanup
The California DTSC had objected to the settlement on the grounds that the company is still responsible for ongoing remediation of lead and other heavy metals at the Vernon site.
If California ultimately rejects the settlement and Exide abandons the facility, California will still have access to $26.5 million in surety bonds that Exide purchased to help maintain the Vernon site, the company’s attorney, Jared R. Friedmann of Weil, Gotshal & Manges LLP, told the court Friday.
It would cost $72 million to completely clean up the Vernon site, including stormwater and full containment, Perry Myers, a supervising hazardous substances engineer with the California Environmental Protection Agency’s Department of Toxic Substances Control, told the court Thursday.
Exide currently is spending $750,000 per month on safeguards that prevent the release of lead dust, arsenic, and other toxins into the air and water, Brad Elias of O’Melveny & Myers LLP, an attorney for the California Department of Toxic Substances Control, said Thursday.
The U.S. EPA, which is backed the reorganization plan, received more than 1,000 public comments against the settlement at a public hearing it held Oct. 13, agency attorney Alan Tenenbaum told the court Thursday.
The settlement’s environmental response trust would fund ongoing containment and safety efforts at 16 of Exide’s former sites in 10 other states, even if it wouldn’t be enough for a full cleanup, the agency said in an Oct. 14 filing.
“The settlement seeks to avoid further impacts on the community” and avoid “a potentially chaotic transition” if the site is abandoned, Tenenbaum told the court Thursday.
The settlement’s multi-state trust would allow Texas to remediate two contaminated sites in Dallas and Frisco, Abigail Ryan of the Texas Attorney General’s Office said Friday.
European, U.S. Assets Sold
Exide, headquartered in Milton, Ga., was one of the world’s largest battery producers when it filed for Chapter 11 bankruptcy in May with plans to sell its assets.
The company’s North American business sale closed Aug. 25.
The case is In re Exide Holdings, Inc., Bankr. D. Del., No. 20-11157, hearing 10/16/20.