YOU ARE HERE: IVPress HomeCollections

U.S. Gypsum files for Chapter 11

little effect on local plant?

June 26, 2001|By RUDY YNIGUEZ, Staff Writer

PLASTER CITY — The United States Gypsum Corp. filed for reorganization protection under Chapter 11 of the U.S. bankruptcy code to manage growing asbestos litigation costs and to resolve asbestos claims in a fair and equitable manner, the company announced Monday.

Robert Williams, Chicago-based USG director of corporate communications, said there would be no effect locally.

"It's business as usual," Williams said, adding no layoffs are expected.

The filing only affects USG's United States Gypsum Co. subsidiary.

In a letter to employees, the company wrote that the Chapter 11 filing should have little effect on the jobs of most employees, and Williams said too much should not be read into the statement. He said those whose jobs will be affected will be company attorneys, as the reorganization filing will allow the company to move the various asbestos lawsuits against the company to a single courtroom in Delaware.

In a separate letter to suppliers, the company states it understands the immediate impact from the company not paying for goods and services owed prior to the filing, but that federal law does not allow a business in Chapter 11 to pay those debts except by court order.


Despite the nonpayment, the letters listed a number of reasons suppliers should continue to do business with the company.

"Because (1) invoices for ongoing purchases after the filing date are entitled to priority status and will be paid in full in the ordinary course of business on ordinary business terms; (2) long-term relationships with vendors will continue to be extremely important going forward and (3) USG is a large, growing company whose need for goods and services will continue to increase," the letter states.

While Williams declined to provide a list of local suppliers of goods and services, one is the Imperial Irrigation District, which supplies electricity to the facility.

Sue Giller, IID spokeswoman, said the company's account is not public information, but the company typically uses just under $500,000 monthly in electricity.

William C. Foote, USG chairman, president and chief executive officer, said in a press release, "It was important to take the litigation out of a dysfunctional tort system and move it to a single forum where the claims can be objectively evaluated."

The press release goes on to state "the recent bankruptcies of other asbestos defendants have dramatically increased U.S. Gypsum's asbestos costs to the point that they are completely out of proportion to its legitimate liability."

The company recently went through a $105 million, 30-month expansion at the Plaster City operation in western Imperial County. It employs about 370 people locally. Numerous local incentives, including a $1 million yearly reduction in power and a $2.7 million upgrade to the high-voltage transmission lines to the facility from IID, reportedly were largely responsible for USG's expansion.

The USG plant here produces a range of products including wallboard, plaster and agriculture- and feed-grade gypsum.

Staff Writer Rudy Yniguez can be reached at 337-3440.

Imperial Valley Press Online Articles