DuPont de Nemours Inc.’s ex-top executive is backtracking on claims the chemical maker never intended to saddle its spinoff Chemours Co. with “unlimited exposure” for liabilities.
Ellen Kullman, who resigned as CEO in 2015, said in a court filing directors understood there weren’t any restrictions on Chemours’ obligation to pay for DuPont’s litigation covered by the agreement setting up the company.
“When the DuPont board approved the separation agreement, we of course knew that Chemours’ obligation to indemnify DuPont for matters identified in the agreement was uncapped,” Kullman said in Nov. 6 affidavit attached to a Delaware Chancery Court filing Wednesday by DuPont.
A judge could find that statement at odds with an earlier affidavit Kullman gave Chemours’ lawyers, in which she said directors didn’t intend to saddle the spinoff with “unlimited exposure for historical DuPont liabilities.”
The new filing may strengthen DuPont’s arguments that Chemours can’t escape financial responsibility for costs tied to a host of environmental lawsuits over DuPont’s past operations.
Shares of Wilmington, Delaware-based Chemours fell about 4% on the news, erasing a gain of more than 2%.
“Our filings speak for themselves and we look forward to presenting our argument to the chancery court,” David Rosen, a Chemours spokesman, said Wednesday in an emailed statement.
Chemours sued DuPont in chancery court in May, accusing executives of its former parent of misleading it about the extent of liabilities the spinoff would be forced to accept. DuPont also is based in Wilmington.
Chemours officials zeroed in on the amount of liability they were asked to assume for clean-up demands tied to DuPont products such as PFOA, a cancer-linked chemical formerly used to make Teflon nonstick coatings. DuPont and Chemours face a wave of suits tied to the PFOA chemical in states such as Ohio and West Virginia.
The companies in 2017 agreed to split a $671 million settlement related to about 3,550 health claims but have disputed who is responsible for others. Under the separation agreement, DuPont argues, Chemours is supposed to indemnify it for any liability.
The accord came after at least three juries found DuPont liable for injuries, including cancers, blamed on PFOA. The company was facing almost 40 more trials over the chemical when it signed the deal.
Last year, U.S. regulators asked Chemours to test public and private drinking water supplies in West Virginia and Ohio for GenX, a successor to PFOA. The U.S. Environmental Protection Agency said in a letter it was concerned about GenX discharges into public waterways.
In her new affidavit, Kullman reinforced her position that DuPont’s board never intended to load Chemours up with so much liability that a bankruptcy filing was inevitable.
“We believed Chemours was sufficiently capitalized to meet all of its obligations,” the former chief executive said.
The case is Chemours Co. v. DowDupont Inc., 2019-0351, Delaware Chancery Court (Wilmington).
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