Asarco has until july 2 to organize its bankruptcy plan

A federal bankruptcy judge has decided that bankrupt copper mining company ASARCO has until July 2 to organize its Chapter 11 reorganization plan. Currently it’s thought likely that the plan will include the sale of its working assets to Sterlite Industries Ltd for $2.6 billion. ASARCO, which has billions of dollars worth of asbestos and other environmental liabilities, had originally asked to be given until August 1 to organize the plan, but Judge Richard Schmidt decided on the July 2 deadline. After the deadline passes, outside parties, including ASARCO’s parent company Grupo Mexico, will be allowed to propose plans. Grupo Mexico has put in an unofficial offer of $2.7 billion for the company, having lost control during bankruptcy proceedings. Grupo Mexico is a mining conglomerate headed by Chairman and Chief Executive German Larrea Mota-Velasco. The company is the world’s third largest producer of copper, and has mining interests in several South American locations. Sterlite, a subsidiary of Vedanta Resources Ltd, is an India-based copper, zinc and aluminum producer and. The company was the winning bidder at the ASARCO auction in May. At this stage, however, it’s unclear as to whether ASARCO will sell to Sterlite or to its former parent. ASARCO management is at odds with its former parent for many reasons, which may preclude a Grupo Mexico sale. However, if the Sterlite sale is rejected by ASARCO’s bankruptcy judge it may allow Grupo Mexico a real chance at reacquiring control over its former subsidiary. ASARCO filed for bankruptcy in 2005, and during the process a bankruptcy judge removed Grupo Mexico’s control over the company due to allegations that the parent company was stripping ASARCO’s assets in an attempt to protect those assets from asbestos and environmental liability claims. One of those assets was the Peruvian copper mine which was ASARCO’s most valuable asset, arguably the main reason for Grupo Mexico acquiring the company. Among ASARCO’s claims are that Grupo Mexico systematically stripped the subsidiary of assets, including Peruvian copper mines that ASARCO once had a significant stake in and were the company’s most significant asset. ASARCO claims that Grupo Mexico did this to prevent the mines being used to pay ASARCO’s creditors. ASARCO also claims that Grupo Mexico had full knowledge of the company’s billions of dollars worth of liabilities when it acquired the company. Grupo Mexico has denied the charges in the recent month-long trial which ended last week. A ruling on the case, in which ASARCO has asked for the return of $11.3 billion in assets, is expected some time during the summer. (Source: Asbestos and Mesothelioma News)