Conalco aluminum company files for bankrutptcy

It's been 20 years since Consolidated Aluminum Corp. of Allendale did any business. Now the company wants to officially liquidate, saying that's the best way to deal with claims against it, including asbestos-injury cases and pension debt.

The company, also known as Conalco, filed for Chapter 11 recently in federal Bankruptcy Court in Newark. Conalco said it had assets of between $500,000 and $1 million but owes between $50 million and $100 million to as many as 199 creditors.

From 1948 until 1994, Conalco "was a major manufacturer and supplier of aluminum and aluminum products in the United States and internationally," the bankruptcy filing said. But it sold off almost all of its assets to Ormet Corp. and ceased operations in 1994. Now it operates mostly to manage its response to lawsuits in several states — including Louisiana, Illinois and West Virginia — alleging that former workers were exposed to asbestos and coal tar pitch volatiles.

Conalco's biggest debt is to its parent company, Lonza America Inc. of Allendale, which made a $72.7 million loan to Conalco for expenses that included pension and retiree medical benefits to former Conalco employees, according to the bankruptcy filing. Lonza, based in Basel, Switzerland, was founded in 1897 in the Swiss Alps and is a leading life sciences company.

"Conalco made the decision to seek relief under Chapter 11 because it found itself the defendant in a number of lawsuits in various states, and since it no longer operates after selling its assets more than two decades ago, it intends to use the Chapter 11 process to streamline and resolve these remaining open claims," Conalco's attorney, Sharon Levine of Lowenstein Sandler in Roseland, said in a statement. "The filing of the Chapter 11 case stops all of the litigation against Conalco, so that all claims can be handled through the Chapter 11 process.

"There were about five lawsuits against Conalco and other unrelated companies, as of the date of the bankruptcy filing, that related to claims about asbestos exposure from the 1970s," Levine said.

Levine said the Conalco retirees will continue to receive pension benefits. According to the bankruptcy filing, Conalco owes $4.3 million to its discontinued pension plan. The Pension Benefits Guaranty Corp., which guarantees private pensions, is a creditor in the case. According to PBGC spokesman Marc Hopkins, the agency gets involved in every bankruptcy case where there is an underfunded pension plan, advocating on behalf of keeping plans intact. If a plan fails, the PBGC takes over pension payments of up to $59,300 a year, per retiree. The PBGC is funded by insurance premiums and the assets of liquidated plans, not tax dollars.