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Sterigenics drains $1.3 billion in cash while facing increased legal pressure for causing cancers

Posted on: February 3rd, 2020 by Romanucci & Blandin

Lawsuit amended to show parent company funneled money to shareholders as victims’ claims grow

CHICAGO, IL (February 3, 2020) – Romanucci & Blandin, LLC and the other law firms suing Sterigenics and parent company Sotera for polluting the air in Willowbrook, Illinois with toxic ethylene oxide (EtO) and causing at least 75 cases of cancer, have filed an amended legal complaint showing the company has drained its assets beginning in 2016. These financial transactions moved $1.3 billion dollars out of corporate holdings and into investors’ hands. Those funds will no longer be available to provide justice to the victims in this case. The medical sterilization company exposed innocent neighbors to the airborne carcinogen for decades. In the fall of 2019, the company permanently closed its Willowbrook facility after intense public pressure.

There are now approximately 75 cases pending before the court, which name Sterigenics and other parties responsible for causing leukemia, lymphoma, breast cancer, miscarriages and other medical conditions.

“The behavior of Sterigenics and Sotera is disturbing and calls into question its motives for the distributions. It demonstrates a willful disregard for the health of the community. They shed more than a billion dollars in assets that would and could be used to provide justice to the families whose lives were tragically changed by the poison they emitted. We are committed to holding Sterigenics accountable for all of their conduct in the court of law,” said Antonio Romanucci of Romanucci & Blandin, LLC and Lead Counsel for the legal group.

The amended complaint, filed in Cook County on Friday, January 31, 2020, states and alleges that defendants Sterigenics and Sotera played an indispensable role in the carefully orchestrated funneling of nearly $1.3 billion to shareholders in the last 27 months, with the intention of ensuring that these funds will not be available to compensate victims when they secure judgments against them in court. By doing so, Sterigenics and Sotera effectively admit, but hope to avoid accountability for, their culpability in exposing Willowbrook area residents (including plaintiffs) to the extraordinarily dangerous ethylene oxide, which seriously damaged the health of many, and even claimed the lives of some.

Specifically, during the last 27 months, Sterigenics and Sotera were learning:

  • in 2016, that the U.S. EPA would reclassify EtO as a “known” (from “probable”) human carcinogen, and that the chemical was 30 times more likely to cause cancer than the U.S. EPA had previously recognized;
  • in 2018, that this information would be reported to the public, including and especially Willowbrook area residents;
  • in 2018, that cancer-stricken plaintiffs had begun to file lawsuits, some of them wrongful death lawsuits; and,
  • in 2019, that the first of these plaintiffs had successfully obtained the remand to the court of their lawsuits which had been baselessly removed by defendants to federal court.

Sterigenics and Sotera were working with their corporate parents to make sure that virtually all available cash and other assets would be funneled away from these unsecured creditor- plaintiffs, and instead to the companies’ venture capitalist shareholders in the form of massive cash distributions and to banks in the form of pledged assets, and hundreds of millions in interest payments on borrowings undertaken to fund the payments to shareholders. For example:

  • In October, 2016, Sterigenics-Nordion Topco, LLC (“Topco”), a parent of defendants Sterigenics and Sotera, borrowed $350 million, for the purpose of funding a $340 million cash distribution to Topco’s shareholders. Sterigenics and Sotera were necessary to this borrowing, upon information and belief, as they each guaranteed its repayment by granting the lender group a security interest in their tangible and intangible assets, thus making these assets unavailable to plaintiffs, as Sterigenics and Sotera’s unsecured creditors.
  • In October, 2017, Sotera Health Holdings, LLC (“Health Holdings”), also a parent of Sterigenics and Sotera, and Topco, together increased their borrowings by some $175 million. They added to these increased borrowings some $28 million in free cash, which together funded a $203 million distribution to their shareholders. As with the borrowing of one year earlier, upon information and belief, the repayment of these borrowings, too, was guaranteed by Sterigenics and Sotera granting the lender group a security interest in their tangible and intangible assets, thus making these assets unavailable to plaintiffs, as Sterigenics’ and Sotera’s unsecured creditors.
  • In August, 2018, Sotera itself made a $95 million cash distribution to shareholders, thus making this cash unavailable to plaintiffs.
  • In July, 2019, Health Holdings borrowed an additional $320 million, which was used in its entirety to fund a $320 million cash distribution to shareholders. Upon information and belief, once again, Sterigenics and Sotera each guaranteed the repayment of this borrowing by granting the lender group a security interest in their tangible and intangible assets, thus making these assets unavailable to plaintiffs as Sterigenics and Sotera’s unsecured creditors.
  • In December, 2019, Health Holdings completed a refinancing of, inter alia, previous borrowings, obtaining nearly $3.28 billion in new debt financing, or access thereto. This borrowing was used, in part, to fund a $309 cash million distribution to shareholders in December of 2019. As with previous borrowings by their parents, Sterigenics and Sotera guaranteed the repayment of this new borrowing, by granting to the lender group security interests in their tangible and intangible assets.

Sterigenics’ and Sotera’s central role in this orchestrated and intentional effort has not only effectively placed the companies’ cash and other assets out of plaintiffs’ reach, but also dangerously de-stabilized the companies, jeopardizing their very existence, and thus further jeopardizing the likelihood that plaintiffs will receive just compensation for their injuries. As Moody’s credit rating service has observed, after the 2019 transactions noted above, these companies have “a high degree of environmental risk,” and will have “limited ability to absorb unforeseen setbacks or cash demands on the business.”

Antonio Romanucci is the court-appointed Lead Counsel for the legal group suing Sterigenics. Four Co-Lead Counsels were also appointed, including Todd Smith of Power Rogers & Smith L.L.P; Patrick Salvi, II of Salvi, Schostok & Pritchard, P.C.; Steven Hart of Hart McLaughlin & Eldridge, LLC; and Shannon McNulty of the Clifford Law Offices.

The Plaintiffs’ Executive Committee includes Romanucci & Blandin, LLC, Power Rogers & Smith, L.L.P., Salvi Schostok & Pritchard, P.C., Hart McLaughlin & Eldridge, LLC; Clifford Law Offices; Tomasik Kotin & Kasserman, LLC; The Collins Law Firm P.C.; and Miner Barnhill & Galland, P.C. Together the firms are fighting to hold Sterigenics accountable for the reckless negligence that has resulted in the needless and continuous poisoning of men, women and children in Illinois for so many years.

About Romanucci & Blandin, LLC

Romanucci & Blandin has been rated as a leading civil trial practice law firm in Chicago concentrating in catastrophic personal injury, medical malpractice, police misconduct, civil rights and mass tort matters. The attorneys at the Chicago law firm represent individuals and their families in catastrophic personal injury matters, wrongful death and workers’ compensation cases. The cases that are referred to Romanucci & Blandin involve accidents or injuries which occurred due to negligence and carelessness on the part of individuals, governmental bodies and corporations of all sizes. Since its inception over 20 years ago, Romanucci & Blandin has secured more than $500 million in verdicts and settlements on behalf of their clients across the country. For more information about Romanucci & Blandin, please visit www.rblaw.net or call (312) 458-1000.

About Power Rogers & Smith L.L.P

The attorneys at Power Rogers & Smith, L.L.P. have won more than $4 billion in verdicts and settlements for our clients. In fact, Chicago Lawyer magazine’s Annual Settlement Survey has named our firm the “No. 1 Plaintiff’s Law Firm” in most dollars earned for our clients eight years in a row. We handle a wide range of cases for plaintiffs including wrongful death, product liability and class actions. Through the tireless effort and sincere commitment of our attorneys, we have successfully obtained the life-saving compensation and justice our clients deserve, helping to provide them with the opportunity to move forward in their lives. Not only does our work improve the lives of our clients, it can also bring about important changes in the law by forcing companies to do things the right way and for regulatory agencies to crack down on practices that pose a danger to the public. When you need a winning attorney in your corner, call on an advocate at our firm. For more information, please visit www.prslaw.com or call 312-236-9381.

About Salvi, Schostok & Pritchard, P.C.

Salvi, Schostok & Pritchard was established by attorney Patrick Salvi in 1982. With offices in Chicago and Waukegan, the firm has 18 lawyers and is supported by more than 35 staff members. The firm represents clients in a variety of medical malpractice, personal injury and wrongful death cases. Salvi Law has recovered more than $1.5 billion in verdicts and settlements on behalf of injured clients, including 245 cases resulting in awards of $1 million or more. In 2017, the firm won the largest compensatory personal injury jury verdict in the state of Illinois, $148 million for a dancer paralyzed by a collapsed pedestrian shelter at O’Hare International Airport. The firm has been routinely listed as one of the top law firms in the state with the highest reported settlement totals in the Jury Verdict Reporter / Chicago Daily Law Bulletin’s Settlement Survey. To contact Salvi, Schostok & Pritchard, please call 312-372-1227 or visit www.salvilaw.com.

About Hart McLaughlin & Eldridge

Hart McLaughlin & Eldridge (“HME”) is a firm of trial lawyers specializing in mass tort and class action cases. The attorneys at HME practice on a nationwide basis in both federal and state courts and are actively involved in some of the largest and most significant mass tort and class action cases in the country. HME lawyers have particular expertise in toxic torts, carcinogen and environmental exposure, occupational and para-occupational exposure to toxins, and the fields of medical causation, oncology, and epidemiology. For more information about Hart McLaughlin & Eldridge please visit www.hmelegal.com or call (312) 955-0545.

About Clifford Law Offices

Clifford Law Offices, a Chicago-based boutique litigation firm, has emerged as a leader in obtaining substantial verdicts and settlements on behalf of its clients since its inception 34 years ago. The firm has established a national reputation, and is consistently named by the National Law Journal as one of the Top 10 Litigation Boutiques in the country, as well as topping the U.S. News/Best Lawyers in America list as among the best in several areas of law including Commercial Litigation; Bet-the-Company Litigation; Personal Injury Litigation; Mass Tort Litigation; Product Liability Litigation; and Qui Tam Law. The Chicago Lawyer has annually named Clifford Law Offices one of the city’s top firms in its Annual Settlement Survey. Having obtained more than $3 billion in settlements and verdicts for its clients in various areas of personal injury and wrongful death, in 2019, the firm achieved the highest combined annual settlement total in personal injury and commercial litigation of all Chicago area firms as reported by the Chicago Lawyer Annual Settlement Survey. Lawyers at the firm, many of whom have obtained record- breaking awards for clients, have been recognized over the years for their hard work and the firm’s commitment to excellence, leading it to be named by the National Law Journal as one of the Top 10 Litigation Boutiques in the country, the Elite Trial Lawyers Award and the top 20 Plaintiff’s Hot List. The philosophy of Clifford Law Offices is based upon a dedication to protecting and preserving the dignity and rights of all individuals. To find out more about the firm, go to www.CliffordLaw.com or call 312-899-9090.

About The Collins Law Firm, P.C.

The Collins Law Firm has built a nationwide reputation for fighting for the victims of environmental contamination. Based in Naperville, Illinois, the Collins Law Firm team of experienced trial lawyers takes the fight to corporations and works to help families by making their neighborhoods safe to live in again and getting them the compensation, they deserve. The Collins Law Firm attorneys have recovered more than $102 million in settlements and judgments related to environmental issues like vapor intrusion, groundwater contamination, and landfill and soil contamination. For more information about The Collins Law Firm, please visit www.collinslaw.com/Environmental- Litigation/, or call (630) 687-9838.

About Tomasik Kotin Kasserman

Tomasik Kotin Kasserman cares about our clients. The attorneys at TKK have extensive experience working with victims of chemical exposure and are committed to not only achieving justice for those who have been harmed by corporations, but to enhancing public safety by improving policies, procedures, and regulations. While our record of success speaks for itself, our greatest satisfaction comes from seeing our clients reach a successful conclusion to their case that allows them to move past the damage that was done to them and their families. Find out more by giving us a call 312- 605-8800 or visiting us at TKKlaw.com. TKK: Achieving Justice, Enhancing Safety.

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