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Weyerhaeuser to pay $500M for diapering over problem pre-IPO

Yeowtch. A bankruptcy judge has slapped Weyerhaeuser with a massive fine for a pre-IPO maneuver that, in her opinion, smells to the tune of $500 million. Bill Heinze reports that:

"In a 138-page ruling on Lambert v. Weyerhaeuser Co., No. 99-6470., U.S. Bankruptcy Judge Margaret H. Murphy is reported to have levied a $457.8 million judgment, plus millions more in attorney fees and interest, against Weyerhaeuser Co. for violating patent infringement warranties when it spun off its disposable diaper division as a "liability-laden subsidiary."

According to the Fulton County Daily Report on April 13, 2005, Judge Murphy wrote that "the gravamen of Weyerhaeuser's liability is that, in addition to the funds that Weyerhaeuser received in connection with the IPO, the primary benefit of the bargain to Weyerhaeuser was divorcing itself from what it knew to be an enormous potential patent infringement liability that was substantially certain to occur. Additionally, Weyerhaeuser was able to reap the benefit of an unpredictably successful IPO. To reward Weyerhaeuser's strategic divestment by limiting damages ... would encourage other large corporations to evade liabilities by transferring assets to a subsidiary and divesting themselves of their liability-laden subsidiaries ..."

More here.

Posted by Product Team on April 13, 2005 at 01:45 PM | Permalink | TrackBack (0)

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