Chemours Co.’s directors were accused in a lawsuit of duping shareholders about its financial health and the extent of its legal liability at the time it was spun off from a predecessor of DuPont de Nemours Inc.
When the former E.I. DuPont & Co. officials spun Chemours off in 2015, they saddled the ex-unit with more than $2.5 billion liability over environmental harm and health risks from a class of chemicals known as PFAS, an amount that left the firm insolvent at its inception, Robert Pinto, a Chemours investor, said in a Delaware Chancery Court suit unsealed Thursday.
Chemours directors covered up the company’s financial woes over a four-year period by approving dividends and making stock repurchases as part of an effort to persuade the market that the firm reshaped itself into a viable entity, Pinto said.
The directors didn’t acknowledge until May 2019 the company hadn’t “transformed itself from being on the brink of insolvency,” and its liabilities were crushing, according to the 111-page complaint. “Any stockholder with candid reporting from the board would have rushed to sell his or her shares rather than continue sitting on a financial time bomb.”
A Chemours spokesman, Thom Sueta, said in a statement the lawsuit was “without merit.”