Attorneys for Illinois plaintiffs suing Sterigenics claim the company deliberately shuffled $1.3 billion in assets to investors to avoid compensating people sickened by exposure to ethylene oxide (EtO).
The attorneys representing 75 people who lived or worked near the company’s now-shuttered Willowbrook, Ill., medtech sterilization plant filed an amended complaint in Cook County, Ill. on Jan. 31. The new filing claims Sterigenics and its parent companies began moving the money around in 2016 when they learned that the U.S. Environmental Protection Agency would reclassify EtO from a “probable” to a “known” human carcinogen.
Willowbrook-area residents began filing personal-injury and wrongful-death lawsuits against Sterigenics and parent company Sotera Health in 2018, claiming they were responsible for causing leukemia, lymphoma, breast cancer, miscarriages and other medical conditions.
Specifically, plaintiffs’ attorneys claim that Sterigenics, Sotera Health and their parent companies moved the money in “massive cash distributions” to shareholders, in assets pledged to banks, and in hundreds of millions in interest payments on loans to fund the payments to shareholders. Sterigenics and Sotera Health guaranteed the loans’ repayment by granting the lenders a security interest in their tangible and intangible assets, and all of this was engineered to keep from compensating plaintiffs, according to a news release from the attorneys.
For example, plaintiffs’ attorneys claim that:
- In October 2016, Sterigenics-Nordion Topco, a parent company of Sterigenics and Sotera Health, borrowed $350 million to fund a $340 million cash distribution to Topco’s shareholders. .
- In October 2017, Sotera Health Holdings, also a parent of Sterigenics and Sotera Health, joined Topco in borrowing another $175 million and added about $28 million in free cash to fund a $203 million distribution to their shareholders.
- In August, 2018, Sotera Health made a $95 million cash distribution to shareholders.
- In July, 2019, Sotera Health Holdings borrowed an additional $320 million to fund a cash distribution to shareholders.
- In December, 2019, Sotera Health Holdings refinanced its loans, obtaining nearly $3.28 billion in new debt financing to fund a $309 million cash distribution to shareholders.
By taking part in these financial moves, “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,” the news release said. The plaintiffs’ attorneys claim that these financial maneuvers also dangerously de-stabilized the companies.
“The behavior of Sterigenics and Sotera is disturbing and calls into question its motives for the distributions,” said plaintiffs’ lead attorney Antonio Romanucci. “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.”
The Sterigenics’ Willowbrook temporary plant closure in February 2019 sparked an ongoing crisis over medtech sterilization using EtO. Sterigenics decided in September that it would not reopen the Willowbrook plant, which sterilized millions of medical devices annually.
Sterigenics told Medical Design & Outsourcing in an email statement that the plaintiffs’ allegations are “inaccurate and misleading.”
“Sterigenics and its parent Sotera Health are vibrant and growing companies,” the statement said. “The companies regularly take actions to maintain and enhance their financial strength for the benefit of all stakeholders as they invest for the future and continue to deliver vital services and products to customers. Assertions that the companies took actions with respect to capital structure in response to ongoing litigation are false.
“While we empathize with anyone dealing with cancer, we are confident that operations at our Willowbrook facility are not responsible for causing the illnesses alleged in any lawsuit,” the companies added. “We look forward to continuing to present our case in court to defend against the plaintiffs’ baseless charges.”