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> Financial research firm CreditSights estimates that 3M could ultimately be on the hook for nationwide PFAS cleanup costs of up to $142.7 billion. That’s almos

> Financial research firm CreditSights estimates that 3M could ultimately be on the hook for nationwide PFAS cleanup costs of up to $142.7 billion. That’s almost triple the company’s $53 billion market capitalization, and that’s before any personal injury claims and other lawsuits. What does this actually mean? It's just showing off a big number without giving any real context. 3M is the only manufacturer of tons of important materials as I understand it, so it's not like they can just get erased from the market. But what does accountability actually mean in this context?

delfinom 3y ago
Government bailout, it's clearly too big to fail
- atoav 3y ago
  Socialization.
- CoastalCoder 3y ago
  I wonder - could a bankruptcy court simply transfer ownership of all 3M stock to the injured parties? Seems to me that would make them as whole as possible, while retaining 3M's ability to manufacture other crucial products.
  - BobbyJo 3y ago
    That's effectively how bankruptcy works but with more paperwork. You take assets (whether it's the deeds to the equipment or ownership of the whole company via stock) and you give the value of that (in the form of money or assets) to the claimants. Either way it's a transfer of wealth from the current business owners (stockholders) to claimants, just a matter of how that transfer happens.
- NickC25 3y ago
  Exactly. They should be nationalized. If they are the only producer of a number of strategically important materials, nationalization needs to happen. The private markets are great, but cannot be trusted to clean up after their own mess - they have proven this time and time and time again. The taxpayers will ultimately be on the hook for this payout, and that's simply unacceptable. If the public has to bail out this company, at the very least, the board and C-Suite need to be liquidated and be fined substantially for this sort of behavior. They've known about the danger of these chemicals for almost 60 years, and not once did they (AFAIK) go to the government and actively ask for help to replace said chemicals with safer alternatives that don't literally last forever if consumed.
  - gwright 3y ago
    Right, because nationalized industries/companies have a wonderful track record of environmental concern and practices? I'm not sure what the solution is to these problems (or this particular problem) but "nationalizing" producers certainly isn't one of them. Destroying 3M isn't one either. I don't understand the approach to difficult problems that starts with thinking "the government" is effectively a magic wand.
    - NickC25 3y ago
      I'm not saying nationalized companies are great. I'm saying that if a company engages in such deceptive practices with materials that they know are toxic, and they fail to disclose that to the relevant parties (the government, and the people), they have no business being in business, as they are effectively externalizing the risk their products put on the rest of us. Destroying the company is not the best idea, but there has to be a line society has to draw and be vigilant about defending it. Otherwise, you're going to just encourage more of this behavior...because the flip side is a really ugly precedent to set. You want companies to use toxic chemicals in their products, lie about it, and when found out, just pay some fine and walk away like nothing happened? No, there has to be a line where we say "you made a ton of money by lying to us and putting toxic chemicals in our air, our water, and our bodies. you're going to now pay that back with substantial interest, and be barred from ever being in a position of any level of corporate power whatsoever for the rest of your life". The taxpayer CAN NOT be the one to be on the hook for corporate misdeeds time and time again. In countries like China, executives get disappeared for such hubris.
      - youreincorrect 3y ago
        > Destroying the company is not the best idea, but there has to be a line society has to draw and be vigilant about defending it. Why is it not the best idea? It's a great idea. Fine them more money and let them go bankrupt. Let companies that did not go under for such awful practices pick up the pieces. Why is bankruptcy acceptable for Kmart but not 3M? Be specific, no nonsense about how they are the only company in existence ever capable of creating some mysterious chemical yet also only have a $50B market capitalization (if their chemicals were so rare, impossible to produce, and highly sought after, market cap would be higher). > The taxpayer CAN NOT be the one to be on the hook for corporate misdeeds time and time again. I don't understand. You think the taxpayer cannot be on the hook, yet you also think we are obligated to bail out the business by nationalizing it? What do you think nationalizing a business entails? It would literally place the taxpayer on the hook for that business. Nationalizing it would not imply any guarantee the business remains profitable, and future losses would be owned by the public. I do agree that execs should be punished more severely though. We are absolutely on the same page there. And I don't care if the current execs are not the original execs responsible. As far as I can tell, they've allowed the problem to continue if not get worse.
- deleted 3y ago
  [deleted]
prpl 3y ago
There’s some irony that one of the M is for Mining - the poster boy for superfund cleanups. I guess this would be an ultrafund
batmenace 3y ago
Well if the company goes bankrupt, theoretically other companies can buy e.g. 3M's patents / processes / subsidiaries and continue their production. THe company isn't unprofitable, so it would be sold off in parts and the proceeds of the sale (theoretically) would go towards settling lawsuits.
- s1artibartfast 3y ago
  or it might just be sold as a whole to another company, or continue to exist post bankruptcy
  - dylan604 3y ago
    Unlikely though. Nobody would want to buy the company whole as that would include all of this liability. Selling of the individual parts to raise funds for paying the debts of the unsold parts of the business entering bankruptcy seems like the only way to go
    - s1artibartfast 3y ago
      Breaking it up doesn't change the liability post bankruptcy.
      - nickelpro 3y ago
        If I buy a candy bar from a bankrupt chocolate company I don't inherit any liability from the candy bar. "Breaking up" a company by selling its assets and distributing the profits to creditors absolutely does vanish the liability.
        s1artibartfast 3y ago
        I think maybe we're confusing terms here. Breaking up a company normally means separated into smaller existing companies. If you buy 3m's candy bar division, you still might be on the hook for the forever chemicals the candy shop dumped in the river. If you're just talking about dissolving a company and selling off the tangible assets, not selling off functional business units then I agree, liability doesn't follow material Goods. This generally isn't considered breaking up a company. Breaking up a large company into smaller ones during bankruptcy does not by default absolve the smaller companies of liability. Courts can add bankruptcy settlement terms that absolve a company of liability moving forward, but these can be applied to the company at all as a whole or the smaller businesses if it is broken up.
arrosenberg 3y ago
What it should mean is the US government taking ownership of the company, appointing its' own executives and either selling the company to pay for the cleanup, or using the forward profits from the company to pay for it. That won't happen, but wouldn't it be nice if it did? Just once.
paiute 3y ago
I'm starting to see a pattern which basically amounts to corporate shakedowns. I think the trend has only been accelerating since Perdue Parma. They will take the money and never do a thing to clean up the chemicals.
- moomoo3000 3y ago
  Are there examples of that happening?
- hgsgm 3y ago
  Better than not taking the money, at least. At a minimum it reduces inflation a tiny bit which helps everyone.
slymon99 3y ago
They go bankrupt, because their liabilities exceed their assets. There are three main sets of creditors - the US government who are receiving this $142.7 billion, equity shareholders who own $MMM, and bondholders. In a bankruptcy, you arrange levels of creditors by "seniority", where more senior creditors are paid first. In this case, I would imagine the levels of seniority are: 1. The US government 2. Bondholders 3. Equity shareholders 3M has plenty of assets to be distributed to the creditors - the manufacturing capabilities that you mention, intellectual property, relationships with purchasers. These assets might be sold directly on the market (this is easier with physical assets like manufacturing labs). A new corporation with new management might be established to handle liquidating the assets, or even running the business (this is what happened with FTX). Either way, it seems like bondholders and shareholders alike would get zero'd out and the US government could do what it want with 3M's assets. To answer your question succintly: > 3M is the only manufacturer of tons of important materials as I understand it, so it's not like they can just get erased from the market 3M is a corporation and one of their assets is their ability to manufacture tons of important materials. 3M the corporation would be obliterated but their ability to manufacture tons of important material would likely be sold off.
- CameronNemo 3y ago
  The shareholders shouldn't just get zeroed. There should be a clawback of profits made by 3M since the 1970s. Raid my 401k -- someone has to pay.
  - rapht 3y ago
    Hello, "limited liability company".
  - sokoloff 3y ago
    We'll put you down in the "not a fan of the rule of law" category.
    - CameronNemo 3y ago
      Thanks! https://www.copblock.org/40719/myth-rule-law-john-hasnas/ https://www.copblock.org/40719/myth-rule-law-john-hasnas/
kmod 3y ago
Assuming those numbers are realized it would mean bankruptcy, essentially, and questions like this are pretty standard and well-thought-about there. IANAL but I think this is why Chapter 11 bankruptcy exists (where you keep the company going because that's valuable) vs Chapter 7 (where you liquidate it). I think the Purdue bankruptcy is similar where the company is somewhat being handed over to the people that were harmed, because that's more valuable to them than selling the company piecemeal and then distributing the proceeds.
- Jeff_Brown 3y ago
  Would it? If they can earn the value of their liabilities in three years, why not just do that?1
  - sokoloff 3y ago
    How can they do that? Their entire sales for full year 2022 were only $34.2 billion, with adjusted free cash flow of only $4.7 billion. They literally could not cover the interest charges on a $143B judgment, let alone pay it off in 3 years.
    - Jeff_Brown 3y ago
      I stand corrected, thanks.
- TylerE 3y ago
  3M going under would be bad in a lot of ways. They are THE name is serious respiratory and other PPE, for instance.
feifan 3y ago
I read that sentence as saying someone came up with a cost estimate of $142.7b to clean up everything, and then there's a comparison to 3M's $53b market cap for scale/comparison.
- cwkoss 3y ago
  I don't think all the money in the world could cleanup "everything" that is contaminated with PFAS - it is effectively pervasive in the ecosystem at this point.
simonster 3y ago
It means that the market believes they are unlikely to be on the hook for that amount, or else the market cap would be near-zero. Given 3M's current profits, assets, and liabilities, a 142.7B payout would bankrupt it.

delfinom 3y ago

Government bailout, it's clearly too big to fail

atoav 3y ago
Socialization.
CoastalCoder 3y ago
I wonder - could a bankruptcy court simply transfer ownership of all 3M stock to the injured parties? Seems to me that would make them as whole as possible, while retaining 3M's ability to manufacture other crucial products.
- BobbyJo 3y ago
  That's effectively how bankruptcy works but with more paperwork. You take assets (whether it's the deeds to the equipment or ownership of the whole company via stock) and you give the value of that (in the form of money or assets) to the claimants. Either way it's a transfer of wealth from the current business owners (stockholders) to claimants, just a matter of how that transfer happens.
NickC25 3y ago
Exactly. They should be nationalized. If they are the only producer of a number of strategically important materials, nationalization needs to happen. The private markets are great, but cannot be trusted to clean up after their own mess - they have proven this time and time and time again. The taxpayers will ultimately be on the hook for this payout, and that's simply unacceptable. If the public has to bail out this company, at the very least, the board and C-Suite need to be liquidated and be fined substantially for this sort of behavior. They've known about the danger of these chemicals for almost 60 years, and not once did they (AFAIK) go to the government and actively ask for help to replace said chemicals with safer alternatives that don't literally last forever if consumed.
- gwright 3y ago
  Right, because nationalized industries/companies have a wonderful track record of environmental concern and practices? I'm not sure what the solution is to these problems (or this particular problem) but "nationalizing" producers certainly isn't one of them. Destroying 3M isn't one either. I don't understand the approach to difficult problems that starts with thinking "the government" is effectively a magic wand.
  - NickC25 3y ago
    I'm not saying nationalized companies are great. I'm saying that if a company engages in such deceptive practices with materials that they know are toxic, and they fail to disclose that to the relevant parties (the government, and the people), they have no business being in business, as they are effectively externalizing the risk their products put on the rest of us. Destroying the company is not the best idea, but there has to be a line society has to draw and be vigilant about defending it. Otherwise, you're going to just encourage more of this behavior...because the flip side is a really ugly precedent to set. You want companies to use toxic chemicals in their products, lie about it, and when found out, just pay some fine and walk away like nothing happened? No, there has to be a line where we say "you made a ton of money by lying to us and putting toxic chemicals in our air, our water, and our bodies. you're going to now pay that back with substantial interest, and be barred from ever being in a position of any level of corporate power whatsoever for the rest of your life". The taxpayer CAN NOT be the one to be on the hook for corporate misdeeds time and time again. In countries like China, executives get disappeared for such hubris.
    - youreincorrect 3y ago
      > Destroying the company is not the best idea, but there has to be a line society has to draw and be vigilant about defending it. Why is it not the best idea? It's a great idea. Fine them more money and let them go bankrupt. Let companies that did not go under for such awful practices pick up the pieces. Why is bankruptcy acceptable for Kmart but not 3M? Be specific, no nonsense about how they are the only company in existence ever capable of creating some mysterious chemical yet also only have a $50B market capitalization (if their chemicals were so rare, impossible to produce, and highly sought after, market cap would be higher). > The taxpayer CAN NOT be the one to be on the hook for corporate misdeeds time and time again. I don't understand. You think the taxpayer cannot be on the hook, yet you also think we are obligated to bail out the business by nationalizing it? What do you think nationalizing a business entails? It would literally place the taxpayer on the hook for that business. Nationalizing it would not imply any guarantee the business remains profitable, and future losses would be owned by the public. I do agree that execs should be punished more severely though. We are absolutely on the same page there. And I don't care if the current execs are not the original execs responsible. As far as I can tell, they've allowed the problem to continue if not get worse.
deleted 3y ago
[deleted]

prpl 3y ago

There’s some irony that one of the M is for Mining - the poster boy for superfund cleanups. I guess this would be an ultrafund

batmenace 3y ago

Well if the company goes bankrupt, theoretically other companies can buy e.g. 3M's patents / processes / subsidiaries and continue their production. THe company isn't unprofitable, so it would be sold off in parts and the proceeds of the sale (theoretically) would go towards settling lawsuits.

s1artibartfast 3y ago
or it might just be sold as a whole to another company, or continue to exist post bankruptcy
- dylan604 3y ago
  Unlikely though. Nobody would want to buy the company whole as that would include all of this liability. Selling of the individual parts to raise funds for paying the debts of the unsold parts of the business entering bankruptcy seems like the only way to go
  - s1artibartfast 3y ago
    Breaking it up doesn't change the liability post bankruptcy.
    - nickelpro 3y ago
      If I buy a candy bar from a bankrupt chocolate company I don't inherit any liability from the candy bar. "Breaking up" a company by selling its assets and distributing the profits to creditors absolutely does vanish the liability.
      - s1artibartfast 3y ago
        I think maybe we're confusing terms here. Breaking up a company normally means separated into smaller existing companies. If you buy 3m's candy bar division, you still might be on the hook for the forever chemicals the candy shop dumped in the river. If you're just talking about dissolving a company and selling off the tangible assets, not selling off functional business units then I agree, liability doesn't follow material Goods. This generally isn't considered breaking up a company. Breaking up a large company into smaller ones during bankruptcy does not by default absolve the smaller companies of liability. Courts can add bankruptcy settlement terms that absolve a company of liability moving forward, but these can be applied to the company at all as a whole or the smaller businesses if it is broken up.

arrosenberg 3y ago

What it should mean is the US government taking ownership of the company, appointing its' own executives and either selling the company to pay for the cleanup, or using the forward profits from the company to pay for it. That won't happen, but wouldn't it be nice if it did? Just once.

paiute 3y ago

I'm starting to see a pattern which basically amounts to corporate shakedowns. I think the trend has only been accelerating since Perdue Parma. They will take the money and never do a thing to clean up the chemicals.

moomoo3000 3y ago
Are there examples of that happening?
hgsgm 3y ago
Better than not taking the money, at least. At a minimum it reduces inflation a tiny bit which helps everyone.

slymon99 3y ago

They go bankrupt, because their liabilities exceed their assets. There are three main sets of creditors - the US government who are receiving this $142.7 billion, equity shareholders who own $MMM, and bondholders. In a bankruptcy, you arrange levels of creditors by "seniority", where more senior creditors are paid first. In this case, I would imagine the levels of seniority are: 1. The US government 2. Bondholders 3. Equity shareholders 3M has plenty of assets to be distributed to the creditors - the manufacturing capabilities that you mention, intellectual property, relationships with purchasers. These assets might be sold directly on the market (this is easier with physical assets like manufacturing labs). A new corporation with new management might be established to handle liquidating the assets, or even running the business (this is what happened with FTX). Either way, it seems like bondholders and shareholders alike would get zero'd out and the US government could do what it want with 3M's assets. To answer your question succintly: > 3M is the only manufacturer of tons of important materials as I understand it, so it's not like they can just get erased from the market 3M is a corporation and one of their assets is their ability to manufacture tons of important materials. 3M the corporation would be obliterated but their ability to manufacture tons of important material would likely be sold off.

CameronNemo 3y ago
The shareholders shouldn't just get zeroed. There should be a clawback of profits made by 3M since the 1970s. Raid my 401k -- someone has to pay.
- rapht 3y ago
  Hello, "limited liability company".
- sokoloff 3y ago
  We'll put you down in the "not a fan of the rule of law" category.
  - CameronNemo 3y ago
    Thanks! https://www.copblock.org/40719/myth-rule-law-john-hasnas/ https://www.copblock.org/40719/myth-rule-law-john-hasnas/

kmod 3y ago

Assuming those numbers are realized it would mean bankruptcy, essentially, and questions like this are pretty standard and well-thought-about there. IANAL but I think this is why Chapter 11 bankruptcy exists (where you keep the company going because that's valuable) vs Chapter 7 (where you liquidate it). I think the Purdue bankruptcy is similar where the company is somewhat being handed over to the people that were harmed, because that's more valuable to them than selling the company piecemeal and then distributing the proceeds.

Jeff_Brown 3y ago
Would it? If they can earn the value of their liabilities in three years, why not just do that?1
- sokoloff 3y ago
  How can they do that? Their entire sales for full year 2022 were only $34.2 billion, with adjusted free cash flow of only $4.7 billion. They literally could not cover the interest charges on a $143B judgment, let alone pay it off in 3 years.
  - Jeff_Brown 3y ago
    I stand corrected, thanks.
TylerE 3y ago
3M going under would be bad in a lot of ways. They are THE name is serious respiratory and other PPE, for instance.

feifan 3y ago

I read that sentence as saying someone came up with a cost estimate of $142.7b to clean up everything, and then there's a comparison to 3M's $53b market cap for scale/comparison.

cwkoss 3y ago
I don't think all the money in the world could cleanup "everything" that is contaminated with PFAS - it is effectively pervasive in the ecosystem at this point.

simonster 3y ago

It means that the market believes they are unlikely to be on the hook for that amount, or else the market cap would be near-zero. Given 3M's current profits, assets, and liabilities, a 142.7B payout would bankrupt it.