Citron Says Chemours Is 'Toxic,' Will Go Bankrupt

Chemours Co CC shares are down more than 7.6 percent in Thursday after Citron released a new report slamming the company as “a bankruptcy waiting to happen.”

According to Citron, Chemours was actually created with bankruptcy in mind. Last week, roughly 5.2 million Americans discovered that their drinking water is contaminated with two chemicals, perfluorooctanoic acid and perfluooctane sulfonic acid, which are linked to cancer.

The first of 260 cancer-related lawsuits against E I Du Pont De Nemours And Co DD began today in Columbus, Ohio, but Citron believes DuPont has set Chemours up to take the fall for 60 years of toxic dumping.

Last year, DuPont spun off its performance chemical division, along with $4 billion in debt and all of its legacy liabilities, into Chemours.

“While Chemours was set up for bankruptcy, DuPont just could not let it happen in its first year, and just prior to its merger with Dow Chemical,” Citron speculates. “If that were to happen, a court might have too easy a time transferring the environmental liabilities right back to DuPont before the spinoff.”

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Now that DuPont has dumped its liabilities and a significant amount of debt on Chemours, the spinoff is free to go bankrupt and DuPont will have avoided a major catastrophe, Citron concludes.

“After 15 years of publishing, Citron can confidently state that Chemours is the most morally and financially bankrupt company that we have ever witnessed.”

Not surprisingly, Citron predicts that Chemours is destined for bankruptcy within the next 18 months.

Disclosure: the author holds no position in the stocks mentioned.