CASE STUDY: Mesirow Financial's Structured Settlement Professionals Saved Client $29 Million in Upfront Costs

Challenge:
The federal Environmental Protection Agency (EPA) and the State Department of Environmental Protection held our client, a governmental entity, 72 percent responsible for befouling a large body of water. The total cost of the environmental clean-up, which would occur over 30 years, was estimated at $160 million.

Action:
Our consulting team conducted an economic analysis of the present value of three clean-up alternatives. Based on the analysis, we determined that the most feasible, least expensive solution was a trust with a reversionary benefit. The first challenge was to obtain agreement from the federal and state environmental protection agencies before establishing a trust with $60 million in a balanced fund of stocks and bonds for the client.

Result:
This was the first time reversionary interest had been incorporated into an environmental settlement. Because of the reversionary interest clause, our client will receive all funds remaining after the clean-up is complete, which the parties project to be approximately $30 million. As a result of the settlement agreement, the up-front cost to the client is $29 million less than the original estimate and they retained the reversionary benefit. In addition, remediation began immediately and the trust documentation allowed the client to monitor the process and take advantage of reduced cost technology in the clean-up.