May 19 (Reuters) - Seven U.S. states on Monday objected

to fire protection company Kidde-Fenwal's bankruptcy plan,

saying that the proposed settlement improperly attempts to

shield its owner Carrier Global ( CARR ) from lawsuits related to toxic

PFAS chemicals in its firefighting foam products.

Carrier, which is not bankrupt, is attempting to use

Kidde-Fenwal's bankruptcy to avoid its own separate

responsibility for lawsuits over the so-called "forever

chemicals" in a way that violates that U.S. Supreme Court

precedent, the states alleged in court filings in Delaware

bankruptcy court.

Carrier previously agreed to pay $540 million to

Kidde-Fenwal and its creditors as part of a Chapter 11 plan that

would resolve lawsuits by local governments, companies and

individuals who have claimed that Kidde-Fenwal's firefighting

foam products contaminated drinking water and soil with PFAS

near airports and military bases around the U.S.

But that deal cannot be used to cut off states' ability to

sue Carrier directly over the alleged PFAS contamination,

according to two separate objections filed by the Democratic

attorneys general of New York, California, Colorado,

Connecticut, Delaware, Maine, Vermont and the District of

Columbia.

They cited a Supreme Court ruling last year, in the

bankruptcy of Purdue Pharma, that sharply scaled back a court's

ability to wipe away legal claims against entities that have not

filed for bankruptcy themselves.

Carrier did not immediately respond to a request for

comment.

Kidde-Fenwal filed for bankruptcy in May 2023, after being

named as a defendant in more than 4,400 PFAS lawsuits over its

chemical firefighting foam products. It was the first company to

go bankrupt as a result of PFAS litigation, but experts have

said that more companies could follow.

Dubbed "forever chemicals" because they do not easily break

down in the human body or environment, per- and polyfluoroalkyl

substances, or PFAS, are a group of roughly 15,000 known

chemicals used in hundreds of consumer and commercial products

including firefighting foams, non-stick pans, stain resistant

clothing and cosmetics.

Kidde-Fenwal's bankruptcy plan does not explicitly contain

the type of "non-debtor releases" that were shot down in the

Supreme Court last year. Instead, it characterizes the PFAS

liability as an "estate claim," a type of legal claim that

Kidde-Fenwal can bring against its parent company and that only

Kidde-Fenwal's bankruptcy estate can settle or litigate.

The states argued that Kidde-Fenwal's plan is using "word

games" to "obscure the underlying reality" of the settlement,

which will take away creditors' ability to sue Carrier over PFAS

contamination.

The states said Carrier has "vast liability" for the

contamination, which presents significant and persistent risks

to human health and the environment.

New York, for example, said that Kidde-Fenwal's chemical

have contaminated soil and water at approximately 35 locations.

The state has already spent more than $100 million to address

the contamination, with ongoing annual costs of more than $3

million, according to the objection.

Carrier has a market capitalization of $64.8 billion, and it

sells heating, air conditioning and refrigeration services.

Kidde-Fenwal intends to split Carrier's $540 million

contribution, along with future insurance recoveries and other

assets, among PFAS creditors. Under Kidde-Fenwal's proposed

bankruptcy plan, states would receive 30% of the settlement

funds, local water providers would receive 30%, and individuals

with personal injury claims would receive 22%, with smaller

amounts reserved for firefighter training and damage to

airports, businesses, landfills and personal property.

Kidde-Fenwal, which sold its assets to private equity firm

Pacific Avenue Capital Partners earlier in its bankruptcy,

intends to solicit creditor votes on its Chapter 11 plan

beginning in June.

Water providers in the U.S. have reached large settlements

in their PFAS litigation, including a $10.3 billion settlement

with 3M and a $1.19 billion settlement with DuPont, Chemours and

Corteva.

The case is Kidde-Fenwal Inc, U.S. Bankruptcy Court for the

District of Delaware, No. 23-10638.

For Kidde-Fenwal: Brian Glueckstein and Justin DeCamp of

Sullivan & Cromwell

For the creditors' committee: David Molton of Brown Rudnick

Read more:

Carrier reaches $730 mln settlement over fire protection

unit PFAS claims

Fire protection company Kidde-Fenwal files for bankruptcy

citing PFAS lawsuits

Litigation over 'forever chemicals' is growing: Is your

company the next defendant?

EPA to rollback 'forever chemical' rule, extend timelines

(Reporting by Dietrich Knauth in New York)